What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-07 compared with 2025-05-08 · 341 added, 329 removed, 589 unchanged (53% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 March 31, 2025 (the “Quarterly Report”).

“SAFE HARBOR” STATEMENT UNDER PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

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• Results of operations.

This section provides an analysis of our results of operations for the three and six months ended March 31, 2025 and March 31, 2024.

This section provides an analysis of our results of operations for the three and nine months ended June 30, 2025 and June 30, 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 six months ended March 31, 2025 and March 31, 2024, as well as a discussion of our financial condition and liquidity as of March 31, 2025.

This section provides an analysis of our cash flows for the nine months ended June 30, 2025 and June 30, 2024, as well as a discussion of our financial condition and liquidity as of June 30, 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.

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In 2024, the Company announced a strategic restructuring plan (the “2024 Strategic Restructuring Plan”) designed to free up additional funds to invest in music and accelerate the Company’s growth for the next decade.

The Company expects to incur total non-recurring restructuring charges of approximately $240 million or approximately $160 million of total non-recurring after tax charges.

The expected pre-tax charges include approximately $158 million of severance and other contract termination costs, along with approximately $82 million of non-cash impairment charges.

The majority of severance payments and other termination costs are expected to be paid by the end of fiscal year 2026.

The 2024 Strategic Restructuring Plan is substantially complete and the remaining associated cash payments are expected to be made by the end of fiscal year 2026.

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 transformative initiative.

The Company expects allocating a majority of the costs savings to increase investment in the Company’s core Recorded Music and Music Publishing businesses, new skill sets and tech capabilities.

For the three months ended March 31, 2025, total severance and other contract termination costs recorded in connection with the Strategic Restructuring Plan were $7 million, all of which was recognized in our Recorded Music segment.

For the six months ended March 31, 2025, total severance and other contract termination costs recorded in connection with the Strategic Restructuring Plan were $8 million, of which $9 million of expense was recognized in our Recorded Music segment while there was a $1 million benefit recognized at Corporate due to a change in estimate.

Additionally, for the three and six months ended March 31, 2025, the Company recognized $6 million and $32 million of impairment losses, respectively, all of which were recognized in our Recorded Music segment.

For the three months ended June 30, 2025, the Company recognized a $1 million benefit in our Recorded Music segment due a change in estimate of severance costs.

For the nine months ended June 30, 2025, total severance and other contract termination costs recorded in connection with the 2024 Strategic Restructuring Plan were $7 million, of which $8 million of expense was recognized in our Recorded Music segment while there was a $1 million benefit recognized at Corporate due to a change in estimate.

Additionally, for the nine months ended June 30, 2025, the Company recognized $32 million of impairment losses, all of which were recognized in our Recorded Music segment.

Impairment charges recognized during the period primarily relate to the write-off of certain long-form audiovisual production assets and lease termination costs for office closures.

The Company continues to review its operations for additional cost

savings and efficiencies.

Our ongoing review could result in additional costs and charges which may be significant.

Other Impairments

For the three and nine months ended June 30, 2025, the Company recognized a pre-tax impairment charge of $70 million ($48 million after-tax) within the Recorded Music segment for long-lived assets associated with certain of the Company’s non-core e-tailer operations due to a triggering event that indicated the carrying amount was no longer recoverable.

The recoverable fair value was determined based on current market indicators.

BMG Termination

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 (the “BMG Termination”).

Alternative Distribution Alliance (“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 direct deals by BMG is a phased in-sourcing of distribution during the current fiscal year and we expect BMG to be rolled off by the end of the current fiscal year.

The shift to digital direct deals by BMG is a phased in-sourcing of distribution during the current fiscal year and we expect BMG to be rolled off by the end of the current fiscal year.

RESULTS OF OPERATIONS

Three Months Ended March 31, 2025 Compared with Three Months Ended March 31, 2024

Three Months Ended June 30, 2025 Compared with Three Months Ended June 30, 2024

Consolidated Results

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For the Three Months Ended

March 31, 2025 vs.

June 30, 2025 vs.

2025 2024 $ Change % Change

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Total Revenues

Total revenues decreased by $10 million, or 1%, to $1,484 million for the three months ended March 31, 2025 from $1,494 million for the three months ended March 31, 2024.

The decrease includes $27 million of unfavorable currency exchange fluctuations.

Prior to intersegment eliminations, Recorded Music and Music Publishing revenues represented 79% and 21% of total revenue for the three months ended March 31, 2025, respectively, and 80% and 20% of total revenue for the three months ended March 31, 2024, respectively.

Total revenues increased by $135 million, or 9%, to $1,689 million for the three months ended June 30, 2025 from $1,554 million for the three months ended June 30, 2024.

Revenue growth was favorably impacted by the settlement of certain copyright infringement cases (the “Copyright Settlement”), which resulted in $16 million higher Recorded Music revenue.

The prior-year quarter included $22 million of incremental revenue recognized in Recorded Music from a Digital Service Provider (“DSP”) for performance obligations satisfied in previous periods (the “DSP True-Up Payments”).

Recorded Music revenue growth was also unfavorably impacted by the BMG Termination, which resulted in $14 million less Recorded Music revenue compared to the prior-year quarter.

The increase in total revenue includes $24 million of favorable currency exchange fluctuations.

Prior to intersegment eliminations, Recorded Music and Music Publishing revenues represented 80% and 20% of total revenue for each of the three months ended June 30, 2025 and June 30, 2024, respectively.

Prior to intersegment eliminations, U.S.

and international revenues represented 44% and 56% of total revenues for the three months ended March 31, 2025 and 45% and 55% of total revenues for the three months ended March 31, 2024.

Total digital revenues after intersegment eliminations decreased by $8 million, or 1%, to $1,027 million for the three months ended March 31, 2025 from $1,035 million for the three months ended March 31, 2024.

Total streaming revenue decreased by $3 million, primarily driven by Recorded Music, partially offset by growth in Music Publishing.

Total streaming revenue includes $19 million of unfavorable currency exchange fluctuations.

Prior to intersegment eliminations, total digital revenues for the three months ended March 31, 2025 were composed of U.S.

and international revenues represented 43% and 57% of total revenues for the three months ended June 30, 2025, respectively, and 44% and 56% of total revenues for the three months ended June 30, 2024, respectively.

Total digital revenues after intersegment eliminations increased by $57 million, or 5%, to $1,132 million for the three months ended June 30, 2025 from $1,075 million for the three months ended June 30, 2024.

Total streaming revenue increased by $42 million, driven by growth in Recorded Music and Music Publishing.

Total streaming revenue includes $11 million of favorable currency exchange fluctuations.

Prior to intersegment eliminations, total digital revenues for the three months ended June 30, 2025 were composed of U.S.

revenues of $535 million and international revenues of $598 million, or 47% and 53% of total digital revenues, respectively.

