WMG 10-K & 10-Q changes, risk factors and insider trading

The industries in which we operate are highly competitive, have experienced ongoing consolidation among major music entertainment companies and are driven by consumer preferences that are rapidly changing. Additionally, they require substantial human and capital resources. We compete with other recorded music companies and music publishing companies to identify and sign new recording artists and songwriters with the potential to achieve long-term success and to enter into and renew agreements with established recording artists and songwriters. In addition, our competitors may from time to time increase the amounts they spend to discover, or to market and promote, recording artists and songwriters or reduce the prices of their music in an effort to expand market share. We may lose business if we are unable to sign successful recording artists or songwriters or to match the prices offered by our competitors. Our Recorded Music business competes not only with other recorded music companies, but also with recording artists who may choose to distribute their own works (which has become morean practicableeasy option as music is distributed online rather than physically) and companies in other industries (such as Spotifydigital music services) that may choose to sign direct deals with recording artists or recorded music companies. Our Music Publishing business competes not only with other music publishing companies, but also with songwriters who publish their own works and companies in other industries that may choose to sign direct deals with songwriters or music publishing companies. In addition to competition from traditional music industry players, we also face competition from new entrants, including investment funds that make acquisitions or investments in recorded music or music publishing catalogs and the income streams derived therefrom. The Recorded Music business also faces competition from other forms of entertainment and leisure activities, such as cable and satellite television, motion pictures and video games in physical and digital formats.

We are dependent on identifying, signing and retaining recording artists with long-term potential, whose debut music is well received on release, whose subsequent music is anticipated by consumers and whose music will continue to generate salesrevenue as part of our catalog for years to come. The competition among record companies for such talent is intense. Competition among record companies to sell and otherwise market and promote music is also intense. We are also dependent on signing and retaining songwriters who will write the hit songs of today and the classics of tomorrow. The competition to sign songwriters and acquire copyrights to music and then collect fees for the use of the music in various forms of media is also intense. Our competitive position is dependent on our continuing ability to attract and develop recording artists and songwriters whose work can achieve a high degree of public acceptance and who can timely deliver their music to us. Our financial results may be adversely affected if we are unable to identify, sign and retain such recording artists and songwriters under terms that are economically attractive to us, including with respect to delivery commitments, advance and royalty obligations and rights retention. Our financial results may also be affected by the existence or absence of superstar recording artist releases during a particular period. Some music entertainment industry observers believe that the number of superstar recording acts with long-term appeal, both in terms of catalog sales and future releases, has declined in recent years. Additionally, our financial results are generally affected by the appeal of our recorded music and music publishing catalogs to consumers.

Streaming revenue is important because it has offset declines in downloads and physical sales and now represents the substantial majority of our business, which continues to grow. According to IFPI, streaming revenue, which includes revenue from ad-supported and subscription services, accounted for approximately 96% of digital revenue in 2023.2024. There can be no assurance that this growth pattern will persistcontinue or that digital revenue will continue to grow at a rate sufficient to offset and exceed declines in downloads and physical sales. If growth in streaming revenue levels off or fails to grow as quickly as it has over the past several years, our business may experience reduced levels of revenue and operating income.

Under our license agreements and relevant statutes, we receive royalties from digital music services in exchange for the rights to stream or otherwise offer our music. The determination of the amount and timing of such payments is complex and subject to a number of variables, including the revenue generated, the type of music offered and the country in which it is sold, identification of the appropriate licensor, and the service tier on which music is made available. As a result, we may not be paid appropriately for our music. FailureIf towe beare not accurately paidpaid, our royaltiesit may adversely affect our business, results of operations and financial condition.

There can be no assurance that in the future country-specific trends, developments or other events, either in the United States or elsewhere, including following the 2024 United States federal elections, will not have a significant adverse effect on our business, results of operations or financial condition. Unfavorable conditions can depress revenuesrevenue in any given market and prompt promotional or other actions that adversely affect our margins.

OnFurther, Februaryour 24, 2022, the geopolitical situation in Eastern Europe intensified with Russia's invasion of Ukraine, and the sanctions and other measures imposed in response to this conflict have increased global economic and political uncertainty. We own Recorded Music and Music Publishing businesses within Russia and, on March 10, 2022, the Company announced a suspension of thesebusiness operations which,may alongbe withadversely theimpacted by ongoing sanctions, limits our activities there. In addition, on October 7, 2023, Hamas led attacks against Israel. In response to the attacks, Israel formally declared war on Hamas and the armed conflict in IsraelUkraine and GazaRussia isand ongoing with additional conflicts throughoutin the Middle East. While our operations in Russia and Israelthe Middle East do not constitute a material portion of our business, a prolonged continuation, significant escalation or expansion of these conflicts’ current scope, increased or sustained economic disruption, sanctions or countersanctions, further devaluation of local currencies or increased cyber-related disruptions affecting these countries or adjacent territories could make it difficult to deliver our content, increase costs, and have an adverse effect on our results of operations in these areas.

The impact of climate change has caused, and may continue to cause, changes in weather patterns, resulting in more severe and more frequent weather-related disasters such as floods and heat waves. Failure to adapt the Company'sour operations and supply-chain to respond to climate change relatedchange-related extreme weather events, rising temperatures, and natural disasters could potentially result in lost revenue and/or higher costs due to operational disruptions, property damage, increased cooling costs, as well as financial losses, and/or penalties for insurance deductibles, increased insurance premiums or loss of access to insurance coverage for company facilities and regulatory compliance.

In addition, there is increasing scrutiny and evolving expectations from investors, our recording artists, regulators and other stakeholders of our climate-related practices and disclosures. Regulators, both in the United States and in foreign jurisdictions where we operate, have imposed and likely willmay continue to impose climate-related rules and guidance. The costs incurred to comply with these requirements, or our inability to meet these requirements, expectations, laws or regulations could result in adverse publicity, reputational harm, loss of business opportunities, or loss of investor confidence, which could adversely affect our business, results of operations and financial condition.

We expect to increase revenues and cash flow through a business strategy which requires us, among other things, to continue to maximize the value of our music, to significantly reduce costs to maximize flexibility and adjust to new realities of the market, to continue to act to contain digital piracy and streaming fraud and to diversify our revenue streams into growing segments of the music entertainment business by capitalizing on digital distribution and emerging technologies, entering into expanded-rights deals with recording artists and operating our artist services businesses.

Our business is to a large extent dependent on technological developments, including access to and selection and viability of new technologies, and is subject to potential pressure from competitors as a result of their technological developments. For example, our business may be further adversely affected by technological developments, including generative AI, that facilitate the piracy of music, by an inability to enforce our intellectual property rights in digital environments and by a failure to further develop successful business models applicable to a digital environment.

Mechanical royalties and performance royalties are two of the main sources of income to our Music Publishing business and mechanical royalties are a significantan expense to our Recorded Music business. In the United States, mechanical royalty rates are set every five years pursuant to an administrative process under the U.S. Copyright Act, unless rates are determined through industry negotiations, and performance royalty rates are determined by negotiations with performing rights societies, the largest of which, ASCAP and BMI, are subject to a consent decree rate-setting process if negotiations are unsuccessful. Outside the United States, mechanical and performance royalty rates are typically negotiated on an industry-wide basis. In most territories outside the United States, mechanical royalties are based on a percentage of wholesale prices for physical productproducts and based on a percentage of consumer prices for digital formats. The mechanical and performance royalty rates set pursuant to such processes may adversely affect us by limiting our ability to increase the profitability of our Music Publishing business. If the mechanical and performance royalty rates are set too highhigh, itthey may also adversely affect us by limiting our ability to increase the profitability of our Recorded Music business. In addition, rates our Recorded Music business receives in the United States for webcasting and satellite radio are set every five years by an administrative process under the U.S. Copyright ActAct, unless rates are determined through industry negotiations. It is important as revenue continues to shift from physical to diversified distribution channels that we receive fair value for all of the uses of our intellectual property as our business model now depends upon multiple revenue streams from multiple sources. The rates set for recorded music and music publishing income sources through collecting societies or legally prescribed rate-setting processes could have a material adverse impact on our business prospects.

Our business is significantly impacted by ongoing changes in the music entertainment industry. In response, we actively seek to adapt our cost structure to the changing economics of the industry. For example, we have shifted and continue to shift resources from our physical sales channels to efforts focused on digital channels, emerging technologies and other new revenue streams, and we continue our efforts to reduce overhead and manage our variable and fixed-cost structure. In fiscal year 2018, we completed the creation of our new center of excellence for U.S. financial shared services in Nashville, Tennessee, which combined our U.S. transactional financial functions in one location. To establish the new center, we moved some of our U.S. departments to Nashville. The Company started a multi-year implementation in August 2019 to upgrade our information technology and finance infrastructure, including related systems and processes. The upgrades are designed to enhance our financial records and the flow of financial information, improve data analysis and accelerate our financial reporting. The deployment of our new technology platform is currently being implemented using a wave-based approach. We have launched certain components onto our new technology platform in select territories and will continue to deploy the technology platform to additional territories over time. We expect to incur material costs in connection with this project, and there can be no assurance that we will be successful in upgrading our systems and processes effectively or on the timetable and at the costs contemplated, or that we will achieve the expected long-term cost savings.

