Q1 2025 Warner Music Group Corp Earnings Call
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Welcome to Warner Music group's first quarter earnings call for the period ended December 31st 2024.
At the request of Warner Music Group today's call is being recorded for replay purposes, and if you object you may disconnect at any time.
Now I would like to turn today's call over to your host Mr. Kareem Chin head of Investor Relations.
You may begin.
Yeah.
Yeah.
Good morning, everyone and welcome to Warner Music group's fiscal first quarter earnings Conference call.
Please note that our earnings press release earnings snapshot and Form 10-Q are available on our website.
On today's call, we have our CEO, Robert Kintzel, and our CFO, Brian <unk>, who will take you through our results and then we will answer your questions.
For our prepared remarks, I'd like to refer you to the second slide of the earnings snapshot to remind you that this communication includes forward looking statements that reflect the current views of Warner music group about future events and financial performance.
We plan to present certain non-GAAP results. During this conference call and in our earnings snapshot slides and that provided schedules reconciling these results to our GAAP results in our earnings press release.
All of these materials are posted on our website.
Also please note that all revenue figures and comparisons discussed today will be presented in constant currency unless otherwise noted rep.
References to adjusted revenue and adjusted OIBDA are adjusted for previously disclosed notable items. The details of these can be found in our press release.
All forward looking statements are made as of today and we disclaim any duty to update such statements or expectations beliefs and projections are expressed in good faith and we believe there is a reasonable basis for them.
However, there can be no assurance that management's expectations beliefs, and projections will result will be achieved investors should not rely on forward looking statements because they are subject to a variety of risks uncertainties and other factors that can cause actual results that differ materially from our expectations.
Information concerning factors that could cause actual results to differ materially from those in the forward looking statements is contained in our filings with the SEC and with that I'll turn it over to Robert.
Thanks, Kareem and Hello, everyone.
I'm speaking to you today from Los Angeles, where the community is recovering from the devastation of the wildfires, we continue to support the relief efforts for those most in need.
This past Sunday, our artisan song others took home Grammy Awards, including Charlie <unk> spending her first three.
Bruno winning his <unk> and.
And Amy Alan within the song writer of the year Award.
It was fantastic to see everyone pulled together and demonstrate the healing power of music.
Our results this quarter were driven by artists and songwriters.
All stages of their careers and from all corners of the world across new releases and reinvigorated catalog.
Warner Music group's engine is strong.
We built up sustained momentum during 2024 delivering year over year double digit growth in subscription streaming revenue and adjusted OIBDA, while reallocating more resources to key areas like Anr investment.
And Warner Music group is a crucial part of a thriving ecosystem.
It's music's Brazilians sure ability and durability that makes it such a unique and valuable sector.
Our results this quarter reflect the impact of temporary macro trends both in our industry and in the global economy, and I'll give you the headlines and Brian will go through more detail.
The following figures are adjusted for all previously disclosed notable items.
You can find the details in our earnings press release.
Total company revenue and adjusted OIBDA grew 4% and 1% respectively.
Recorded music revenue grew 4% in music publishing revenue grew 7%.
Within recorded music subscription streaming grew 7%.
Collecting the expected deceleration from last year's double digit growth as we lapped a series of DSP price increases.
During the quarter, we paid significant FX headwinds largely driven by the strengthening of the dollar against key currencies, such as the Euro and pound gives.
That more than half of our revenue is in non dollar currencies. These currency movements created a roughly 200 basis point headwind to our adjusted OIBDA margin.
As all of these impacts will stabilize over time I would like to focus my remarks on our strategy and explain why we're so confident about the future.
Our goals are clear.
Increase our share of the pie, meaning market share.
Grow the pie itself by increasing the value of music.
And become more efficient, providing greater cash flow both for reinvestment and for shareholder return.
First in terms of growing our share.
<unk> heard me talk about us, becoming the best home for talent at every stage of their careers from baby bonds to veteran superstars.
Our recent successes have showcased how we're firing on all cylinders across that entire continuum.