Prior to intersegment eliminations, total digital revenues for the three months ended March 31, 2024 were composed of U.S.

Prior to intersegment eliminations, total digital revenues for the three months ended June 30, 2024 were composed of U.S.

revenues of $504 million and international revenues of $572 million, or 47% and 53% of total digital revenues, respectively.

Recorded Music revenues decreased by $14 million, or 1%, to $1,175 million for the three months ended March 31, 2025 from $1,189 million for the three months ended March 31, 2024.

The decrease includes $22 million of unfavorable currency exchange fluctuations.

Recorded Music revenues were $497 million and $508 million, or 42% and 43% of consolidated Recorded Music revenues for each of the three months ended March 31, 2025 and March 31, 2024, respectively.

International Recorded Music revenues were $678 million and $681 million, or 58% and 57%, of consolidated Recorded Music revenues for each of the three months ended March 31, 2025 and March 31, 2024, respectively.

The overall decrease in Recorded Music revenue was driven by decreases in digital and artist services and expanded-rights revenues, partially offset by increases in physical and licensing revenue.

Digital revenue decreased by $7 million, or 1%, which includes an unfavorable impact of currency exchange fluctuations of $17 million.

Revenue from streaming services decreased by $3 million, to $825 million for the three months ended March 31, 2025 from $828 million for the three months ended March 31, 2024.

The decrease in streaming revenue was impacted by a challenging year-over-year comparison, largely in subscription streaming revenue, and includes an unfavorable impact of foreign currency exchange rates of $16 million.

Top digital sellers in the quarter include ROSÉ, Bruno Mars, Teddy Swims, and Benson Boone.

Download and other digital revenues decreased by $4 million, or 20%, to $16 million for the three months ended March 31, 2025 from $20 million for the three months ended March 31, 2024 due to the continued shift to streaming services.

Licensing revenue increased by $1 million, or 1%, driven by higher licensing activity primarily in Japan and the U.S., partially offset by the timing of copyright infringement settlements.

Licensing revenue includes an unfavorable impact of foreign currency exchange rates of $2 million.

Artist services and expanded-rights revenue decreased by $9 million, or 7%, due to lower concert promotion revenue primarily in France, lower direct-to-consumer merchandising revenue at EMP, a decrease in revenue related to the exit of the Company’s non-core owned and operated media properties in connection with the Strategic Restructuring Plan, and an unfavorable impact of foreign currency exchange rates of $2 million.

Physical revenue increased by $1 million, or 1%, driven by growth in Japan and the impact of acquisitions, partially offset by the impact of the BMG Termination, and an unfavorable impact of foreign currency exchange rates of $1 million.

Top physical releases in the quarter include Mac Miller’s Balloonerism and new releases from ONE OK ROCK and TWICE.

Music Publishing revenues increased by $4 million, or 1%, to $310 million for the three months ended March 31, 2025 from $306 million for the three months ended March 31, 2024.

Music Publishing revenues were $161 million and $170 million, or 52% and 56% of consolidated Music Publishing revenues, for the three months ended March 31, 2025 and March 31, 2024, respectively.

International Music Publishing revenues were $149 million and $136 million, or 48% and 44% of consolidated Music Publishing revenues, for the three months ended March 31, 2025 and March 31, 2024, respectively.

Recorded Music revenues increased by $103 million, or 8%, to $1,354 million for the three months ended June 30, 2025 from $1,251 million for the three months ended June 30, 2024.

The increase includes $21 million of favorable currency exchange fluctuations.

Recorded Music revenues were $536 million and $517 million, or 40% and 41% of consolidated Recorded Music revenues for each of the three months ended June 30, 2025 and June 30, 2024, respectively.

International Recorded Music revenues were $818 million and $734 million, or 60% and 59%, of consolidated Recorded Music revenues for each of the three months ended June 30, 2025 and June 30, 2024, respectively.

The overall increase in Recorded Music revenue was driven by increases in digital, artist services and expanded-rights and licensing revenues, partially offset by a decrease in physical revenue.

Digital revenue increased by $47 million, or 5%, which includes a favorable impact of currency exchange fluctuations of $10 million.

Revenue from streaming services increased by $32 million to $895 million for the three months ended June 30, 2025 from $863 million for the three months ended June 30, 2024.

The increase in streaming revenue was driven by subscription streaming growth and includes a favorable impact of foreign currency exchange rates of $9 million, partially offset by the unfavorable impact of the DSP True-Up Payments and the BMG Termination of $4 million in the prior-year quarter.

Download and other digital revenues increased by $15 million, or 79%, to $34 million for the three months ended June 30, 2025 from $19 million for the three months ended June 30, 2024 due to the impact of the Copyright Settlement of $16 million, partially offset by the continued shift to streaming services.

Licensing revenue increased by $21 million, or 23%, driven by higher licensing activity primarily in the U.K.

and China, and timing of other copyright infringement settlements.

Licensing revenue includes a favorable impact of foreign currency exchange rates of $3 million.

Artist services and expanded-rights revenue increased by $36 million, or 23%, due to higher concert promotion revenue primarily in France and Spain, and a favorable impact of foreign currency exchange rates of $4 million.

Physical revenue, which includes a favorable impact of foreign currency exchange rates of $4 million, decreased by $1 million, or 1%, as growth from strong releases in Korea and Japan was offset by the $10 million impact of the BMG Termination.

Top sellers in the quarter included BAEKHYUN, ROSÉ, Bruno Mars, Grateful Dead, and Teddy Swims.

Music Publishing revenues increased by $31 million, or 10%, to $336 million for the three months ended June 30, 2025 from $305 million for the three months ended June 30, 2024.

Music Publishing revenues were $186 million and $161 million, or 55% and 53% of consolidated Music Publishing revenues, for the three months ended June 30, 2025 and June 30, 2024, respectively.

International Music Publishing revenues were $150 million and $144 million, or 45% and 47% of consolidated Music Publishing revenues, for the three months ended June 30, 2025 and June 30, 2024, respectively.

The overall increase in Music Publishing revenue was driven by increases in digital, performance, synchronization, and mechanical revenues.

Digital revenue increased by $1 million, or 1%, driven by an increase in downloads and other digital revenue of $1 million, while Music Publishing revenue from streaming services remained constant at $185 million for each of the three months ended March 31, 2025 and March 31, 2024, partially offset by an unfavorable impact of foreign currency exchange rates of $2 million.

Performance revenue increased by $1 million, or 2%, driven by higher concert revenue, partially offset by an unfavorable impact of foreign currency exchange rates of $2 million.

Mechanical revenue increased by $1 million, or 7%, driven by higher physical sales, partially offset by an unfavorable impact of foreign currency exchange rates of $1 million.

Synchronization revenue increased by $1 million, or 2%, attributable to higher television and commercial licensing activity, partially offset by the timing of copyright infringement settlements.