In March 2023, we announced a restructuring plan, (the “2023 Restructuring Plan”) intended to drive the evolution of the Company and position the Company for long-term growth, primarily through headcount reductions. The 2023 Restructuring Plan is substantially complete as of September 30, 2024.2025. ThereThe wasCompany recognized a $1 million benefit associated with the 2023 Restructuring Plan recorded forin the fiscal yearyears ended September 30, 20242025 and September 30, 2024, primarily associated with a changechanges in estimateestimates for costs previously recorded. During the fiscal year ended September 30, 2023, the Company recognized restructuring charges of approximately $40 million for severance costs. Amounts for both periods were recorded in the Recorded Music segment.

For the fiscal year ended September 30, 2024, the Company recognized a2025, total of $178 million of restructuring and impairments in connection with the Strategic Restructuring Plan. Total severance and other termination costs recorded in connection with the 2024 Strategic Restructuring Plan were $121$6 million, of which,which $113$8 million of expense was recognized in our Recorded Music segment andwhile $8there was an $2 million wasbenefit recognized in Corporate.Corporate due to a change in estimate. Additionally, for the fiscal year ended September 30, 2024,2025, the Company recognized $57 million of non-cash restructuring and impairments which was comprised of $50$32 million of impairment losseslosses, on unamortized intangible assets and $7 millionall of non-cashwhich restructuring related to future equity awards to be granted, of which, $54 million waswere recognized in our Recorded Music segment and $3 million was recognized in Corporate.segment. Impairment charges recognized primarily relate to the winding downwrite-off of thecertain Company’slong-form O&Oaudiovisual Mediaproduction Properties.assets and impairments of operating lease right-of-use assets that are no longer in use.

We cannot be certain that we will not be required to implement further restructuring activities, make additions or other changes to our management or workforce based on other cost reduction measures or changes in the markets and industry in which we compete. Our inability to structure our operations based on evolving market conditions could impact our business. Restructuring activities can create unanticipated consequences and negative impacts on the business, and we cannot be sure that any ongoing or future restructuring efforts will be successful or generate expected cost savings.

Some performer groups, particularly in Europe,Europe and Latin America, are urging governments to intervene in the music streaming business in ways that could affect the terms agreed in our contracts with artists and songwriters. Governments,Additionally, governments, including statescertain state governments in the United States, have enacted or considered enacting legislation limiting the duration that an individual can be bound under a “personal services” contract, which could impair our ability to retain the services of key artists and songwriters. Government intervention in the music streaming business or the enactment of legislation affecting the terms of our contracts with our artists and songwriters could have an adverse effect on our business, financial condition and results of operations.

The success of our business depends on our ability to obtain, maintain, protect and enforce our trademarks, copyrights and other intellectual property rights, including name, image, likeness and voice rights. The measures that we take to obtain, maintain, protect and enforce our intellectual property rights, including, if necessary, litigation or proceedings before governmental authorities and administrative bodies, may be ineffective, expensive and time-consuming and, despite such measures, third parties may be able to obtain and use our intellectual property rights without our permission. Additionally, changes in law may be implemented, or changes in interpretation of such laws may occur, that may affect our ability to obtain, maintain, protect or enforce our intellectual property rights. Failure to obtain, maintain, protect or enforce our intellectual property rights could harm our brand or brand recognition and adversely affect our business, results of operations and financial condition.

Digital piracy continuesand streaming manipulation has and may continue to adversely impact our business.

If we fail to obtain appropriate relief through the judicial process or the complete enforcement of judicial decisions issued in our favor (or if judicial decisions are not in our favor), if we are unsuccessful in our efforts to lobby governments to enact and enforce strongerstrong legal penalties for copyright infringement and streaming manipulation or if we fail to develop effective means of protecting and enforcing our intellectual property (whether copyrights or other intellectual property rights suchin asthese patents, trademarks and trade secrets) or our music entertainment-related products or services,areas, our results of operations, financial position and prospects may suffer.

The U.S. government, including Congress, the Federal Trade Commission and the Department of Commerce, has announced that it is reviewing the need for even greater regulation forof the collection of information concerning consumer behavior on the Internet and mobile platforms, including regulationregulations aimed at restricting certain targeted advertising practices, the use of location data and disclosures of privacy practices in the online and mobile environments, including with respect to online and mobile applications. State governments are engaged in similar legislative and regulatory activities (including the California Consumer Privacy Act (“CCPA”), effective on January 1, 2020, the California Privacy Rights and Enforcement Act, effective January 1, 2023 (“CPRA”) and other analogous statutes more recently in other states). The effects of CCPA and these other recently adopted laws includesinclude an increased ability of individuals to control the use of their personal data; heightened transparency obligations,obligations; increased obligations of companies to maintain the security of data; and increased exposure to fines or damages for companies that do not accord individuals their specified privacy rights, that experience data breaches or that do not maintain cybersecurity at certain levels of quality.

The subsidiaries of the Company have no obligation to pay amounts due on any liabilities of the Company or to make funds available to the Company for such payments. The ability of our subsidiaries to pay dividends or make other distributions to the Company in the future will depend, among other things, on their earnings, tax considerations and covenants contained in any financing or other agreements. For instance, our Revolving Credit Facility includes covenants restricting the ability of Acquisition Corp. to pay dividends and make distributions. Although these covenants are currently suspended, they will be reinstated if Acquisition Corp.’s Total Indebtedness to EBITDA Ratio increases above 3.50:1.00 and the term loans do not achieve an investment grade rating. In addition, such payments may be limited as a result of claims against our subsidiaries by their creditors, including suppliers, vendors, lessors and employees.

These additional covenants are currently suspended. These covenants will be reinstated if Acquisition Corp.’s Total Indebtedness to EBITDA Ratio increases above 3.50:1.00 and the term loans do not achieve an investment grade rating. As of September 30, 2024,2025, Acquisition Corp.’s Total Indebtedness to EBITDA Ratio is 2.05x2.02x and the term loans achieved a corporate credit ratingratings of BBB- from both S&P and Fitch.Fitch and Ba1 from Moody’s.

Under our amended and restated certificate of incorporation, Access and its affiliates, and in some circumstances, any of our directors and officers who isare also a director, officer, employee, stockholder, member or partner of Access and its affiliates, have no obligation to offer us corporate opportunities.

The policies relating to corporate opportunities and transactions with Access and its affiliatesaffiliates, set forth in our amended and restated certificate of incorporation, address potential conflicts of interest between the Company, on the one hand, and Access, its affiliates and its directors, officers, employees, stockholders, members or partners who are directors or officers of the Company, on the other hand. Our amended and restated certificate of incorporation provides that we, on our behalf and on behalf of our subsidiaries, renounce any interest or expectancy in, or in being offered an opportunity to participate in, corporate opportunities, that are from time to time presented to Access or any of its affiliates, directors, officers, employees, stockholders, members or partners, even if the opportunity is one that we or our subsidiaries might reasonably be deemed to have pursued or had the ability or desire to pursue if granted the opportunity to do so. None of Access, its affiliates or any of its directors, officers, employees, stockholders, members or partners will generally be liable to us or any of our subsidiaries for breach of any fiduciary or other duty, as a director or otherwise, by reason of the fact that such person pursues, acquires or participates in such corporate opportunity, directs such corporate opportunity to another person or fails to present such corporate opportunity, or information regarding such corporate opportunity, to us or our subsidiaries unless, in the case of any such person who is a director or officer, such corporate opportunity is expressly offered to such director or officer in writing solely in his or her capacity as a director or officer. To the fullest extent permitted by law, by becoming a stockholder in our company, stockholders will be deemed to have notice of and consented to this provision of our amended and restated certificate of incorporation. Although these provisions are designed to resolve conflicts between us and Access and its affiliates fairly, conflicts may not be resolved in our favor or be resolved at all.