Including new stores, such as Benson Boone, who had the biggest song in the World last year with beautiful things Anthony swims, who had the biggest song in the U S with lose control.
Regional superstars like <unk>, the most listened to artist in Italy in 2024, or Jeff et cetera.
Islands number one streaming audit of 2024.
Global Superstars, including Charlie CX, do Alibaba, Coldplay, Mike to ours, and Bruno Mars, who has become the number one artists in the world and Spotify with a record breaking 150 million monthly listeners.
Music legends from share the Lincoln Park to Mac Miller Who's latest album in top 10 in 10 markets.
And finally, our irreplaceable catalog, which includes the household names from likes of Fleetwood Mac, the grateful dead prints and the retail Franklin.
A great example of how catalog music can remain vital and relevant is the most recent success of <unk> iconic 1984 recording forever young.
A huge viral trend drove streams to increase over 300% in 2024 versus the prior year.
And we released a new version by David get up.
Bill and Dave IMAX, reaching number two on the EU airplay chart.
I am pleased to see that so many of our recording artists are also songwriter assigned to Warner Chappell, including Benson Boon Teddy swims back Brian Cardi, B do Alibaba, Madonna and the Grateful dead.
The latest superstar to partner with us across both set of rights is black things Rose whose debut has become the highest charting album by K pop female so lowest in the United States.
In addition to growing our organic investment behind Anr, we continued to pull other levers in the quarter as part of our ongoing efforts to generate increased market share including hot.
Partnering with local players such as skilled box in India.
Wiring valuable catalogs like cloud nine in Benelux, and making leadership changes, including appointing a new CEO in Japan.
All of this hard work is aimed at growing our global market share.
We're already seeing early positive signs as Atlantic one of our flagship labels increase its market share by half a percentage point in the U S over the prior year quarter. According to eliminate data.
At the same time Warner Chappell continues its strong performance landing at number two on Billboards yearend Hot 100 Publishing chart.
Second let's talk about how we're aligned with our widening network of partners and growing the pie.
Collaborative innovation has always been part of our DNA, we actively work with our partners to constantly evolve and to attract more customers and the music ecosystem.
Whether it's launching new formats, expanding features adding new tiers or experimenting with business models. Our collective goal is to ensure the continued growth of the pie.
Is that is starting to happen our goal is to ensure that the value of music increases as the revenue pie expense.
While there is still progress to be made across the industry. Our recent deals including the renewal, we just inked with Spotify represent positive momentum today, we're announcing an important new agreement that provides additional benefits for auto sensor organizers as well as WMD and Spotify.
Enabling us to move forward collaboratively to expand the entire music ecosystem.
We look forward to seeing the value of music increase as we drive growth through further innovation together with Spotify.
It is our increasingly powerful combination of recorded music and music publishing rights that make our records are essential for any service.
In 2020 for our artists and songwriters contributed two nine of Billboards top 10 and over half of Billboards top 100.
Our music has fueled massive subscriber growth over the past 16 years, and we'll continue to do so.
Moving onto efficiency, my mantra is focus and simplicity bring greater intensity and impact.
Through a combination of organizational changes and investments into technology, we are continuing to make the company more effective and efficient.
At the same time.
We've exited some non core businesses in order to allocate our resources to the most accretive activities, while doubling down on our central value proposition to artists and songwriters.
We've made real progress on these fronts and we are delivering on schedule through our previously announced restructuring programs.
As we've told you our goal was to reinvest the majority of these savings into strategically important initiatives that will propel our business forward.
This enabled us to increase our anr investment by double digits last year and this year.
Today, we announced the acquisition of a controlling interest in temple music from Providence equity partners with an option to acquire the remainder by the end of 2027.
Temple will provide us with an evergreen catalog, which includes premium music rights to songs recorded by audio such as Bruno Mars 21 pilots, Adele with Khalifa, Florida, Georgia line and Lucas Graham.
In addition to the high quality of these rights Tempus robust margins and cash flow generation make for an attractive financial profile that meets our key investment criteria.
We have a preexisting administration agreement with temple and this investment will become even more accretive as deals with other publishers roll off and.