Digital revenue increased by $10 million, or 5%, driven by an increase in streaming revenue, which includes a favorable impact of foreign currency exchange rates of $1 million.

Revenue from streaming services grew by $10 million, or 5%, to $202 million for the three months ended June 30, 2025 from $192 million for the three months ended June 30, 2024, driven by the impact of digital deal renewals, primarily in the U.S, and a favorable impact of foreign currency exchange rates of $1 million.

Performance revenue increased by $6 million, or 12%, driven by growth from concerts, radio and live events primarily in Europe, and a favorable impact of foreign currency exchange rates of $1 million.

Mechanical revenue increased by $3 million, or 23%, and includes a favorable impact of foreign currency exchange rates of $1 million.

Synchronization revenue increased by $12 million, or 29%, attributable to timing of other copyright infringement settlements, higher television and commercial licensing activity, and the $3 million impact of our acquisition of Tempo.

Revenue by Geographical Location

revenue decreased by $20 million, or 3%, to $658 million for the three months ended March 31, 2025 from $678 million for the three months ended March 31, 2024.

Recorded Music revenue decreased by $11 million, or 2%.

Recorded Music digital revenue decreased by $12 million, or 3%, driven by lower streaming revenue of $12 million, or 3%, while download and other digital revenue was flat to the prior-year quarter.

Recorded Music licensing revenue increased by $1 million, or 3%, driven by the timing of licensing settlements.

Recorded Music physical revenue and artist services and expanded-rights revenues remained constant .

Music Publishing revenue decreased by $9 million, or 5%, to $161 million for the three months ended March 31, 2025 from $170 million for the three months ended March 31, 2024.

Music Publishing digital revenue decreased by $9 million, or 8%, attributable to lower streaming revenue of $10 million, or 9%, partially offset by an increase in download and other digital revenue of $1 million.

Music Publishing streaming revenue reflects the impact of digital deal renewals compared to the prior-year quarter.

Music Publishing performance revenue decreased by $1 million, or 5%.

Music Publishing mechanical revenue increased by $2 million, or 67%, during the three months ended March 31, 2025 compared to the three months ended March 31, 2024, and U.S.

Music Publishing synchronization revenue remained constant, driven by higher television and commercial licensing activity and the impact of acquisitions, partially offset by the timing of copyright infringement settlements.

International revenue increased by $10 million, or 1%, to $827 million for the three months ended March 31, 2025 from $817 million for the three months ended March 31, 2024.

Excluding the unfavorable impact of foreign currency exchange rates of $27 million, International revenue increased by $37 million, or 5%.

International Recorded Music revenue decreased by $3 million, which includes an unfavorable impact of foreign currency exchange rates of $22 million, driven by lower artist services and expanded rights revenue, partially offset by growth across digital and physical revenues.

International Recorded Music licensing revenue remained constant driven by licensing deals primarily in Japan, partially offset by the timing of copyright infringement settlements compared to the prior-year quarter.

International Recorded Music artist services and expanded-rights revenue decreased by $9 million due to lower direct-to-consumer merchandising revenue at EMP, lower concert promotion revenue primarily in France, and the unfavorable impact of foreign currency exchange rates of $2 million.

International Recorded Music digital revenue increased by $5 million, attributable to higher streaming revenue of $9 million, or 2%, which reflects an unfavorable impact of foreign currency exchange rates of $16 million, partially offset by lower download and other digital revenue of $4 million driven by the continued shift to streaming services.

Physical revenue increased by $1 million driven by new releases primarily in Japan, partially offset by lower revenue resulting from the BMG Termination and an unfavorable impact of foreign currency exchange rates of $1 million.

International Music Publishing revenue increased by $13 million, or 10%, to $149 million for the three months ended March 31, 2025 from $136 million for the three months ended March 31, 2024.

International Music Publishing revenue growth was driven by increases in digital revenue of $10 million attributable to growth in streaming, performance revenue of $2 million due to growth from concerts, radio and live events, synchronization revenue of $1 million due to higher television and commercial licensing activity, and other revenue of $1 million.

This was partially offset by a decrease in International Music Publishing mechanical revenue of $1 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

revenue increased by $44 million, or 6%, to $722 million for the three months ended June 30, 2025 from $678 million for the three months ended June 30, 2024.

Recorded Music revenue increased by $19 million, or 4%.

Recorded Music digital revenue increased by $20 million, or 5%, driven by higher download and other digital revenue of $15 million, or 150%, including the impact of the Copyright Settlement in the quarter, and higher streaming revenue of $5 million, or 1%.

Recorded Music licensing revenue increased by $8 million, or 30%, driven by timing of other copyright infringement settlements.

Recorded Music artist services and expanded-rights revenues decreased by $5 million, or 10%, driven by lower merchandising revenue, and physical revenue decreased by $4 million, or 8% .

Music Publishing revenue increased by $25 million, or 16%, to $186 million for the three months ended June 30, 2025 from $161 million for the three months ended June 30, 2024.

Music Publishing digital revenue increased by $11 million, or 10%, attributable to higher streaming revenue of $11 million, or 10%.

Music Publishing streaming revenue reflects impact of digital deal renewals.

Music Publishing performance and mechanical revenues remained constant during the three months ended June 30, 2025 compared to the three months ended June 30, 2024.

Music Publishing synchronization revenue increased by $13 million, or 54%, driven by timing of other copyright infringement settlements, higher television and commercial licensing activity and the impact of acquisitions.

International revenue increased by $90 million, or 10%, to $968 million for the three months ended June 30, 2025 from $878 million for the three months ended June 30, 2024.

Excluding the favorable impact of foreign currency exchange rates of $23 million, International revenue increased by $67 million, or 7%.

International Recorded Music revenue increased by $84 million, which includes a favorable impact of foreign currency exchange rates of $21 million, driven by growth across digital, artist services and expanded rights, licensing and physical revenues.

International Recorded Music licensing revenue increased by $13 million, or 21%, driven by licensing deals primarily in the U.K.

and China, and timing of other copyright infringement settlements.

International Recorded Music artist services and expanded-rights revenue increased by $41 million, or 37%, driven by higher concert promotion revenue primarily in France and Spain, and the favorable impact of foreign currency exchange rates of $4 million.

International Recorded Music digital revenue increased by $27 million, attributable to higher streaming revenue of $27 million, or 6%, which includes the impact of the BMG Termination, and reflects a favorable impact of foreign currency exchange rates of $9 million.

Physical revenue increased by $3 million driven by the favorable impact of foreign currency exchange rates of $4 million, partially offset by the impact of the BMG Termination.

International Music Publishing revenue increased by $6 million, or 4%, to $150 million for the three months ended June 30, 2025 from $144 million for the three months ended June 30, 2024.

International Music Publishing revenue growth was driven by increases in performance revenue of $6 million due to growth from concerts, radio and live events in Europe and mechanical revenue of $3 million.