Our Class A Common Stock has one vote per share and our Class B Common Stock has 20 votes per share. Given the greater number of votes per share attributed to our Class B Common Stock, Access, who is our only Class B Common Stock stockholder, holds approximately 98% of the total combined voting power of our outstanding common stock. As a result of our dual class ownership structure, Access is able to exert a significant degree of influence or actual control over our management and affairs and over matters requiring stockholder approval, including the election of directors, mergers or acquisitions, asset sales and other significant corporate transactions. Further, Access owns shares representing approximately 72% of the economic interest of our outstanding common stock. Because of the 20-to-1 voting ratio between the Class B Common Stock and Class A Common Stock, the holders of Class B Common Stock collectively continue to control a majority of the total combined voting power of our outstanding common stock and therefore beare able to control all matters submitted to our stockholders for approval, so long as the outstanding shares of Class B Common Stock represent at least approximately 10% of the total number of outstanding shares of common stock. This concentrated control will limit the ability of our other stockholders to influence corporate matters for the foreseeable future. For example, Access will be able to control elections of directors, amendments of our certificate of incorporation or by-laws, increases to the number of shares available for issuance under our equity incentive plans or adoption of new equity incentive plans and approval of any merger or sale of assets for the foreseeable future. This control may materially adversely affect the market price of our Class A Common Stock.

The remaining shares of Class B Common Stock outstanding subsequent to the consummation of the IPO are restricted securities within the meaning of Rule 144, but will be eligible for resale subject, in certain cases, to applicable volume, manner of sale, holding period and other limitations of Rule 144 or pursuant to an exception from registration under Rule 701 under the Securities Act, or “Rule 701.” Access has the right to require us to register shares of common stock for resale in some circumstances pursuant to a registration rights agreement we entered into with Access. Access has in the past sold shares of common stock pursuant to Rule 144 and in registered offerings to the public,public andand, depending upon market prices for the Company’s common stockstock, may again do so from time to time.

We are a “controlled company” within the meaning of NASDAQ rules and, as a result, we qualify for, and intend to rely on, exemptions from certain corporate governance requirements.

We intend to rely on these exemptions. As a result, we are not required to have a majority of independent directors, our compensation and our nominating and corporate governance committees will not consist entirely of independent directors and such committees may not be subject to annual performance evaluations. Consequently, our stockholders will not have the same protections afforded to stockholders of companies that are subject to all of NASDAQ corporate governance rules and requirements. Our status as a controlled company could make our Class A Common Stock less attractive to some investors or otherwise harm our stock price.

You should read the following discussion of our financial condition and results of operations in conjunction with the consolidated financial statements and related notes thereto included elsewhere in this Annual Report. Discussion of FY 2023 items and year-over-year comparisons between FY 2024 and FY 2023 can be found in Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended September 30, 2024.

•Results of operations. This section provides an analysis of our results of operations for the fiscal years ended September 30, 2024, September 30, 20232025 and September 30, 2022.2024. This analysis is presented on both a consolidated and segment basis.

•Financial condition and liquidity. This section provides an analysis of our cash flows for the fiscal years ended September 30, 2024, September 30, 20232025 and September 30, 2022,2024, as well as a discussion of our financial condition and liquidity as of September 30, 2024.2025. The discussion of our financial condition and liquidity includes recent debt financings and a summary of the key debt covenant compliance measures under our debt agreements.

We evaluate our operating performance based on several factors, including ourAdjusted primaryOIBDA. financialWe measuredefine ofAdjusted OIBDA as operating income (loss) beforeadjusted to exclude the following items: (i) non-cash depreciation of tangible assetsassets, and(ii) non-cash amortization of intangible assetsassets, adjusted to exclude the impact of(iii) non-cash stock-based compensation and other related expensesexpenses, and certain items that affect comparability including but not limited to(iv) gains or losses on divestituresdivestitures, and(v) expenses related to restructuring and transformation initiativesinitiatives, (“Adjustedwhich OIBDA”).includes Forcosts furtherassociated details regarding the components ofwith the Company’s Adjustedfinancial OIBDAtransformation performance measure, see Note 18initiative to design and implement new information technology and upgrade our consolidatedfinance financialinfrastructure, statementsand included(vi) elsewhereexecutive herein.transition costs. Items excluded are not viewed to contribute directly to management’s evaluation of operating results. We consider Adjusted OIBDA to be an important indicator of the operational strengths and performance of our businesses. However, a limitation of the use of Adjusted OIBDA as a performance measure is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in our businesses. Accordingly, Adjusted OIBDA should be considered in addition to, not as a substitute for, operating income (loss), net income (loss) attributable to Warner Music Group Corp. and other measures of financial performance reported in accordance with United States generally accepted accounting principles (“U.S. GAAP”). In addition, our definition of Adjusted OIBDA may differ from similarly titled measures used by other companies. A reconciliation of consolidated Adjusted OIBDA to operating income (loss) and net income (loss) attributable to Warner Music Group Corp. is provided in our “Results of Operations.”

We are one of the world’s leading music entertainment companies. Our renowned family of iconic record labels, including Atlantic Records, Warner Records, Elektra Records and Parlophone Records, is home to many of the world’s most popular and influential recording artists. In addition, Warner Chappell Music, our global music publishing business, boasts an extraordinary catalog that includes timeless standards and contemporary hits, representing works by over 180,000190,000 songwriters and composers, with a global collection of more than one and a halftwo million musical compositions. We classify our business interests into two fundamental operations: Recorded Music and Music Publishing. A brief description of each of those operations is presented below.

In the United States, our Recorded Music business is conducted principally through our major record labels—Atlantic Records and Warner Records. In October 2018, we launched Elektra Music Group in the United States as a standalone label group, which comprises the Elektra, Fueled by Ramen and Roadrunner labels, and in December 2021, we acquired 300 Entertainment and subsequently launched 300 Elektra Entertainment, or 3EE, a frontline label group that brings together the multi-genre power of 300 Entertainment and Elektra Music Group. Our Recorded Music business also includes Rhino Entertainment, a division that specializes in marketing our recorded music catalog through compilations, reissuances of previously released music and video titles and releasing previously unreleased material from our vault. We also conduct our Recorded Music business through a collection of additional record labels including Asylum, Big Beat, Canvasback, East West, Erato, FFRR, Nonesuch, Parlophone, Reprise, Sire, Spinnin’ Records, TenThousand Projects, Warner Classics and Warner MusicRecords Nashville.

Outside the United States, our Recorded Music business is conducted in more than 70 countries through various subsidiaries, affiliates and non-affiliated licensees. Internationally, we engage in the same activities as in the United States: discovering and signing artists and distributing, selling, marketing and promoting their music. In most cases, we also market, promote, distribute and sell the music of those recording artists for whom our domestic record labels have international rights. In certain smaller markets, we license the right to distribute and sell our music to non-affiliated third-party record labels.

Our Recorded Music business’business’s operations include WMX, a next generation services division that connects artists with fans and amplifies brands in creative, immersive, and engaging ways. This division includes a rebranded WEA commercial services and marketing network (formerly Warner-Elektra-Atlantic Corporation, or WEA Corp.), which markets, distributes and sells music and video products to retailers and wholesale distributors.distributors, and enhances relationships with fans by creating artist merchandise, which we operate, market and sell across various channels, including e-commerce, retail and through touring. Our business’business’s distribution operations also include Alternative Distribution Alliance (“ADA”), which markets, distributes and sells the products of independent labels to retail and wholesale distributors; and various distribution centers and ventures operated internationally.

The operations of our Music Publishing business are conducted principally through Warner Chappell Music, our global music publishing company headquartered in Los Angeles, with operations in over 70 countries through various subsidiaries, affiliates, and non-affiliated licensees and sub-publishers. We own or control rights to more than one and a halftwo million musical compositions, including numerous pop hits, American standards, folk songs and motion picture and theatrical compositions. Assembled over decades, our award-winning catalog includes over 180,000190,000 songwriters and composers and a diverse range of genres including pop, rock, jazz, classical, country, R&B, hip-hop, rap, reggae, Latin, folk, blues, symphonic, soul, Broadway, electronic, alternative and gospel. Warner Chappell Music also administers the music and soundtracks of several third-party television and film producers and studios. We have an extensive production music catalog collectively branded as Warner Chappell Production Music.

In September 2023, the Company terminated its distribution agreement with BMG as BMG began to bring digital distribution in-house and license directly with digital service partners in fiscal 2024 while also licensing its physical distribution with a different provider (the “BMG Termination”). ADA, which is part of our Recorded Music business, had previously been distributing BMG’s recorded music catalog and revenues are reported within our Recorded Music segment. The shift to digital direct deals by BMG will bewas a phased in-sourcing of distribution,distribution whichduring the current fiscal year and we expectrolled tooff beBMG, largelyincluding completedits byphysical distribution, at the end of the current fiscal 2025.year.