And we expand the scope of our direct control over the catalog.
Our tempo acquisition is a great example of our M&A strategy in action.
As we become more efficient, we're creating a virtuous cycle that will enable greater reinvestment that delivers accelerated growth.
Our long term outlook remains intact and our confidence is based upon a healthy and evolving industry.
Underpinned by collaborative innovation with the Dsp's.
Our ability to provide value to our artists and songwriters through our global services and deep expertise.
And focus on are propelling growth through operational efficiency.
Finally, we're really excited about our upcoming new music from Liza, David get a check Harlow Jesu Benson balloon Mario Becerra, Corona July and Zach, Brian as well as the excellent performance of our catalog and with that I'll turn it over to Brian.
Brian: Thank you Robert and good morning, everyone.
Brian: Before I get into our results I want to remind everyone that growth rate comparisons will be in constant currency and where appropriate I will reference growth metrics, which are adjusted for all previously disclosed notable items.
Brian: There are items throughout the quarter and the year that affect comparability we.
We have provided additional disclosure in our earnings press release, which details the impacts from these items on a historical basis.
In Q1 total revenue declined 4% and adjusted OIBDA declined 18% with a margin of 21, 8% a decrease of 390 basis points over the prior year quarter.
On an adjusted basis for notable items total revenue grew 4%.
OIBDA increased 1% and margin decreased 80 basis points due to revenue mix and operational FX headwinds, partially offset by cost savings net of Reinvestments.
The impact of foreign exchange was pronounced and adjusted OIBDA as roughly 58% of our total revenue is in non U S dollar currency.
Brian: FX represented.
Approximately $36 million headwind to adjusted OIBDA, and a roughly 200 basis points headwind to margin.
Recorded music revenue decreased 6% and grew 4% on an adjusted basis.
Subscription streaming grew 7% and expected deceleration from Q4, as we lapped prior year price increases.
AD supported streaming declined by 7%.
Driven by the timing of deal renewals and content delivery with certain emerging streaming platforms physical revenue increased 8% due to strong new releases in the U S, namely from Lincoln Park Rose and Charlie <unk> and strength in Japan, and Korea, which was <unk>.
Brian: Really offset by the BMG roll off.
When adjusting for BMG, which had a $16 million impact in the quarter physical would've grown 21%.
Artist services and expanded rights revenue decreased 3%, primarily due to weakness in concert promotion revenue in France, as well as ongoing weakness in our E Commerce business EMP.
Licensing revenue decreased 39% as we compare against the licensing agreement extension for an artist catalog in the prior year quarter.
Net of the impact of that licensing extension licensing revenue increased 6%.
Recorded music adjusted OIBDA decreased 21% with a margin of 24% a decrease of 450 basis points.
On an adjusted basis.
Justin OIBDA was flat and margins decreased 80 basis points.
Music publishing total revenue increased 7%, while digital increased 6% and streaming increased 7%.
Brian: These growth rates compare against the prior year quarter, which saw a robust streaming revenue growth of 30% and reflect continued market and catalog growth.
Performance revenue grew 12% driven by an increase in touring activity outside the U S and U S radio activity.
Sink revenue was flat, while mechanical revenue decreased 7% due to lower physical sales.
Music publishing adjusted OIBDA decreased 2% with a margin of 25, 7% a decrease of 240 basis points.
Q1, operating cash flow increased 13% to $332 million from $293 million in the prior year quarter.
The increase was primarily due to timing of working capital items, including the timing of payments associated with digital deal renewals.
Operating cash flow conversion was 91% of adjusted OIBDA.
Free cash flow increased 12% to $296 million from $264 million in the prior year quarter.
As of December 31, we had a cash balance of $802 million.
Total debt of 4 billion and net debt of $3 2 billion.
Our weighted average cost of debt was four 2% and our nearest maturity date remains 2028.
I'd like to reiterate that over the last year, we focused on our core business and reduce costs along the way.
As a result of actions taken over the course of the prior fiscal year, we've generated cost savings that we've been able to reinvest.