This was partially offset by decreases in digital revenue of $1 million, synchronization revenue of $1 million, and other revenue of $1 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024.

Cost of revenues

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For the Three Months Ended

March 31, 2025 vs.

June 30, 2025 vs.

2025 2024 $ Change % Change

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Total cost of revenues $ 913 $ 830 $ 83 10 %

Artist and repertoire costs decreased by $8 million, to $531 million for the three months ended March 31, 2025 from $539 million for the three months ended March 31, 2024.

Artist and repertoire costs as a percentage of revenue remained constant at 36% for each of the three months ended March 31, 2025 and March 31, 2024.

Product costs increased by $8 million, to $260 million for the three months ended March 31, 2025 from $252 million for the three months ended March 31, 2024.

Product costs as a percentage of revenue increased to 18% for the three months ended March 31, 2025 from 17% for the three months ended March 31, 2024 due to revenue mix from lower artist services and expanded-rights revenue, partially offset by higher costs on third-party distributed label revenue and the impact of acquisitions.

Artist and repertoire costs increased by $36 million, to $584 million for the three months ended June 30, 2025 from $548 million for the three months ended June 30, 2024.

Artist and repertoire costs as a percentage of revenue remained constant at 35% for each of the three months ended June 30, 2025 and June 30, 2024.

Product costs increased by $47 million, to $329 million for the three months ended June 30, 2025 from $282 million for the three months ended June 30, 2024.

Product costs as a percentage of revenue increased to 19% for the three months ended June 30, 2025 from 18% for the three months ended June 30, 2024 due to revenue and deal mix.

Selling, general and administrative expenses

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For the Three Months Ended

March 31, 2025 vs.

June 30, 2025 vs.

2025 2024 $ Change % Change

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______________________________________

(1) Includes depreciation expense of $28 million and $26 million for the three months ended March 31, 2025 and March 31, 2024, respectively.

Total selling, general and administrative expense increased by $4 million, to $450 million for the three months ended March 31, 2025 from $446 million for the three months ended March 31, 2024.

Expressed as a percentage of revenue, total selling, general and administrative expense remained constant at 30% for each of the three months ended March 31, 2025 and March 31, 2024 due to the factors noted below.

General and administrative expense increased by $18 million to $276 million for the three months ended March 31, 2025 from $258 million for the three months ended March 31, 2024.

The increase in general and administrative expense was largely due to higher non-cash stock-based compensation costs of $4 million, the impact of acquisitions of $3 million and higher depreciation expense driven by assets placed into service of $2 million, partially offset by savings from the Strategic Restructuring Plan, of which a portion has been reinvested in the Company’s business.

Expressed as a percentage of revenue, general and administrative expense increased to 19% for the three months ended March 31, 2025 from 17% for the three months ended March 31, 2024.

Selling and marketing expense decreased by $12 million, or 7%, to $157 million for the three months ended March 31, 2025 from $169 million for the three months ended March 31, 2024.

Expressed as a percentage of revenue, selling and marketing expense remained constant at 11% for each of the three months ended March 31, 2025 and March 31, 2024 due to savings from the Strategic Restructuring Plan, of which a portion has been reinvested in the Company’s business.

Distribution expense decreased by $2 million to $17 million for the three months ended March 31, 2025 from $19 million for the three months ended March 31, 2024.

Expressed as a percentage of revenue, distribution expense remained constant at 1% for each of the three months ended March 31, 2025 and March 31, 2024.

(1) Includes depreciation expense of $29 million and $25 million for the three months ended June 30, 2025 and June 30, 2024, respectively.

Total selling, general and administrative expense increased by $9 million, to $471 million for the three months ended June 30, 2025 from $462 million for the three months ended June 30, 2024.

Expressed as a percentage of revenue, total selling, general and administrative expense decreased to 28% for the three months ended June 30, 2025 from 30% for the three months ended June 30, 2024 due to the factors noted below.

General and administrative expense increased by $18 million to $282 million for the three months ended June 30, 2025 from $264 million for the three months ended June 30, 2024.

The increase in general and administrative expense was driven by incremental investment in technology of $7 million, higher non-cash stock-based compensation costs of $5 million due to the departure of our former Chief Financial Officer (“CFO”) in the current year, the impact of acquisitions of $4 million and higher depreciation expense of $4 million, primarily driven by the core financials component of our new technology platform being placed into service, partially offset by savings from the 2024 Strategic Restructuring Plan, of which a portion has been reinvested in the Company’s business.

Expressed as a percentage of revenue, general and administrative expense remained constant at 17% for each of the three months ended June 30, 2025 and June 30, 2024.

Selling and marketing expense decreased by $6 million, or 3%, to $167 million for the three months ended June 30, 2025 from $173 million for the three months ended June 30, 2024.

Expressed as a percentage of revenue, selling and marketing expense decreased to 10% for the three months ended June 30, 2025 from 11% for the three months ended June 30, 2024 due to savings from the 2024 Strategic Restructuring Plan, of which a portion has been reinvested in the Company’s business.

Distribution expense decreased by $3 million to $22 million for the three months ended June 30, 2025 from $25 million for the three months ended June 30, 2024.

Expressed as a percentage of revenue, distribution expense decreased to 1% for the three months ended June 30, 2025 from 2% for the three months ended June 30, 2024.

Reconciliation of Net Income Attributable to Warner Music Group Corp.

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For the Three Months Ended

March 31, 2025 vs.

June 30, 2025 vs.

2025 2024 $ Change % Change

Net income attributable to Warner Music Group Corp.

Net (loss) income attributable to Warner Music Group Corp.

$ (16) $ 139 $ (155) — %

Income attributable to noncontrolling interest — 2 (2) (100) %

Net income 36 96 (60) (63) %

Net (loss) income (16) 141 (157) — %

Income tax expense 5 30 (25) (83) %

Income before income taxes 65 114 (49) (43) %

Net (loss) income before income taxes

(11) 171 (182) — %

Other expense (income) 137 (4) 141 — %

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Transformation initiative costs 19 18 1 6 %

Executive transition costs 4 — 4 (100) %

Net gain on divestitures — (1) 1 — %

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Adjusted OIBDA

Adjusted OIBDA decreased by $9 million to $303 million for the three months ended March 31, 2025 from $312 million for the three months ended March 31, 2024.

Expressed as a percentage of total revenue, Adjusted OIBDA margin decreased to 20% for the three months ended March 31, 2025 from 21% for the three months ended March 31, 2024.

The decreases in Adjusted OIBDA and Adjusted OIBDA margin are driven by revenue mix, partially offset by the impact of acquisitions and savings from the Strategic Restructuring Plan, a portion of which has been reinvested in the Company’s business.