Fiscal Year Ended September 30, 20242025 Compared with Fiscal Year Ended September 30, 2023 and Fiscal Year Ended September 30, 20222024

Total revenues increased by $389$281 million, or 6%,4%, to $6,707 million for the fiscal year ended September 30, 2025 from $6,426 million for the fiscal year ended September 30, 20242024. Revenue growth was favorably impacted by the settlement of certain infringement cases (the “Copyright Settlement”) which resulted in $16 million higher Recorded Music revenue and $4 million of incremental Recorded Music streaming revenue recognized from $6,037a millionDigital Service Provider (“DSP”) for performance obligations satisfied in previous periods (the fiscal“DSP yearTrue-Up ended September 30, 2023.Payments”). The currentprior year included $68$75 million of Recorded Music licensing revenue from a licensing agreement extension for an artist’s catalog (the “Licensing Extension”)., $43 million of incremental Recorded Music streaming revenue recognized from the DSP True-Up Payments, and $30 million of Recorded Music streaming revenue from a deal with one of the Company’s digital partners (the “Digital License Renewal”), which resulted in upfront revenue recognition for the fiscal year ended September 30, 2024. In addition, revenue growth was unfavorably impacted by the BMG TerminationTermination, which resulted in $86$81 million of lower Recorded Music digital revenue, partially offset by $16 million incremental Recorded Music streaming revenue resulting from the Digital License Renewal in the fiscal year ended September 30, 2024 compared to the prior year.year, Musicof Publishingwhich digital$34 million was in streaming revenue growthand $47 million was also impacted by a $24 million benefit in thephysical prior year due to a ruling by the Copyright Royalty Board in Phonorecords III upholding higher percentage of revenue U.S. mechanical royalty rates (the “CRB Rate Benefit”).revenue. Adjusted for these items, total revenues increased by 7%,8%, which includes a decrease in revenue related to the divestiture of the owned and operated media businesses in connection with the Strategic Restructuring Plan, and includes $4$7 million of unfavorablefavorable currency exchange fluctuations. Prior to intersegment eliminations, Recorded Music and Music Publishing revenues represented 81% and 19% of total revenues for each of the fiscal yearyears ended September 30, 2024, respectively,2025 and 82%September 30, 2024, respectively. Prior to intersegment eliminations, U.S. and 18%international revenues represented 43% and 57% of total revenues for the fiscal year ended September 30, 2023,2025, respectively. PriorIn tothe intersegmentprior eliminations,year, U.S. and international revenues represented 45% and 55% of total revenues for the fiscal year ended September 30, 2024, respectively. In the prior year, U.S. and international revenues represented 46% and 54% of total revenues prior to intersegment eliminations, respectively.

Total digital revenues after intersegment eliminations increased by $123$113 million, or 3%, to $3,989$4,393 million for the fiscal year ended September 30, 20232025 from $3,866$4,280 million for the fiscal year ended September 30, 2022, which includes $38 million in downloads and other digital revenue from the Copyright Settlement.2024. Total streaming revenue increased 5%by 2% driven by growth across Recorded Music and Music Publishing.Publishing, Theincluding growth in Musicsubscription Publishingstreaming includesrevenue. Total digital revenues represented 65% of consolidated revenues for the impactfiscal inyear ended September 30, 2025, from 67% for the year and the priorfiscal year ofended $24September million30, and $20 million, respectively, due to the CRB Rate Benefit.2024. Prior to intersegment eliminations, total digital revenues for the fiscal year ended September 30, 20232025 were composed of U.S. revenues of $1,993$2,048 million and international revenues of $1,998$2,346 million, or 50%47% and 53% of total digital revenuesrevenues, for each of U.S. and international revenues.respectively. Prior to intersegment eliminations, total digital revenues for the fiscal year ended September 30, 20222024 were composed of U.S. revenues of $1,983$2,039 million and international revenues of $1,885$2,243 million, or 51%48% and 49%52% of total digital revenues, respectively.

Recorded Music revenues decreasedincreased by $11$185 millionmillion, or 4%, to $4,955$5,408 million for the fiscal year ended September 30, 20232025 from $4,966$5,223 million for the fiscal year ended September 30, 2022.2024. The decreaseincrease includes $99$6 million of unfavorablefavorable currency exchange fluctuations. U.S. Recorded Music revenues were $2,184$2,181 million and $2,231$2,210 million, or 44%40% and 45%42% of consolidated Recorded Music revenues, for the fiscal years ended September 30, 20232025 and September 30, 2022,2024, respectively. International Recorded Music revenues were $2,771$3,227 million and $2,735$3,013 million, or 56%60% and 55%58% of consolidated Recorded Music revenues, for the fiscal years ended September 30, 20232025 and September 30, 2022,2024, respectively.

Music Publishing revenues increased by $130$96 million, or 14%,8%, to $1,088$1,306 million for the fiscal year ended September 30, 20232025 from $958$1,210 million for the fiscal year ended September 30, 2022.2024. U.S. Music Publishing revenues were $582$693 million and $513$660 million, or 53% and 54%55% of consolidated Music Publishing revenues, for the fiscal yearyears ended September 30, 20232025 and September 30, 2022,2024, respectively. International Music Publishing revenues were $506$613 million and $445$550 million, or 47% and 46%45% of Music Publishing revenues, for the fiscal yearyears ended September 30, 20232025 and September 30, 2022,2024, respectively.

U.S. revenue increasedremained by $104 million, or 4%, to $2,870 millionconstant for the fiscal year ended September 30, 20242025 compared to the fiscal year ended September 30, 2024. U.S. Recorded Music revenue decreased by $29 million, or 1%, primarily driven by a decrease in licensing revenue of $70 million largely attributable to $75 million from $2,766the millionLicensing Extension in the prior year, partially offset by higher U.S. Recorded Music artist services and expanded-rights revenue driven by the impact of our acquisitions of $38 million. U.S. Recorded Music digital revenue remained constant for the fiscal year ended September 30, 2023. U.S. Recorded Music revenue increased by $26 million, or 1%, primarily driven by growth in licensing revenue of $92 million due to $68 million from the Licensing Extension. U.S. Recorded Music growth was also attributable to higher physical revenue, partially offset by lower U.S. Recorded Music digital and artist services and expanded-rights revenues. U.S Recorded Music physical revenue increased by $1 million2025 compared to the prior year.year U.S.driven Recordedby Musican increase in download and other digital revenue decreasedof by $17$15 million, oroffset 1%, which includesby a decrease in U.S. Recorded Music streaming revenue of $4$12 million,million. andThe a decreaseincrease in download and other digital revenue is largely due to the impact of $13the million.Copyright Settlement of $16 million in the current year. The decrease in U.S. Recorded Music digitalstreaming revenue is primarily due to the impact of the DSP True-Up Payments of $23 million and the BMG Termination of $48$23 million.million U.S.in Recordedthe Musicprior artistyear. servicesAdjusted andfor expanded-rightsthe impact of these events, streaming revenue decreased by $50 millionincreased due to lowercontinued merchandising revenue of $15 million and a decreasegrowth in revenuesubscription related to the exit of the Company’s O&O Media Properties announced as part of the Strategic Restructuring Plan.services. U.S. Music Publishing revenue increased by $78$33 million, or 13%,5%, to $693 million for the fiscal year ended September 30, 2025 from $660 million for the fiscal year ended September 30, 2024 from $582 million for the fiscal year ended September 30, 2023.2024. U.S. Music Publishing digital revenue increased by $63$6 million, or 16%,1%, attributable to continued growth in streaming revenue.revenue, U.S. Music Publishing streaming revenuewhich increased by $62$6 million, or 16%, reflecting continued market growth and timing of payments, partially offset by the CRB Rate Benefit of $24 million in the prior year.1%. U.S. Music Publishing synchronization revenue increased by $3$21 million, primarily driven by an increase in other copyright infringement settlements, higher commercialsettlements and videothe gameacquisition licensingof activity,Tempo partiallyMusic offsetof by$8 lower film and television licensing activity.million. U.S. Music Publishing performance revenue increased by $11$6 million, or 18%8% due to the timing of payments from collection societies.payments. U.S. Music Publishing mechanical revenue remainedincreased flatby to$2 priormillion, year.or 17% driven by the timing of distributions.