Robert: As Robert mentioned, our acquisition of tempo is a Prime example of this strategy.
Our restructuring program is on track and delivering results as planned.
Looking ahead as the previously disclosed notable items become immaterial, we intend to simplify our disclosure and commentary to focus on our as reported and constant currency results.
We continue to expect high single digit subscription streaming growth when adjusted for BMG for this fiscal and on a multiyear basis.
As a result of the foreign exchange headwinds that we expect to persist in the near term we are unable to reaffirm our margin expansion target for this fiscal year.
On a multiyear basis, our goal remains to deliver annual margin expansion of approximately 100 basis points and operating cash flow conversion of 50% to 60% of adjusted OIBDA.
The music industry remains healthy resilient and is growing with new DSP deals focused on improved monetization.
We are excited about our release slate and look forward to continuing to deliver great music.
Our underlying business is strong and we continue to focus on our core while creating efficiencies to deliver long term success.
Thank you for joining us today, we will now open the call for questions.
Thank you to ask a question. Please press star one of your telephone and wait for your name to be announced.
Robert: Your question. Please press star one again please.
Please standby, while we compile the Q&A roster.
Our first question comes from the line of Benjamin Swinburne with Morgan Stanley. Your line is now open.
Thanks, Good morning.
Robert on the new Spotify deal I know you probably can't get into too much specific detail, but you've talked a lot about trying to really.
Really create some distance between how your revenues grow from your DSP partners and their own retail pricing.
Sort of another way of asking about shifting from kind of revenue share to wholesale over time I'm wondering if you could comment about how this deal may or may not have has evolved your model and the direction that I think you'd like to see it go and anything else you think we should be thinking about that's important here.
And then Brian on.
On the currency piece.
Could you talk a little bit about whether that is tied to some currency risk you're taking in your royalty deals with your artists or if this is simply that you have a high U S dollar.
Kind of overhead and corporate costs and fixed cost base and so youre dealing with some negative leverage it'd be helpful to understand the piece there. Thanks.
Okay. Thanks Pam.
Good morning.
Thank you for acknowledging that we can't get into the details.
Robert: But.
Robert: What I'll say is that.
Robert: As I said in my opening remarks in previous calls, we're focusing on a three pronged strategy, which has.
<unk> increased our share of the pie market share our work day today.
Atlantic progress in the last quarter or.
Robert: To increase the pie itself, which is where our deals with an ESP scope and then efficiency so on.
And sort of increasing the size of the pie.
I'm very.
Very happy with our progress and with this deal.
It's obviously important that we do that we're doing this in conjunction with our distribution partners.
And.
As we said on this strategy.
Easy there is always transition time to it.
It's one of those things that we need to still rollout through the entire industry.
But I'm happy to say that we.
We now have two deals which are headed in this direction, which is Amazon Spotify.
Now, there's more work to do with others and for all of the cycle through but.
So some really great step in the right direction.
Okay great.
Robert: And Ben it's Brian on the foreign exchange.
It is.
Not to do with the royalty it is.
As you noted.
Robert: About 58% of our revenue is non dollar currency. So it really is the in period exposure.
That runs through OIBDA.
This was an unusual quarter as the dollar strengthened.
Materially post election.
Do of course have hedging programs that allow us to focus more on the underlying operation, but the hedging runs through other income and expense below OIBDA. So it really has to do with just that non dollar exposure in the period.
Okay. Thank you.
Thank you. Our next question comes from the line of Michael Morris with Guggenheim Securities LLC. Your line is now open.
Thank you good morning.
I wanted to ask too about the announcements from this morning, and congratulations first to follow up on Ben's question.
You did mention a number of things new fan experiences further paid subscription tiers.
Can you talk at all about the timing of these things coming through.
When we could at least start to see it and maybe to expand on your last answer.
Can you have different types of products with different distribution partners. So that you don't need sort of every domino to fall or is it something that you need agreements with all your large partners in order to move forward on.
On the product.