Adjusted OIBDA increased by $57 million to $373 million for the three months ended June 30, 2025 from $316 million for the three months ended June 30, 2024, driven by the impact of the Copyright Settlement of $9 million in Recorded Music in the current quarter and the $12 million impact of the DSP True-Up Payments in the prior-year quarter, as well as revenue mix, the impact of acquisitions, and savings from the 2024 Strategic Restructuring Plan, partially offset by the reinvestment of these savings in the Company’s business including $7 million of incremental investment in technology for the three months ended June 30, 2025.

Expressed as a percentage of total revenue, Adjusted OIBDA margin increased to 22% for the three months ended June 30, 2025 from 20% for the three months ended June 30, 2024.

Non-cash stock-based compensation and other related costs

Our non-cash stock-based compensation and other related costs increased by $4 million to $14 million for the three months ended March 31, 2025 from $10 million for the three months ended March 31, 2024, primarily related to issuance of additional restricted stock units and market-based performance stock units.

Our non-cash stock-based compensation and other related costs increased by $5 million to $16 million for the three months ended June 30, 2025 from $11 million for the three months ended June 30, 2024, primarily due to $5 million of costs related to the departure of our former CFO in the current year.

Net gain on divestitures

There was no net gain on divestitures during the three months ended March 31, 2025.

Net gain on divestitures during the three months ended March 31, 2024 includes a pre-tax gain of $14 million in connection with the divestiture of certain publishing rights.

There was no net gain on divestitures during the three months ended June 30, 2025.

Net gain on divestitures during the three months ended June 30, 2024 includes a pre-tax gain of $1 million in connection with the divestiture of certain non-core owned and operated media properties.

Executive transition costs

Executive transition costs were $4 million during the three months ended June 30, 2025, which consisted of severance costs associated with the departure of our former CFO in the current year.

Transformation initiative costs

Our transformation initiative costs which include costs associated with our finance transformation decreased by $1 million to $18 million for the three months ended March 31, 2025 from $19 million for the three months ended March 31, 2024.

Our transformation initiative costs which include costs associated with our finance transformation increased by $1 million to $19 million for the three months ended June 30, 2025 from $18 million for the three months ended June 30, 2024.

Restructuring and Impairments

Our restructuring and impairment charges decreased to $13 million for the three months ended March 31, 2025 from $95 million for the three months ended March 31, 2024.

The three months ended March 31, 2025 includes severance costs and impairment charges related to the write-off of certain long-form audiovisual production assets recognized in connection with the Strategic Restructuring Plan.

Our restructuring and impairment charges increased to $69 million for the three months ended June 30, 2025 from $1 million for the three months ended June 30, 2024.

The three months ended June 30, 2025 includes an impairment charge of $70 million for long-lived assets associated with certain of the Company’s non-core e-tailer operations.

Depreciation expense

Our depreciation expense increased by $2 million to $28 million for the three months ended March 31, 2025 from $26 million for the three months ended March 31, 2024.

The increase is primarily due to technology assets being placed into service.

Our depreciation expense increased by $4 million to $29 million for the three months ended June 30, 2025 from $25 million for the three months ended June 30, 2024.

The increase is primarily driven by the core financials component of our new technology platform being placed into service.

Amortization expense

Our amortization expense increased by $5 million, to $62 million for the three months ended March 31, 2025 from $57 million for the three months ended March 31, 2024.

Our amortization expense increased by $12 million, to $67 million for the three months ended June 30, 2025 from $55 million for the three months ended June 30, 2024.

The increase is driven by incremental amortization related to acquisitions of music-related assets, partially offset by certain intangible assets becoming fully amortized.

Operating income

Our operating income increased by $49 million to $168 million for the three months ended March 31, 2025 from $119 million for the three months ended March 31, 2024.

In addition to the factors impacting Adjusted OIBDA described above, the increase in operating income was driven by a decrease in restructuring and impairment charges of $82 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 related to the Strategic Restructuring Plan, partially offset by a $14 million net gain on a divestiture in the prior-year quarter, higher amortization expenses of $5 million, and higher non-cash stock-based compensation and other related costs of $4 million.

Our operating income decreased by $38 million to $169 million for the three months ended June 30, 2025 from $207 million for the three months ended June 30, 2024.

In addition to the factors impacting Adjusted OIBDA described above, the decrease in operating income was driven by an increase in restructuring and impairment charges of $68 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024, higher amortization expenses of $12 million, higher non-cash stock-based compensation and other related costs of $5 million, and the impact of a $1 million net gain on a divestiture in the prior-year quarter.

Interest expense, net

Our interest expense, net, decreased to $39 million for the three months ended March 31, 2025 from $42 million for the three months ended March 31, 2024 due to lower interest rates on variable rate debt.

Our interest expense, net, increased to $43 million for the three months ended June 30, 2025 from $40 million for the three months ended June 30, 2024 due to incremental debt related to the Tempo Asset-Based Notes acquired in connection with the acquisition of Tempo.

Other expense (income)

Other expense for the three months ended March 31, 2025 primarily includes foreign currency losses on our Euro-denominated debt of $34 million, currency exchange losses on our intercompany loans of $27 million, and realized and unrealized losses on hedging activity of $6 million.

This compares to foreign currency gains on our Euro-denominated debt of $21 million, currency exchange gains on our intercompany loans of $7 million, and realized and unrealized gains on hedging activity of $5 million for the three months ended March 31, 2024.

Other expense for the three months ended June 30, 2025 primarily includes foreign currency losses on our Euro-denominated debt of $70 million, currency exchange losses on our intercompany loans of $63 million, and realized and unrealized losses on hedging activity of $8 million.

This compares to foreign currency gains on our Euro-denominated debt of $7 million, currency exchange losses on our intercompany loans of $5 million, and realized and unrealized gains on hedging activity of $1 million for the three months ended June 30, 2024.

Income tax expense

Our income tax expense increased by $11 million to $29 million for the three months ended March 31, 2025 from $18 million for the three months ended March 31, 2024.

The increase of $11 million in income tax expense is primarily due to the benefit from the winding down of the Company’s owned and operated media properties in the prior year, partially offset by the impact of lower pre-tax income in the current year.

Net income decreased by $60 million to $36 million for the three months ended March 31, 2025 from $96 million for the three months ended March 31, 2024 as a result of the factors described above.

Our income tax expense decreased by $25 million to $5 million for the three months ended June 30, 2025 from $30 million for the three months ended June 30, 2024.

The decrease of $25 million in income tax expense is primarily due to the impact of pre-tax loss in the current period and benefit for updated allowable costs for reported foreign derived intangible income in the prior period.

Net (loss) income

Net (loss) income decreased by $157 million to net loss of $16 million for the three months ended June 30, 2025 from net income of $141 million for the three months ended June 30, 2024 as a result of the factors described above.

Noncontrolling interest

There was no income attributable to noncontrolling interest during the three months ended March 31, 2025 or the three months ended March 31, 2024.