International revenue increased by $286$277 million, or 9%,8%, to $3,840 million for the fiscal year ended September 30, 2025 from $3,563 million for the fiscal year ended September 30, 2024 from $3,277 million for the fiscal year ended September 30, 2023.2024. Excluding the unfavorablefavorable impact of foreign currency exchange rates of $5 million, international revenue increased by $291$272 million, or 9%.8%. International Recorded Music revenue increased by $242$214 million, or 9%,7%, primarily due to increases in digital revenue of $214$72 million, licensing revenue of $27 million, and physical revenue of $11 million, partially offset by lower artist services and expanded-rights revenue of $10$112 million, licensing revenue of $21 million, and physical revenue of $9 million. International Recorded Music digital revenue increased largely due to an increase in streaming revenue of $225$73 million, or 13%.4%, Streaming revenue growthwhich includes the impact of the DSP True-Up Payments of $4 million in the current year, as well as the Digital Licensing Renewal of $16$30 million, partially offset by the impactDSP True-Up Payments of $20 million and the BMG Termination of $38$11 million andin anthe unfavorableprior year. Adjusted for the impact of foreignthese currencyevents, exchangestreaming ratesrevenue ofincreased $14due million.to continued growth in streaming services. Download and other digital revenues decreased by $11$1 million due to the continued shift to streaming services. International Recorded Music artist services and expanded-rights revenue increased by $112 million primarily due to higher concert promotion revenue of $49 million and higher merchandising revenue of $39 million, which includes a favorable impact from the Company’s partnership with Oasis, and a favorable impact of foreign currency exchange rates of $4 million. International Recorded Music licensing revenue increased by $27$21 million, whichdriven includesby thehigher impactlicensing ofactivity copyright infringement settlements, growthprimarily in broadcast feesEurope and other licensing revenue,Japan and the favorable impact of foreign currency exchange rates of $3 million. International Recorded Music physical revenue increased by $11$9 million, driven by strength of new releases primarily in Japan,Asia, and a favorable impact of foreign currency exchange rates of $1 million. International Recorded Music artist services and expanded-rights revenue decreased by $10 million primarily due to lower direct-to-consumer merchandising revenue, partially offset by higher concert promotion revenue primarily in Japan and France, and a favorable impact of foreign currency exchange rates of $3$5 million. International Music Publishing revenue increased by $44$63 million, or 9%,11%, to $613 million for the fiscal year ended September 30, 2025, from $550 million for the fiscal year ended September 30, 2024, from $506 million for the fiscal year ended September 30, 2023.2024. This was primarily driven by increases in digital revenue of $31 million, performance revenue of $14$24 million, and synchronization revenue of $5$1 million, partially offset by lower mechanical revenue of $5$3 million and other publishing revenue of $1$4 million. International Music Publishing streaming revenue increased by $34$33 million, or 13%,11%, whichreflecting includescontinued amarket favorable impact of foreign currency exchange rates of $3 million, partially offset by a revenue true up of $9 million in the prior year.growth. Performance revenue increased by $14$24 million or 13%19% duedriven toby strong artisthigher touring activityrevenue primarily in Europe and Latin America. International Music Publishing synchronization revenue increased by $5 million due to higher commercial licensing activity primarily in Brazil, France and Germany. International Music Publishing mechanical revenue decreased by $5 million largely due to lower physical sales and timing of distributions.

ProductArtist and repertoire costs increased by $59$175 million, to $1,179$2,342 million for the fiscal year ended September 30, 20232025 from $1,120$2,167 million for the fiscal year ended September 30, 2022.2024. ProductArtist and repertoire costs as a percentage of revenue increased to 20%35% for the fiscal year ended September 30, 20232025, from 19%34% for the fiscal year ended September 30, 20222024, primarily due to revenue mix from higher third-party distributed label revenue.mix.

(1)Includes depreciation expense of $103 million, $87$118 million and $76$103 million for the fiscal years ended September 30, 2024, September 30, 20232025 and September 30, 2022,2024, respectively.

You should read the following discussion of our results of operations and financial condition with the unaudited interim financial statements included elsewhere in this Quarterly Report on Form 10-Q for the fiscal quarter ended MarchJune 31,30, 2026 (the “Quarterly Report”).

•Results of operations. This section provides an analysis of our results of operations for the three and sixnine months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025. This analysis is presented on both a consolidated and segment basis.

•Financial condition and liquidity. This section provides an analysis of our cash flows for the sixnine months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025, as well as a discussion of our financial condition and liquidity as of MarchJune 31,30, 2026. The discussion of our financial condition and liquidity includes recent debt financings and a summary of the key debt covenant compliance measures under our debt agreements.

We evaluate our operating performance based on several factors, including Adjusted OIBDA. We define Adjusted OIBDA as operating income (loss) adjusted to exclude the following items: (i) non-cash depreciation of tangible assets, (ii) non-cash amortization of intangible assets, (iii) non-cash stock-based compensation and other related expenses, (iv) gains or losses on divestitures, (v) expenses related to restructuring and transformation initiatives, which includesinclude costs associated with the Company’s financial transformation initiative to design and implement new information technology and upgrade our finance infrastructure, and (vi) executive transition costs. Items excluded are not viewed to contribute directly to management’s evaluation of operating results. We consider Adjusted OIBDA to be an important indicator of the operational strengths and performance of our businesses. However, a limitation of the use of Adjusted OIBDA as a performance measure is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in our businesses. Accordingly, Adjusted OIBDA should be considered in addition to, not as a substitute for, operating income (loss), net income (loss) attributable to Warner Music Group Corp. and other measures of financial performance reported in accordance with United States generally accepted accounting principles (“U.S. GAAP”). In addition, our definition of Adjusted OIBDA may differ from similarly titled measures used by other companies. A reconciliation of consolidated Adjusted OIBDA to operating income (loss) and net income (loss) attributable to Warner Music Group Corp. is provided in our “Results of Operations.”

For the three months ended MarchJune 31,30, 2026, total severance and other termination costs recorded in connection with the 2025 Strategic Restructuring Plan were $5$4 million, all of which $3 million of expense was recognized in our Recorded Music segment.segment and $1 million was recognized in Corporate. For the sixnine months ended MarchJune 31,30, 2026, total severance and other termination costs recorded in connection with the 2025 Strategic Restructuring Plan were $30$34 million, of which $18$21 million of expense was recognized in our Recorded Music segment and $12$13 million was recognized in Corporate. As of MarchJune 31,30, 2026, total cumulative restructuring and impairment charges recognized in connection with the 2025 Strategic Restructuring Plan were $148$152 million with $98$100 million of costs recognized in our Recorded Music segment, $5 million of costs recognized in our Music Publishing segment, and $45$47 million recognized in Corporate. These costs are composed of $120$124 million of severance costs and $28 million of non-cash impairment charges primarily related to impairments of operating lease right-of-use assets that are no longer in use and royalty advances based on operational changes in the intended use of these assets. There were no charges recognized under the 2025 Restructuring Plan for the three and nine months ended June 30, 2025.

The cost savings under the 2024 Strategic Restructuring Plan will be achieved through a combination of the disposal or winding down of non-core operations, continuing to manage overhead, sharpening focus, expanding shared services, and implementing previously disclosed expected operational efficiencies made possible by the Company’s financial transformation initiative. The Company allocated a majority of the costscost savings to increase investment in the Company’s core Recorded Music and Music Publishing businesses, new skill sets and tech capabilities.

As of MarchJune 31,30, 2026, total cumulative restructuring and impairment charges recognized in connection with the 2024 Strategic Restructuring Plan were $215 million with $206 million of costs recognized in our Recorded Music segment and $9 million recognized in Corporate. These costs are composed of $133 million of severance and other contract termination costs, of which $7 million was non-cash, and $82 million of non-cash impairment charges. There was a $1 million benefit recognized for the three and sixnine months ended MarchJune 31,30, 2026 related to the 2024 Strategic Restructuring Plan.

For the three and sixnine months ended MarchJune 31,30, 2026, the Company recognized an impairment charge of $2$3 million and $11$14 million, respectively, within the Recorded Music segment for long-lived assets associated with EMP, which was the result of remeasuring the carrying value to fair value as it has been classified as held for sale since September 30, 2025. For the three and nine months ended June 30, 2025, prior to its classification as held for sale, the Company recognized an impairment charge of $70 million within the Recorded Music segment for long-lived assets associated with EMP.

Three Months Ended MarchJune 31,30, 2026 Compared with Three Months Ended MarchJune 31,30, 2025

Total revenues increased by $248$175 million, or 17%,10%, to $1,732$1,864 million for the three months ended MarchJune 31,30, 2026 from $1,484$1,689 million for the three months ended MarchJune 31,30, 2025. Revenue growth was impacted by a digital revenue from the settlement of $11certain copyright infringement cases of $16 million in the prior-year quarter (the “DSP True-Up andCopyright Settlement Payments”). Recorded Music revenue growth was also unfavorably impacted by the BMG Termination, which resulted in $6$10 million less Recorded Music digital revenue compared to the prior-year quarter. Adjusted for these items, total revenues increased by $265$201 million, or 18%,12%, which includes $61$16 million of favorable currency exchange fluctuations. Prior to intersegment eliminations, Recorded Music and Music Publishing revenues represented 80% and 20% of total revenue for the three months ended March 31, 2026, respectively, and 79% and 21%each of total revenue for the three months ended MarchJune 31,30, 2025,2026 respectively.and June 30, 2025. Prior to intersegment eliminations, U.S. and international revenues represented 42% and 58% of total revenues for the three months ended June 30, 2026 and 43% and 57% of total revenues for the three months ended MarchJune 31, 2026 and 44% and 56% of total revenues for the three months ended March 31,30, 2025.