New ideas. So that's the first question and then second just on tempo can you speak a little bit about what changes with the size of your ownership stake now in terms of what you Couldnt do before that you can do now and also how it might impact your financials. Thank you guys.
Robert: Sure Okay.
It's Michael.
So.
Robert: We don't need to have a single partner for everything to happen all at once.
There are certain principles of fairness that we applied to that item that we do so so we wanted to make sure that.
The rollout.
Robert: I think auto changes consistently unfairly to everyone, but we don't need to everybody at the same time.
Robert: Sure.
There's a lot of different ways to grow the ecosystem.
Robert: Apps business.
Models tiers bundles.
Plenty for us to continue to expand the pie is to lean into those and as long as we're growing the value of music.
Directly with them.
Happy, which we are.
On.
Paul.
Robert: Having more control over the catalog obviously ownership.
As always the best.
You've got to focus on all kinds of rights expansions.
Robert: Monica monetization strategies that may be if you don't have full control you Kathryn.
Robert: Michelle.
Robert: In our control.
Robert: Secondly, with each year, we have not had in high on 100% of distribution of all.
All titles inside tempo.
Robert: Each year as Steve distribution agreements with other.
Publishers labels expire they will come to us. So this deal has growth built into it which will be accretive. So that's why I'm really love this deal.
Love to do many more of those.
Robert: Thanks, the other question I've got them, but I think Robert answer it again that the tempo transaction was really in our wheelhouse.
<unk> been partners with them from the beginning.
High quality assets at high margin.
Its probably about 80% music publishing and 20% recorded music, but as Robert said it gives us more control expands our.
Admin and distribution relationship and more oil referred to us over time.
Thank you. Thank you.
Thank you. Our next question comes from the line of Benjamin Black with Deutsche Bank. Your line is now open.
Yes.
Benjamin Black with Deutsche Bank. Your line is now open.
Okay. Thank you and thank you for the question. So the AD supported side of the house still appears to be choppy.
Curious, what youre expecting going forward and other than putting out great content.
Are there are there any levers that are in your control that could that you could pull to drive faster growth and the.
Second question is on your emerging platform deals.
Were there any new announcements this quarter end.
Also picked up with obviously, a big partner of yours in the event that the a band and how should investors think about potential sizing.
The headwinds of the AD supported line. Thank you.
So Ben it's Brian I'll take the <unk>.
And as you know Thats two parts there is the emerging platforms that you hit on in the AD supported.
On the emerging platforms as we said that was impacted by deal timing and content delivery in the prior year I don't believe there were anything new there in the quarter in terms of new announcements of deals.
On the AD supported.
Obviously, that's macro driven we have less influence and it is impacted by a number of players.
Robert: We do expect that the stabilize over time.
But it is going to be macro driven.
And then the second part of your question on tick Tock.
I'll take it.
Obviously, nothing new to report.
We have an excellent relationship with tech talk on the team.
Alright, well together.
Obviously, there's a lot of uncertainty for them themselves.
But if you think about it.
As exposure.
Potential ban.
Robert: Our deal.
This year, it's muted.
Not much to worry about.
But obviously, we hope for a good resolution between the parties, but that's just one of those things that we haven't zero control over so we do not for a moment.
There wasn't much exposure to it.
Focus on growing our share of the pie and the growing the pie and the other areas.
Robert: Thank you.
Our next question comes from the line of Kenneth <unk> with Barclays. Your line is now open.
Thank you.
Kenneth: So starting with subscription streaming.
Yes.
This high single digit growth in two days.
In the prepared remarks is that even even this year is that impacted by the disease cannot periods. How should we think about that over the course of the year.
And then.
On the margin comment obviously FX is something that is beyond your control.
The impact of that is understandable.
When you think about the cost cutting initiatives that you have underway.
Were you to leverage that maybe a little bit more.
And yeah.
Obviously, it's going to be.
Thanks.
Well that's good.
Investing some of these cost savings into other initiatives within the company will be good to understand.
Recently, what those investments what kind of capabilities the act linked.
Kenneth: Going forward. Thank you.
Yes.
Kenneth: It's Brian I'll take the first part on subscription and streaming.