There was no income attributable to noncontrolling interest during the three months ended June 30, 2025 compared to a loss of $2 million for the three months ended June 30, 2024.

Business Segment Results

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Adjusted OIBDA

96 79 17 22 %

Corporate expenses and eliminations

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Recorded Music

Recorded Music revenue decreased by $14 million, or 1%, to $1,175 million for the three months ended March 31, 2025 from $1,189 million for the three months ended March 31, 2024.

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

Recorded Music revenue increased by $103 million, or 8%, to $1,354 million for the three months ended June 30, 2025 from $1,251 million for the three months ended June 30, 2024.

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

Cost of revenues

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Total cost of revenues $ 706 $ 636 $ 70 11 %

Recorded Music cost of revenues increased by $1 million, to $599 million for the three months ended March 31, 2025 from $598 million for the three months ended March 31, 2024.

Expressed as a percentage of Recorded Music revenue, Recorded Music artist and repertoire costs remained constant at 29% for each of the three months ended March 31, 2025 and March 31, 2024.

Expressed as a percentage of Recorded Music revenue, Recorded Music product costs increased to 22% for the three months ended March 31, 2025 from 21% for the three months ended March 31, 2024, driven by revenue mix from lower artist services and expanded-rights revenue, partially offset by higher costs on third-party distributed label revenue and the impact of acquisitions.

Recorded Music cost of revenues increased by $70 million, to $706 million for the three months ended June 30, 2025 from $636 million for the three months ended June 30, 2024.

Expressed as a percentage of Recorded Music revenue, Recorded Music artist and repertoire costs remained constant at 28% for each of the three months ended June 30, 2025 and June 30, 2024.

Expressed as a percentage of Recorded Music revenue, Recorded Music product costs increased to 24% for the three months ended June 30, 2025 from 23% for the three months ended June 30, 2024, driven by revenue and deal mix.

Selling, general and administrative expense

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______________________________________

(1) Includes depreciation expense of $13 million for each of the three months ended March 31, 2025 and March 31, 2024.

Recorded Music selling, general and administrative expense decreased by $10 million, to $327 million for the three months ended March 31, 2025 from $337 million for the three months ended March 31, 2024.

The increase in general and administrative expense was largely driven by higher non-cash stock-based compensation and other related costs of $3 million, and the impact of acquisitions of $3 million.

(1) Includes depreciation expense of $14 million and $13 million for the three months ended June 30, 2025 and June 30, 2024, respectively.

Recorded Music selling, general and administrative expense decreased by $8 million, to $345 million for the three months ended June 30, 2025 from $353 million for the three months ended June 30, 2024.

The increase in general and administrative expense was largely driven by the impact of acquisitions of $4 million, partially offset by lower non-cash stock-based compensation and other related costs of $2 million.

The decrease in selling and marketing expense was driven by savings from the 2024 Strategic Restructuring Plan, a portion of which has been reinvested into the Company’s business.

The decrease in distribution expense was primarily driven by revenue mix.

Expressed as a percentage of Recorded Music revenue, Recorded Music selling, general and administrative expense remained constant at 28% for each of the three months ended March 31, 2025 and March 31, 2024.

Expressed as a percentage of Recorded Music revenue, Recorded Music selling, general and administrative expense decreased to 25% for the three months ended June 30, 2025 from 28% for the three months ended June 30, 2024.

Operating Income and Adjusted OIBDA

Recorded Music operating income increased by $69 million to $203 million for the three months ended March 31, 2025 from $134 million for the three months ended March 31, 2024.

In addition to the factors impacting Adjusted OIBDA described below, the increase in operating income was driven by a decrease in restructuring and impairment charges of $75 million compared to the prior-year quarter which includes severance costs and impairment losses recorded in connection with the Strategic Restructuring Plan, partially offset by higher amortization expenses of $1 million related to acquisitions of music-related assets.

Recorded Music Adjusted OIBDA decreased by $2 million to $270 million for the three months ended March 31, 2025 from $272 million for the three months ended March 31, 2024, largely driven by revenue mix and unfavorable movements in foreign currency exchange rates, partially offset by savings from the Strategic Restructuring Plan, of which a portion has been reinvested in the Company’s business.

Expressed as a percentage of Recorded Music revenue, Recorded Music Adjusted OIBDA margin remained constant at 23% for each of the three months ended March 31, 2025 and March 31, 2024 due to the factors noted above.

Recorded Music operating income decreased by $29 million to $201 million for the three months ended June 30, 2025 from $230 million for the three months ended June 30, 2024.

In addition to the factors impacting Adjusted OIBDA described below, the decrease in operating income was driven by an increase in restructuring and impairment charges of $67 million compared to the prior-year quarter, which includes an impairment charge of $70 million for long-lived assets associated with certain of the Company’s non-core e-tailer operations, and higher amortization expenses of $3 million related to acquisitions of music-related assets.

Recorded Music Adjusted OIBDA increased by $40 million to $321 million for the three months ended June 30, 2025 from $281 million for the three months ended June 30, 2024, largely driven by the impact of the Copyright Settlement of $9 million in the current quarter and the $12 million impact of the DSP True-Up Payments in the prior-year quarter, as well as savings from the 2024 Strategic Restructuring Plan, of which a portion has been reinvested in the Company’s business, and favorable movements in foreign currency exchange rates.

Expressed as a percentage of Recorded Music revenue, Recorded Music Adjusted OIBDA margin increased to 24% for the three months ended June 30, 2025 from 22% for the three months ended June 30, 2024 due to the factors noted above.

Music Publishing

Music Publishing revenues increased by $4 million, or 1%, to $310 million for the three months ended March 31, 2025 from $306 million for the three months ended March 31, 2024.

Music Publishing revenues increased by $31 million, or 10%, to $336 million for the three months ended June 30, 2025 from $305 million for the three months ended June 30, 2024.

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

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Total cost of revenues $ 208 $ 196 $ 12 6 %

Music Publishing cost of revenues decreased by $1 million, or 1%, to $194 million for the three months ended March 31, 2025 from $195 million for the three months ended March 31, 2024.

Expressed as a percentage of Music Publishing revenue, Music Publishing cost of revenues decreased to 63% for the three months ended March 31, 2025 from 64% for the three months ended March 31, 2024, largely due to revenue mix.

Music Publishing cost of revenues increased by $12 million, or 6%, to $208 million for the three months ended June 30, 2025 from $196 million for the three months ended June 30, 2024.

Expressed as a percentage of Music Publishing revenue, Music

Publishing cost of revenues decreased to 62% for the three months ended June 30, 2025 from 64% for the three months ended June 30, 2024, largely due to revenue mix.

Selling, general and administrative expense

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______________________________________

(1) Includes depreciation expense of $2 million and $1 million for the three months ended March 31, 2025 and March 31, 2024, respectively.