Total digital revenues after intersegment eliminations increased by $172$119 million, or 17%,11%, to $1,199$1,251 million for the three months ended MarchJune 31,30, 2026 from $1,027$1,132 million for the three months ended MarchJune 31,30, 2025. Total streaming revenue increased by $173$135 million, driven by growth in Recorded Music and Music Publishing. Total streaming revenue includes $38$15 million of favorable currency exchange fluctuations. Prior to intersegment eliminations, total digital revenues for the three months ended MarchJune 31,30, 2026 were composed of U.S. revenues of $537$556 million and international revenues of $662$695 million, or 45%44% and 55%56% of total digital revenues, respectively. Prior to intersegment eliminations, total digital revenues for the three months ended MarchJune 31,30, 2025 were composed of U.S. revenues of $490$535 million and international revenues of $539$598 million, or 48%47% and 52%53% of total digital revenues, respectively.

Recorded Music revenues increased by $205$134 million, or 17%,10%, to $1,380$1,488 million for the three months ended MarchJune 31,30, 2026 from $1,175$1,354 million for the three months ended MarchJune 31,30, 2025. The increase includes $50$13 million of favorable currency exchange fluctuations. U.S. Recorded Music revenues were $565$587 million and $497$536 million, or 41%39% and 42%40% of consolidated Recorded Music revenues for each of the three months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025, respectively. International Recorded Music revenues were $815$901 million and $678$818 million, or 59%61% and 58%,60%, of consolidated Recorded Music revenues for each of the three months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025, respectively.

The overall increase in Recorded Music revenue was driven by increases in digital, artist services and expanded-rights and physical revenues, partially offset by a decrease in licensing revenue.revenues. Digital revenue increased by $134$87 million, or 16%,9%, which includes a favorable impact of currency exchange fluctuations of $34$14 million, primarily due to growth in streaming revenue as a result of the continued growth in streaming services, including growth in subscription and ad-supported revenues. Adjusted for the impacts of the Copyright Settlement and BMG Termination in the prior-year quarter, digital revenue increased $113 million, or 13%. Revenue from streaming services increased by $136$106 million, or 16%,12%, to $961$1,001 million for the three months ended MarchJune 31,30, 2026 from $825$895 million for the three months ended MarchJune 31,30, 2025. Adjusted for the impactsimpact of the DSP True-Up and Settlement Payments and the BMG Termination in the prior-year quarter, Recorded Music streaming revenue increased $153$116 million, or 19%, to $961 million for the three months ended March 31, 2026 from $808 million for the three months ended March 31, 2025.13%. Download and other digital revenues decreased by $2$19 million, or 13%,56%, to $14$15 million for the three months ended MarchJune 31,30, 2026 from $16$34 million for the three months ended MarchJune 31,30, 2025.2025, primarily due to the $16 million impact of the Copyright Settlement in the prior-year quarter. Artist services and expanded-rights revenue increased by $47$29 million, or 40%,15%, due to higher concert promotion revenue primarily in France,Japan and higher merchandising revenue, and a favorable impact of foreign currency exchange rates of $6 million.revenue. Physical revenue increased by $25$18 million, or 22%,15%, primarily driven by strong releases in the quarter as well as catalog and carryover success, andpartially aoffset favorableby an unfavorable impact of foreign currency exchange rates of $4$2 million. Licensing revenue decreasedremained byconstant $1for million,each orof 1%.the three months ended June 30, 2026 and June 30, 2025. Top sellers in the quarter included Bruno Mars, AlexDon Warren,Toliver, sombr, EdAlex SheeranWarren and Melanie Martinez.Madonna.

Music Publishing revenues increased by $43$41 million, or 14%,12%, to $353$377 million for the three months ended MarchJune 31,30, 2026 from $310$336 million for the three months ended MarchJune 31,30, 2025. U.S. Music Publishing revenues were $178$194 million and $161$186 million, or 50%51% and 52%55% of consolidated Music Publishing revenues, for the three months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025, respectively. International Music Publishing revenues were $175$183 million and $149$150 million, or 50%49% and 48%45% of consolidated Music Publishing revenues, for the three months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025, respectively.

The overall increase in Music Publishing revenue was driven by increases in digital, performance,synchronization, synchronization,mechanical, and mechanicalperformance revenues. Digital revenue increased by $36$31 million, or 19%,15%, driven by an increase in streaming revenue. Revenue from streaming services grew by $37$29 million, or 20%,14%, to $222$231 million for the three months ended MarchJune 31,30, 2026 from $185$202 million for the three months ended MarchJune 31,30, 2025, driven by continued market growth and the impact of new deals and renewals, continued market growth and a favorable impact of foreign currency exchange rates of $6 million. Performance revenue increased by $5 million, or 9%, driven by growth from touring and live events primarily in Europe, and a favorable impact of foreign currency exchange rates of $3 million.renewals. Synchronization revenue increased by $1$6 million, or 2%,11%, attributable to an increase in other copyright infringement settlements of approximately $6 million, and a favorable impact of foreign currency exchange rates of $2 million. Mechanical revenue increased by $1$3 million, or 6%,19%, driven by the timing of distributions. Performance revenue increased by $1 million, or 2%, which includes a favorable impact of foreign currency exchange rates of $2 million.

U.S. revenue increased by $85$59 million, or 13%,8%, to $743$781 million for the three months ended MarchJune 31,30, 2026 from $658$722 million for the three months ended MarchJune 31,30, 2025. U.S. Recorded Music revenue increased by $68$51 million, or 14%.10%. U.S. Recorded Music digital revenue increased by $29$14 million, or 8%,3%, driven by higher streaming revenue of $31 million, or 8%, includingpartially offset by the impactimpacts of the Copyright Settlement of $16 million and the BMG Termination of $7 million in the prior-year quarter. U.S. Recorded Music licensing revenue increased by $2$9 million, or 5%,26%, driven by higher copyright infringement settlements.settlements of $5 million. U.S. Recorded Music physical revenue increased $23$21 million, or 43%,45%, driven by strong releases in the quarter as well as catalog and carryover success. U.S. Recorded Music artist services and expanded-rights revenues increased by $14$7 million, or 61%,16%, driven by higher merchandising revenue.revenue of approximately $12 million. U.S. Music Publishing revenue increased by $17$8 million, or 11%,4%, to $178$194 million for the three months ended MarchJune 31,30, 2026 from $161$186 million for the three months ended MarchJune 31,30, 2025. U.S. Music Publishing digital revenue increased by $18$7 million, or 17%,6%, attributable to higher streaming revenue of $19$7 million, or 18%.6%. U.S. Music Publishing synchronization revenue increased by $3 million, or 10%,8%, driven by timing of certain copyright infringement settlements and the impact of acquisitions.settlements. U.S. Music Publishing performance decreased by $3$2 million, or 16%,10%, and mechanical revenue decreasedincreased by $1 millionmillion, drivenor by the timing of distributions.33%.

International revenue increased by $163$116 million, or 20%,12%, to $990$1,084 million for the three months ended MarchJune 31,30, 2026 from $827$968 million for the three months ended MarchJune 31,30, 2025. Excluding the favorable impact of foreign currency exchange rates of $62$17 million, Internationalinternational revenue increased by $101$99 million, or 11%.10%. International Recorded Music revenue increased by $137$83 million, which includes a favorable impact of foreign currency exchange rates of $50$13 million, driven by growth across digital,digital and artist services and expanded rights and physical revenues,rights, partially offset by a decreasedecreases in licensing revenue.and physical revenues. International Recorded Music digital revenue increased by $105$73 million, attributable to higher streaming revenue of $105$75 million, or 23%, which includes the impacts of the DSP True-Up and Settlement Payments and the BMG Termination in the prior-year quarter,15%, and a favorable impact of foreign currency exchange rates of $32$14 million.million, partially offset by the impact of the BMG Termination of $3 million in the prior-year quarter. International Recorded Music artist services and expanded-rights revenue increased by $33$22 million, or 35%,14%, driven by higher concert promotion revenue primarily in France, and the favorable impact of foreign currency exchange rates of $6 million. International Recorded Music physical revenue increased by $2 million driven by the favorable impact of foreign currency exchange rates of $4 million.Japan. These increases were partially offset by a decrease in licensing revenue of $3$9 million, or 4%.12%, and a decrease in physical revenue of $3 million driven by the unfavorable impact of foreign currency exchange rates of $2 million. International Music Publishing revenue increased by $26$33 million, or 17%,22%, to $175$183 million for the three months ended MarchJune 31,30, 2026 from $149$150 million for the three months ended MarchJune 31,30, 2025. International Music Publishing revenue growth was driven by increases in digital revenue of $18$24 million due to growth in streaming, performance revenuestreaming of $8$22 million due to growth from concerts and live events primarily in Europe, andmillion, mechanical revenue of $2 million driven by the timing of distributions.distributions, Synchronizationperformance revenue decreasedof by $2$3 million, or 10%.8%, and synchronization revenue of $3 million, or 18%.