The 7%.
Signaled last quarter, we would be lapping.
Price increases in the prior year and so we.
Kenneth: <unk>.
T cell and it really was subscribers driven and even.
Kenneth: With just that I think we hit the low end of our guidance at 7%.
And so that speaks to I would say that continued healthy health and resiliency of the <unk>.
Kenneth: Underlying growth in subscription that we see.
Kenneth: And then these recent deals point too.
Opportunity for price improvement and better monetization.
Kenneth: <unk> had support and convict conviction for us.
In terms of your question on slate.
The slate is doing well.
Continue to look forward to a number of new releases as well as the catalog.
And so we do expect it to continue to perform well there.
Kenneth: Then on your point on margin and just the cost reductions.
Yes, those are having an impact.
Kenneth: The margin guidance for the year is impacted really by the foreign exchange.
Being the.
The driver of <unk>.
Kenneth: <unk> not being able to get to a 100 basis points.
And then on the operational and investments.
Robert: Robert can expand on it.
Our our restructuring program is on track as working tempo is a good example of investing in music continued to invest in technology and digital skills and platforms.
Robert: Whether it's our supply chain, whether it's our insights whether its applications.
Those are some of the things we're focused on.
Robert: I think I'll, just maybe pick up example supply.
By chain, we have both digital and physical supply chain.
We've been investing in to make them much more efficient.
Stable so that we can have much higher volume throughput on it without adding additional headcount.
So it sounds like.
One small example of it.
An example would be <unk>.
Robert: Investing into standardization standard more close to what you're going to be auto maintenance as much as possible. So so there's a lot going on and on.
Scott.
Starting to bear fruit already.
Robert: And a lot of things that are going on that will bear fruit wendover.
With every single quarter on every single year. So we continue to do so because we see.
We have a line of sight to create the ROI on it.
And can I, just want to reiterate that the currency headwinds we're seeing.
Are a headwind to the margin this year.
Robert: Currency does stabilize over time, and so we would expect that to come back, but we're in a moment here, where I think we've seen a pretty variable move in the dollar.
I think Justin post election to December we saw an 8% appreciation. So it's unusual but we do expect it to stabilize over time.
Robert: Yes.
Speaker Change: Thank you.
Thank you. Our next question comes from the line of Rich Greenfield with like chat partners. Your line is now open.
Thanks for taking the question Robert you've got a long history in digital media and it's generally the Internet just broadly is generally winner take most and it certainly appears like Spotify is rapidly rising to that sort of a winner take most level iterating product.
New product offerings bundles.
I'm just wondering when you look at like Apple they seem like they're sort of I don't know.
It feels like you've sort of given up on music innovation Amazon music certainly hasn't done much in innovation kicked off music stars on Google and Youtube are certainly active outside the U S. But don't seem really active are visible in the U S and I'm just wondering like sort of.
With less competition on the DSP side, what can you do or how does that affect you and how are you thinking about stimulating more competition among dst's.
Speaker Change: Quick question on Orange.
Okay.
At some point.
Going one way or do I want to quantify.
Speaker Change: With Amazon.
Which is.
Enabling.
A lot more experimentation.
Ultimately.
Speaker Change: This from obviously being on the other side when I was on Youtube.
All of these companies want to innovate whether people from the outside.
That's total not they.
All want to innovate they wanted to grow.
So and just take what it takes us having the ability and the rights to do it.
Youre dealing with copyright obviously, there's lots of different limitations and you need a table unwilling partner to do that.
We are that partner.
Speaker Change: So so we're leaning into it heavily.
This is the best way for us to do our part.
An increase.
The increase in the share of the pie that I was mentioning.
Speaker Change: Opening them.
Given them.
Some permissions to do it.
At the same time grow the value of music.
And also I think we can do it in a great way.
All right.
Really great peaceful coexistence.
That drives value for both.
Speaker Change: And are you seeing anyone else in the space like an apple or an Amazon wanting to do things like Super premium our superfan that Spotify is sort of focused on.
Speaker Change: I think there are.