Music Publishing selling, general and administrative expense increased by $4 million, or 13%, to $35 million for the three months ended March 31, 2025 from $31 million for the three months ended March 31, 2024.

Expressed as a percentage of Music Publishing revenue, Music Publishing selling, general and administrative expense increased to 11% for the three months ended March 31, 2025 from 10% for the three months ended March 31, 2024 driven by higher overhead and the impact of acquisitions.

(1) Includes depreciation expense of $1 million for the three months ended June 30, 2025.

There was no depreciation expense for the three months ended June 30, 2024.

Music Publishing selling, general and administrative expense increased by $3 million, or 10%, to $34 million for the three months ended June 30, 2025 from $31 million for the three months ended June 30, 2024, driven by higher overhead and the impact of acquisitions.

Expressed as a percentage of Music Publishing revenue, Music Publishing selling, general and administrative expense remained constant at 10% for the three months ended June 30, 2025 and June 30, 2024.

Operating Income and Adjusted OIBDA

Music Publishing operating income decreased by $17 million to $52 million for the three months ended March 31, 2025 from $69 million for the three months ended March 31, 2024, driven by the same factors affecting Adjusted OIBDA discussed below, partially offset by the gain on divestiture of $14 million in the prior-year quarter, as well as an increase in depreciation and amortization expense of $5 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

Music Publishing Adjusted OIBDA increased by $3 million, or 4%, to $85 million for the three months ended March 31, 2025 from $82 million for the three months ended March 31, 2024, driven by the impact of acquisitions of $3 million.

Expressed as a percentage of Music Publishing revenue, Music Publishing Adjusted OIBDA margin remained constant at 27% for each of the three months ended March 31, 2025 and March 31, 2024.

Music Publishing operating income increased by $7 million to $60 million for the three months ended June 30, 2025 from $53 million for the three months ended June 30, 2024, driven by the same factors affecting Adjusted OIBDA discussed below, partially offset by an increase in depreciation and amortization expense of $10 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024.

Music Publishing Adjusted OIBDA increased by $17 million, or 22%, to $96 million for the three months ended June 30, 2025 from $79 million for the three months ended June 30, 2024, primarily driven by revenue mix.

Expressed as a percentage of Music Publishing revenue, Music Publishing Adjusted OIBDA margin increased to 29% for the three months ended June 30, 2025 from 26% for the three months ended June 30, 2024.

Corporate Expenses and Eliminations

Our operating loss from corporate expenses and eliminations increased by $3 million for the three months ended March 31, 2025 to $87 million from $84 million for the three months ended March 31, 2024, driven by incremental investment in technology and higher depreciation expense of $1 million, partially offset by restructuring and impairment charges of $7 million recorded in the prior-year quarter in connection with the Strategic Restructuring Plan, and lower expenses related to transformation initiatives of $1 million.

Our Adjusted OIBDA loss from corporate expenses and eliminations increased by $10 million for the three months ended March 31, 2025 to $52 million from $42 million for the three months ended March 31, 2024, primarily due to the operating loss factors noted above.

Our operating loss from corporate expenses and eliminations increased by $17 million for the three months ended June 30, 2025 to $92 million from $75 million for the three months ended June 30, 2024, driven by incremental investment in technology and higher depreciation expense of $2 million driven by the core financials component of our new technology platform being placed into service.

Our Adjusted OIBDA loss from corporate expenses and eliminations remained constant at $44 million for each of the three months ended June 30, 2025 and June 30, 2024, primarily due to the operating loss factors noted above.

RESULTS OF OPERATIONS

Six Months Ended March 31, 2025 Compared with Six Months Ended March 31, 2024

Nine Months Ended June 30, 2025 Compared with Nine Months Ended June 30, 2024

Consolidated Results

Our revenues were composed of the following amounts (in millions):

For the Six Months Ended

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2025 2024 $ Change % Change

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Total Revenues

Total revenues decreased by $92 million, or 3%, to $3,150 million for the six months ended March 31, 2025 from $3,242 million for the six months ended March 31, 2024.

The prior year included $75 million from a licensing agreement extension for an artist’s catalog (the “Licensing Extension”) in Recorded Music licensing revenue 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 six months ended March 31, 2024.

Revenue growth was also unfavorably impacted by the BMG Termination, which resulted in $32 million lower Recorded Music revenue compared to the six months ended March 31, 2024, of which $16 million was in streaming revenue and $16 million was in physical revenue.

Adjusted for these items, total revenues increased 1%, which includes $46 million of unfavorable currency exchange fluctuations.

Prior to intersegment eliminations, Recorded Music and Music Publishing revenues represented 80% and 20% of total revenues for the six months ended March 31, 2025, respectively, and 81% and 19% of total revenues for the six months ended March 31, 2024, respectively.

Total revenues increased by $43 million, or 1%, to $4,839 million for the nine months ended June 30, 2025 from $4,796 million for the nine months ended June 30, 2024.

Revenue growth was favorably impacted by $16 million of higher Recorded Music digital revenue from the Copyright Settlement and $4 million of higher Recorded Music digital revenue from the DSP True-Up Payments.

The prior year included $75 million in 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 nine months ended June 30, 2024.

Revenue growth was also unfavorably impacted by the BMG Termination, which resulted in $64 million lower Recorded Music revenue compared to the nine months ended June 30, 2024, of which $24 million was in streaming revenue and $40 million was in physical revenue.

Prior to intersegment eliminations, Recorded Music and Music Publishing revenues represented 80% and 20% of total revenues for the nine months ended June 30, 2025, respectively, and 81% and 19% of total revenues for the nine months ended June 30, 2024, respectively.

Prior to intersegment eliminations, U.S.

and international revenues represented 43% and 57% for the six months ended March 31, 2025, respectively, and 46% and 54% for the six months ended March 31, 2024, respectively.

Total digital revenues after intersegment eliminations decreased by $30 million, or 1%, to $2,109 million for the six months ended March 31, 2025 from $2,139 million for the six months ended March 31, 2024.

Excluding the BMG Termination and the Digital License Renewal, total digital revenues increased 1%.

Total streaming revenue decreased 1% driven by Recorded Music, partially offset by growth in Music Publishing.

Total digital revenues represented 67% of consolidated revenues for the six months ended March 31, 2025, from 66% for the six months ended March 31, 2024.

and international revenues represented 43% and 57% for the nine months ended June 30, 2025, respectively, and 45% and 55% for the nine months ended June 30, 2024, respectively.

Total digital revenues after intersegment eliminations increased by $27 million, or 1%, to $3,241 million for the nine months ended June 30, 2025 from $3,214 million for the nine months ended June 30, 2024.

Total streaming revenue increased 1% primarily driven by an increase in streaming revenue at Music Publishing.

Total digital revenues remained constant at 67% of consolidated revenues for each of the nine months ended June 30, 2025 and June 30, 2024.