Artist and repertoire costs increased by $86$69 million, to $617$653 million for the three months ended MarchJune 31,30, 2026 from $531$584 million for the three months ended MarchJune 31,30, 2025. Artist and repertoire costs as a percentage of revenue remained constant at 36%35% for each of the three months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025.

Product costs increased by $53$28 million, to $313$357 million for the three months ended MarchJune 31,30, 2026 from $260$329 million for the three months ended MarchJune 31,30, 2025. Product costs as a percentage of revenue remained constant at 18%19% for each of the three months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025.

(1)Includes depreciation expense of $31$33 million and $28$29 million for the three months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025, respectively.

Total selling, general and administrative expense increaseddecreased by $10$7 million, to $460$464 million for the three months ended MarchJune 31,30, 2026 from $450$471 million for the three months ended MarchJune 31,30, 2025, primarily driven by cost savings from the Company’s restructuring plans, a portion of which has been reinvested into the Company’s business, partially offset by unfavorable movements in foreign currency exchange rates of $12$3 million. Expressed as a percentage of revenue, total selling, general and administrative expense decreased to 27%25% for the three months ended MarchJune 31,30, 2026 from 30%28% for the three months ended MarchJune 31,30, 2025 due to the factors noted below.

General and administrative expense decreased by $13$18 million to $263$264 million for the three months ended MarchJune 31,30, 2026 from $276$282 million for the three months ended MarchJune 31,30, 2025. The decrease in general and administrative expense was primarily driven by cost savings from the Company’s restructuring plans, of which a portion has been reinvested in the Company’s business, partially offset by higher depreciation expense of $3$4 million due to the core financials component of our new technology platform being placed into service. Expressed as a percentage of revenue, general and administrative expense decreased to 15%14% for the three months ended MarchJune 31,30, 2026 compared to 19%17% for the three months ended MarchJune 31,30, 2025.

Selling and marketing expense increaseddecreased by $10$3 million, or 6%,2%, to $164 million for the three months ended June 30, 2026 from $167 million for the three months ended MarchJune 31, 2026 from $157 million for the three months ended March 31,30, 2025. Expressed as a percentage of revenue, selling and marketing expense decreased to 9% for the three months ended June 30, 2026 from 10% for the three months ended MarchJune 31, 2026 from 11% for the three months ended March 31,30, 2025 due to savings from the Company’s restructuring plans, of which a portion has been reinvested in the Company’s business, partially offset by higher marketing and advertising spend for key releases.

Distribution expense increased by $13$14 million to $30$36 million for the three months ended MarchJune 31,30, 2026 from $17$22 million for the three months ended MarchJune 31,30, 2025. Expressed as a percentage of revenue, distribution expense increased to 2% for the three months ended MarchJune 31,30, 2026 compared to 1% for the three months ended MarchJune 31,30, 2025, driven by higher physical and merchandising revenues.

Adjusted OIBDA increased by $94$60 million to $397$433 million for the three months ended MarchJune 31,30, 2026 from $303$373 million for the three months ended MarchJune 31,30, 2025, driven by thestrong impactoperating of the DSP True-Up and Settlement Payments of $7 million and the BMG Termination of $1 million in the prior-year quarter, as well asperformance, revenue mix and savings from the Company’s restructuring plans, a portion of which has been reinvested in the Company’s business, partially offset by the impact of the Copyright Settlement of $9 million and the BMG Termination of $1 million in the prior-year quarter and unfavorable movements in foreign currency exchange rates of approximately $13$16 million. Expressed as a percentage of total revenue, Adjusted OIBDA margin increased to 23% for the three months ended MarchJune 31,30, 2026 from 20%22% for the three months ended MarchJune 31,30, 2025.

OurThere were no non-cash stock-based compensation and other related costs decreasedfor bythe $2three millionmonths ended June 30, 2026 primarily due to $12the favorable impact of forfeitures. Non-cash stock-based compensation and other related costs were $16 million for the three months ended MarchJune 31,30, 20262025 fromwhich $14included $5 million forof costs related to the threedeparture monthsof endedour Marchformer 31, 2025.CFO.

Our transformation initiative costs, which include costs associated with our finance transformation, decreased by $6$9 million to $12$10 million for the three months ended MarchJune 31,30, 2026 from $18$19 million for the three months ended MarchJune 31,30, 2025.2025 primarily driven by lower project costs associated with our finance transformation.

Our restructuring and impairment charges decreased to $6$7 million for the three months ended MarchJune 31,30, 2026 from $13$69 million for the three months ended MarchJune 31,30, 2025. The three months ended MarchJune 31,30, 2026 includes an additional impairment charge of $2$3 million for long-lived assets associated with EMP, which was the result of remeasuring the carrying value to fair value as it has been classified as held for sale since September 30, 2025. The three months ended June 30, 2025 includes the initial impairment charge of $70 million for long-lived assets associated with EMP.

Our depreciation expense increased by $3$4 million to $31$33 million for the three months ended MarchJune 31,30, 2026 from $28$29 million for the three months ended MarchJune 31,30, 2025. The increase is primarily driven by the core financials and global revenue solution components of our new technology platform being placed into service.

Our amortization expense increased by $10$11 million, to $72$78 million for the three months ended MarchJune 31,30, 2026 from $62$67 million for the three months ended MarchJune 31,30, 2025. The increase is driven by incremental amortization related to acquisitions of music-related assets, partially offset by a decrease of approximately $1 million from the classification of EMP intangible assets, which have been classifiedassets as held for sale.

Our operating income increased by $96$136 million to $264$305 million for the three months ended MarchJune 31,30, 2026 from $168$169 million for the three months ended MarchJune 31,30, 2025, primarily due to the factors impacting Adjusted OIBDA described above and a decrease in restructuring and impairment charges of $7$62 million. The increase in operating income was partially offset by higher amortization expenses of $10$11 million for the three months ended MarchJune 31,30, 2026.

Our interest expense, net, increased to $41$49 million for the three months ended MarchJune 31,30, 2026 from $39$43 million for the three months ended MarchJune 31,30, 2025 primarily due to interest expense on incremental debt related to the Tempo Asset-Based Notes acquired in connection with the acquisition of Tempoapproximately Music$7 in the prior year as well as incremental debtmillion related to the Beethoven Credit Agreement in the quarter,Agreement, partially offset by lower interest rates on variable rate debt in the quarter.

Other income for the three months ended MarchJune 31,30, 2026 primarily includes foreign currency gains on our Euro-denominated debt of $22$3 million andmillion, a currency exchange gainloss on intercompany loans of $12$1 million, and a realized and unrealized loss on hedging activity of $1 million. This compares to foreign currency losses on our Euro-denominated debt of $34$70 million, currency exchange losses on our intercompany loans of $27$63 million, and realized and unrealized losses on hedging activity of $6$8 million for the three months ended MarchJune 31,30, 2025.

Our income tax expense increased by $44$62 million to $73$67 million for the three months ended MarchJune 31,30, 2026 from $29$5 million for the three months ended MarchJune 31,30, 2025. The increase of $44$62 million in income tax expense is primarily due to an increase in pre-tax income in the quarter and a taxable$20 gainmillion onsmaller benefit from EMP impairment in the Company’scurrent saleyear of certain recorded music catalog rights to Beethoven JV, partially offset by the tax benefit associated with partial release of valuation allowance on EMP.quarter.

Net income (loss)

Net income increased by $145$216 million to $181$200 million for the three months ended MarchJune 31,30, 2026 from $36a net loss of $16 million for the three months ended MarchJune 31,30, 2025 as a result of the factors described above.

There was income attributable to noncontrolling interest of $2$4 million during the three months ended MarchJune 31,30, 2026. There was no loss or income attributable to noncontrolling interest for the three months ended MarchJune 31,30, 2025.

Recorded Music revenue increased by $205$134 million, or 17%,10%, to $1,380$1,488 million for the three months ended MarchJune 31,30, 2026 from $1,175$1,354 million for the three months ended MarchJune 31,30, 2025. U.S. Recorded Music revenues were $565$587 million and $497$536 million, or 41%39% and 42%40% of consolidated Recorded Music revenues, for the three months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025, respectively. International Recorded Music revenues were $815$901 million and $678$818 million, or 59%61% and 58%60% of consolidated Recorded Music revenues, for the three months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025, respectively.

The overall increase in Recorded Music revenue was driven by higher revenue across digital, artist services and expanded-rights and physical,physical partially offset by a decrease in licensing revenue,revenues, as described in the “Total Revenues” and “Revenue by Geographical Location” sections above.