Speaker Change: They are actually even more ideas on that.
Speaker Change: But and there are different and I think what.
Speaker Change: What ultimately ends up being grades as people come up with their own variance of products that may be slightly different from each other.
There are similar enough that they are anchored on music.
And Thats why we provide the annual volume.
Speaker Change: So yes.
Obviously Youtube is very active.
A long time and Spotify.
Amazon is very active.
And starting.
Starting this fall.
Thank you.
Speaker Change: Thank you. Our next question comes from the line of cut gun morale with Evercore ISI. Your line is now open.
Speaker Change: Great.
Good morning, Thanks for taking the questions Super fans and subscription streaming if I could.
Speaker Change: First on Super fan monetization over there seems to be a relatively untapped area.
History has talked a lot about but maybe still hasn't moved into how are you thinking about the path to drive innovation with Super fans and I only asked the question because the press release with Spotify seem to reference a number of new opportunities and I think north that extended specifically area as well and Brian If I could follow up on the recorded music subscription streaming.
Can you unpack the trend in the quarter, just a little bit more because to your point the detail shouldnt have been a surprise to anyone given that you're lapping the DSP price increases.
Speaker Change: The six 6% with still on the lower end.
Speaker Change: High singles, you mentioned subscriber trends earlier and your answer anything more to call out there those trends, presumably impact the rest of this year as well and I'm just trying to better understand the dynamics because your comps get harder in the next few quarters.
Speaker Change: Perhaps that will be more than offset by what's going on with Spotify Amazon along with maybe some contributions from capital. So any help would be appreciated. Thank you.
Speaker Change: Alright ill take the first question.
So.
And it also dovetails a little bit.
Richard's question.
I think there will be a different variants, sometimes from different partners or.
Speaker Change: We're looking at it both on our own homegrown strategy as well as one through our distribution partners.
It's an area that has not been figured out.
Speaker Change: Alright, Thats a greenfield for everyone in what we do know is that there are a lot of people willing to.
Are extremely passionate about number of artists and they're willing to spend a lot of money into it than in person experiences by merchandize.
Bio content experiences and interactive August so we know and the engagement is there obviously the.
Our models also unchanged from region to region.
Leanne well documented with a successful debt in Asia.
Everybody is trying to bring here.
A lot of different companies, but efforts around it.
Want to participate in an innovation around this and we are.
Speaker Change: But it hasnt been correct, but not all of them.
But it doesn't mean that we will stop well will continue because we know directionally.
The demand is there.
Speaker Change: The expenses to match it.
So thats really have nothing else to report on that.
Yes.
Yes.
Subscription streaming.
As I said and we had signaled last quarter, we did expect the pricing DSO.
And.
The driver of the vast majority of what we see driving.
The subscription spring is subscriber growth and volume.
Over time as <unk>.
Pricing improves.
Again.
Speaker Change: As that improves we would expect that to be.
Added to it.
Speaker Change: And then our market share as we've said we're pleased with how the slate is performing and the strong catalog. So we continue to see there the vast majority of <unk> subscription and volume at overtime pricing being additive.
Bob: Understood. Thank you Bob.
Thank you. Our next question comes from the line of Backyard Levy with UBS. Your line is now open.
Great. Thank you.
A couple of clarification questions one on the guidance for the high single digit growth on the subscription side does that includes the new deals that you've signed including 10 Paul.
And.
Bob: Maybe on the margin side is the current FX holds.
Performance at good run rate for the year or are you still expecting some efficiencies too.
And maybe just a final one the Spotify deal on the publishing side can you talk about how it compares versus the old CRB rates in the U S and other regions. Thank you.
Got it.
Bob: So obviously, we can't get into details of the deal that we mentioned before Budd.
Rest assured that protecting artists and songwriters rights.
Bob: As our number one priority.
Bob: We feel very happy with this deal.
Yeah, Yeah on subscription.
The Tampa deal will mainly be music publishing.
So we continue to believe in our guidance there and the drivers I just mentioned.
Margin.
Again, we continue to.