Recorded Music cost of revenues increased by $108$71 million, to $707$777 million for the three months ended MarchJune 31,30, 2026 from $599$706 million for the three months ended MarchJune 31,30, 2025. Expressed as a percentage of Recorded Music revenue, Recorded Music artist and repertoire costs remained constant at 29%28% for each of the three months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025. Expressed as a percentage of Recorded Music revenue, Recorded Music product costs increasedremained toconstant 23%at 24% for each of the three months ended MarchJune 31,30, 2026 from 22% for the three months ended March 31, 2025, driven by revenue and dealJune mix.30, 2025.

(1)Includes depreciation expense of $10 million and $13$14 million for the three months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025, respectively.

Recorded Music selling, general and administrative expense increaseddecreased by $15$9 million, to $342$336 million for the three months ended MarchJune 31,30, 2026 from $327$345 million for the three months ended MarchJune 31,30, 2025,2025,which primarily driven byincludes unfavorable movements in foreign currency exchange rates of $12$2 million. The decreasedecreases in general and administrative expense wasand selling and marketing expense were largely driven by cost savings from the Company’s restructuring plans, a portion of which has been reinvested into the Company’s business. The increasedecrease in selling and marketing expense was drivenpartially offset by higher variable marketing spend for key releases. The increase in distribution expense was primarily driven by revenue mix from higher merchandising and physical revenues. Expressed as a percentage of Recorded Music revenue, Recorded Music selling, general and administrative expense decreased to 23% for the three months ended June 30, 2026 from 25% for the three months ended MarchJune 31, 2026 from 28% for the three months ended March 31,30, 2025.

Recorded Music operating income increased by $85$125 million to $288$326 million for the three months ended MarchJune 31,30, 2026 from $203$201 million for the three months ended MarchJune 31,30, 2025. In addition to the factors impacting Adjusted OIBDA described below, the increase in operating income was driven by decreases in restructuring and impairment charges of $7$63 million and depreciation expense of $3$4 million compared to the prior-year quarter, partially offset by higher amortization expenses of $4$10 million related to acquisitions of music-related assets.

Recorded Music Adjusted OIBDA increased by $76$56 million to $346$377 million for the three months ended MarchJune 31,30, 2026 from $270$321 million for the three months ended MarchJune 31,30, 2025, largely driven by strong operating performance and revenue growth, and savings from the Company’s restructuring plans, of which a portion has been reinvested in the Company’s business, partially offset by the impact of the DSP True-Up andCopyright Settlement Payments of $7$9 million and the BMG Termination of $1 million in the prior-year quarter,quarter as well asand unfavorable movements in foreign currency exchange rates of approximately $9$12 million. Expressed as a percentage of Recorded Music revenue, Recorded Music Adjusted OIBDA margin increased to 25% for the three months ended MarchJune 31,30, 2026 from 23%24% for the three months ended MarchJune 31,30, 2025 due to the factors noted above.

Music Publishing revenues increased by $43$41 million, or 14%,12%, to $353$377 million for the three months ended MarchJune 31,30, 2026 from $310$336 million for the three months ended MarchJune 31,30, 2025. U.S. Music Publishing revenues were $178$194 million and $161$186 million, or 50%51% and 52%55% of consolidated Music Publishing revenues, for the three months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025, respectively. International Music Publishing revenues were $175$183 million and $149$150 million, or 50%49% and 48%45% of consolidated Music Publishing revenues, for the three months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025, respectively.

The overall increase in Music Publishing revenue was driven by growth in digital, performance,synchronization, synchronization,mechanical, and mechanicalperformance revenues, as described in the “Total Revenues” and “Revenue by Geographical Location” sections above.

Music Publishing cost of revenues increased by $30$27 million, or 16%,13%, to $224$235 million for the three months ended MarchJune 31,30, 2026 from $194$208 million for the three months ended MarchJune 31,30, 2025. Expressed as a percentage of Music Publishing revenue, Music Publishing cost of revenues remained constant at 63%62% for each of the three months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025.

(1)Includes depreciation expense of $2 million forand the$1 three months ended March 31, 2025. There was no depreciation expensemillion for the three months ended MarchJune 31,30, 2026.2026 and June 30, 2025, respectively.

Music Publishing selling, general and administrative expense decreasedincreased by $2 million, or 6%, to $33$36 million for the three months ended MarchJune 31,30, 2026 from $35$34 million for the three months ended MarchJune 31,30, 2025, primarily due to cost savings from the Company’s restructuring plans, a portion of which has been reinvested into the Company’s business.2025. Expressed as a percentage of Music Publishing revenue, Music Publishing selling, general and administrative expense decreasedremained toconstant 9%at 10% for each of the three months ended MarchJune 31,30, 2026 fromand 11%June for the three months ended March 31,30, 2025.

Music Publishing operating income increased by $9$11 million to $61$71 million for the three months ended MarchJune 31,30, 2026 from $52$60 million for the three months ended MarchJune 31,30, 2025.2025 The increase isprimarily driven by the same factors affecting Adjusted OIBDA discussed below, as well as lower depreciation expenses of $2 million, partially offset by an increase in amortization expense of $6 million related to the impact of acquisitions.below.

Music Publishing Adjusted OIBDA increased by $12$13 million, or 14%, to $97$109 million for the three months ended MarchJune 31,30, 2026 from $85$96 million for the three months ended MarchJune 31,30, 2025, primarily driven by revenue growth and strong operating performance, as well as savings from the Company’s restructuring plans, a portion of which has been reinvested in the Company’s business, partially offset by unfavorable movements in foreign currency exchange rates of approximately $4$5 million. Expressed as a percentage of Music Publishing revenue, Music Publishing Adjusted OIBDA margin remained constant at 27%29% for each of the three months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025.

Our operating loss from corporate expenses and eliminations decreasedremained byconstant $2at $92 million for each of the three months ended MarchJune 31,30, 2026 toand $85June million from $87 million for the three months ended March 31,30, 2025, primarily driven by savings from the Company’s restructuring plans, of which a portion has been reinvested in the Company’s business, partially offset by higher depreciation expense of $8$7 million drivendue byto the core financials and global revenue solution components of our new technology platform being placed into service, andoffset higherby lower non-cash stock-based compensation and other related expenses of $2$4 million.million, and savings from the Company’s restructuring plans, of which a portion has been reinvested in the Company’s business.

Our Adjusted OIBDA loss from corporate expenses and eliminations decreasedincreased by $6$9 million to $46$53 million for the three months ended MarchJune 31,30, 2026 from $52$44 million for the three months ended MarchJune 31,30, 2025, primarily due to savings from the Company’soperating restructuringloss plans,factors ofnoted which a portion has been reinvested in the Company’s business.above.

SixNine Months Ended MarchJune 31,30, 2026 Compared with SixNine Months Ended MarchJune 31,30, 2025

Total revenues increased by $422$597 million, or 13%,12%, to $3,572$5,436 million for the sixnine months ended MarchJune 31,30, 2026 from $3,150$4,839 million for the sixnine months ended MarchJune 31,30, 2025. RevenueRecorded Music digital revenue growth was impacted by $12 million of Recorded Musica digital revenue fromsettlement theof DSP$12 True-Up and Settlement Paymentsmillion in the current year and $4 million in the prior year (the “DSP True-Up and Settlement Payments”), as well as $16 million of the Copyright Settlement in the prior year. Revenue growth was also unfavorably impacted by the BMG Termination, which resulted in $12$22 million lower Recorded Music streaming revenue compared to the sixnine months ended MarchJune 31,30, 2025. Music Publishing revenue was impacted by $17 million of revenue in the prior year recognized in connection with historical matched royalties that were processed to date by the Mechanical Licensing Collective (the “MLC Historical Matched Royalties”). Prior to intersegment eliminations, Recorded Music and Music Publishing revenues represented 80% and 20% of total revenues for each of the sixnine months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025. Prior to intersegment eliminations, U.S. and international revenues represented 42% and 58% for the sixnine months ended MarchJune 31,30, 2026, respectively, and 43% and 57% for the sixnine months ended MarchJune 31,30, 2025, respectively.

Total digital revenues after intersegment eliminations increased by $280$399 million, or 13%,12%, to $2,389$3,640 million for the sixnine months ended MarchJune 31,30, 2026 from $2,109$3,241 million for the sixnine months ended MarchJune 31,30, 2025. Total streaming revenue increased 14% primarily13% driven by an increaseincreases in streaming revenue at Recorded Music.Music and Music Publishing. Total digital revenues remained constant at 67% of consolidated revenues for each of the sixnine months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025. Prior to intersegment eliminations, total digital revenues for the sixnine months ended MarchJune 31,30, 2026 were composed of U.S. revenues of $1,071$1,627 million and international revenues of $1,319$2,014 million, or 45% and 55% of total digital revenues, respectively. Prior to intersegment eliminations, total digital revenues for the sixnine months ended MarchJune 31,30, 2025 were composed of U.S. revenues of $998$1,533 million and international revenues of $1,111$1,709 million, or 47% and 53% of total digital revenues, respectively.