Our restructuring and savings are working and continue to reinvest in the business <unk> being an example of that.
As well as the.
The technology items, Robert and I spoke about earlier.
Okay. Thank you.
Thank you. Our next question comes from the line of Stephen <unk> with Goldman Sachs. Your line is now open.
Hey, great. Thanks for the questions Robert maybe a follow up on the Spotify deal again I. Appreciate you can't go into much detail, but curious if theres anything in this new deal that gives you greater commitments or control into wholesale pricing on something that you've spoken about in the past.
And then one for Brian on just FX margin you called out the 200 basis point impact on margin. This quarter curious, how we should be thinking about that going forward and then just any other help you can give us on the cadence of margins throughout the year and the puts and takes we should consider thank you.
So during.
During the day and so it's not going into.
Great detail.
We have.
This deal gives us a lot of confidence.
We always focus on what do we go into these deals.
Achieving certainty not hope.
We have that.
Yes.
And Steven.
Foreign exchange.
On margin.
Again that really is the drag on.
Achieving our 100 basis points.
And.
The operational piece of it we think is immaterial the rest of the year the year to year foreign exchange headwinds are about 2% to 3% on revenue and OIBDA.
But again, we expect these to moderate over time.
Bob: <unk>.
Our hedging programs as I said before we do.
Bob: Over a four quarter basis hedge about 50%.
And but that shows up down in other income below adjusted OIBDA.
Got it thank you Beth.
Thank you. Our next question comes from the line of Jessica Reif Ehrlich with Bank of America Securities. Your line is now open.
Thanks, maybe two questions on the new coming here.
Talk a little bit then who would there.
Who would bear the cost of the Super premium.
How did the artist get compensated.
And then secondly can you provide any color on how youre thinking about the video catalog monetization that you talked about in the press release.
So I just think that just to quantify what do you mean on the second question.
And you alluded to.
Music.
And video catalog monetization.
So I'm just wondering how you're thinking about video.
Got it okay. Thank you thanks for clarifying.
Okay. So on the on the sort of Super premium experiences.
The cost.
Obviously consumers pay higher price.
And then we just have power.
It helps splits the way more used to them so.
The consumer.
Yes.
Bob: It was obviously getting better product.
A lot of them already.
On the video front obviously.
More and more of Aneel and Spotify, probably if you're using it.
The second one paves the way for more of it from us and others.
No.
I think youll see just increasing.
That expansion that goes to what I mentioned before our formats.
Yes bundles business models all of these things that we can do with DSP in order to grow the pie.
So effectively.
I'd like to asking that question on the automotive.
Sure Matt.
Got it that type of deal.
And then maybe just one last follow up these services be.
Globally or primarily in the bigger market.
Hmm.
I'd say that Thats.
That's a question for them.
But.
Again, having the offense working on the other side.
The intent is always to go global overtime.
Expansion may be country by country or regional.
Michael.
<unk>.
Thank you.
Thank you.
Speaker Change: Thank you I would now like to hand, the call back over to Robert Hanson for closing remarks.
Alright, so thank you so much for attending.
On today's call.
I appreciate your attention and care.
Hum.
Alright.
Our three pronged strategy has.
Grow the pie together.
With our DSP partners.
Innovation.
A larger share of the pie.
Work on market share.
Okay.
Alright plant efficiency.
On a new technology, a lot in order to drive it standardization on technology.
Are those three prongs or confident in our growth outlook for the future.
And finally in Australia.
Really happy with our progress both on the Amazon.
Modified deals.
Which set a new direction for where we're headed on it.
Roll through the rest of the industry and we're obviously happy about our.
Reinvestment of our feet up funds to fund something like tempo, which is accretive high margin.
Speaker Change: Fortunately the short term as well as increasing long term impact. So thank you so much have a great day.
This concludes today's conference call. Thank you for your participation you may now disconnect.
[music] conclusion.
Thank you.
Thank you.
Thank you.
Speaker Change: [music] again.
Speaker Change: Yes.
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Okay.
Please.
Okay.
Okay.
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Speaker Change: So there you go.
Alright.