Prior to intersegment eliminations, total digital revenues

for the six months ended March 31, 2025 were composed of U.S.

for the nine months ended June 30, 2025 were composed of U.S.

revenues of $1,533 million and international revenues of $1,709 million, or 47% and 53% of total digital revenues, respectively.

Prior to intersegment eliminations, total digital revenues for the six months ended March 31, 2024 were composed of U.S.

Prior to intersegment eliminations, total digital revenues for the nine months ended June 30, 2024 were composed of U.S.

revenues of $1,551 million and international revenues of $1,664 million, or 48% and 52% of total digital revenues, respectively.

Recorded Music revenues decreased by $114 million, or 4%, to $2,520 million for the six months ended March 31, 2025 from $2,634 million for the six months ended March 31, 2024.

The decrease includes $38 million of unfavorable currency exchange fluctuations.

Recorded Music revenues were $1,029 million and $1,135 million, or 41% and 43% of consolidated Recorded Music revenues, for the six months ended March 31, 2025 and March 31, 2024, respectively.

International Recorded Music revenues were $1,491 million and $1,499 million, or 59% and 57% of consolidated Recorded Music revenues for the six months ended March 31, 2025 and March 31, 2024, respectively.

The overall decrease in Recorded Music revenue was driven by decreases in digital, licensing, and artist services and expanded-rights revenues, partially offset by an increase in physical revenue.

Digital revenue decreased by $42 million, or 2%, which includes an unfavorable impact of currency exchange fluctuations of $30 million.

Revenue from streaming services fell by $36 million, or 2%, to $1,679 million for the six months ended March 31, 2025 from $1,715 million for the six months ended March 31, 2024.

The decrease in streaming revenue reflects the unfavorable impact of the Digital License Renewal of $30 million, the BMG Termination of $16 million, and the unfavorable impact of foreign currency exchange rates of $29 million.

Excluding the BMG Termination and the Digital License Renewal, streaming revenue increased 1%, driven by the impact of price increases in the prior year, the timing of deal renewals, and content delivery with certain emerging streaming platforms in the prior year.

Download and other digital revenues decreased by $6 million, or 15%, to $35 million for the six months ended March 31, 2025 from $41 million for the six months ended March 31, 2024 primarily due to the continued shift to streaming services.

Recorded Music revenues decreased by $11 million to $3,874 million for the nine months ended June 30, 2025 compared to $3,885 million for the nine months ended June 30, 2024, which includes $17 million of unfavorable currency exchange fluctuations.

Recorded Music revenues were $1,565 million and $1,652 million, or 40% and 43% of consolidated Recorded Music revenues, for the nine months ended June 30, 2025 and June 30, 2024, respectively.

International Recorded Music revenues were $2,309 million and $2,233 million, or 60% and 57% of consolidated Recorded Music revenues for the nine months ended June 30, 2025 and June 30, 2024, respectively.

The overall decrease in Recorded Music revenue was driven by a decrease in licensing offset by increases in artist services and expanded-rights and physical revenues.

Digital revenue increased by $5 million for the nine months ended June 30, 2025 compared to the nine months ended June 30, 2024, which includes an unfavorable impact of currency exchange fluctuations of $20 million, and reflects the impacts of the Copyright Settlement of $16 million and DSP True-Up Payments of $4 million in the current year and $43 million in the prior year, as well as the Digital License Renewal of $30 million and the BMG Termination of $24 million in the prior year.

Revenue from streaming services decreased $4 million to $2,574 million for the nine months ended June 30, 2025 compared to $2,578 million for the nine months ended June 30, 2024, which includes the unfavorable impact of foreign currency exchange rates of $20 million, and reflects the impacts of the DSP True-Up Payments of $4 million in the current year and $43 million in the prior year, as well as the Digital License Renewal of $30 million and the BMG Termination of $24 million in the prior year.

Download and other digital revenues increased by $9 million, or 15%, to $69 million for the nine months ended June 30, 2025 from $60 million for the nine months ended June 30, 2024 primarily due to the impact of the Copyright Settlement of $16 million, partially offset by the continued shift to streaming services.

Licensing revenue decreased by $47 million, or 13%, primarily driven by $75 million from the Licensing Extension in the prior year.

Artist services and expanded-rights revenue decreased by $17 million attributable to lower concert promotion revenue, lower direct-to-consumer merchandising revenue at EMP, and a decrease in revenue related to the exit of the Company’s non-core owned and operated media properties in connection with the Strategic Restructuring Plan.

Physical revenue increased by $13 million, or 5%, which includes the unfavorable impact of the BMG Termination of $16 million.

Excluding the BMG Termination, physical revenue increased 12%, driven by releases from Linkin Park, Mariya Takeuchi, Hwang Young Woong, ROSÉ, and MISAMO, and includes an unfavorable impact of foreign currency exchange rates of $2 million.

Music Publishing revenues increased by $23 million, or 4%, to $633 million for the six months ended March 31, 2025 from $610 million for the six months ended March 31, 2024.

Music Publishing revenues were $334 million and $342 million, or 53% and 56% of consolidated Music Publishing revenues, for the six months ended March 31, 2025 and March 31, 2024, respectively.

International Music Publishing revenues were $299 million and $268 million, or 47% and 44% of Music Publishing revenues, for the six months ended March 31, 2025 and March 31, 2024, respectively.

The overall increase in Music Publishing revenue was attributable to increases in digital revenue of $12 million, or 3%, performance revenue of $6 million, or 6%, other publishing revenue of $4 million, and synchronization revenue of $1 million.

Mechanical revenue remained constant.

Artist services and expanded-rights revenue increased by $19 million, or 4%, attributable to higher concert promotion revenue in Europe.

Physical revenue increased by $12 million, or 3%, driven by strong U.S.

and international releases, including in Japan and Korea, and includes a favorable impact of foreign currency exchange rates of $2 million, partially offset by the unfavorable impact of the BMG Termination of $40 million.

Top sellers for the nine months ended June 30, 2025 included ROSÉ, Bruno Mars, Teddy Swims, Linkin Park, Charli XCX, and Benson Boone.

Music Publishing revenues increased by $54 million, or 6%, to $969 million for the nine months ended June 30, 2025 from $915 million for the nine months ended June 30, 2024.

Music Publishing revenues were $520 million and $503 million, or 54% and 55% of consolidated Music Publishing revenues, for the nine months ended June 30, 2025 and June 30, 2024, respectively.

International Music Publishing revenues were $449 million and $412 million, or 46% and 45% of Music Publishing revenues, for the nine months ended June 30, 2025 and June 30, 2024, respectively.

The overall increase in Music Publishing revenue was attributable to increases in digital revenue of $22 million, or 4%, performance revenue of $12 million, or 8%, synchronization revenue of $13 million, or 8%, mechanical revenue of $3 million, or 7%, and other publishing revenue of $4 million.

The increase in digital revenue was primarily driven by continued growth in streaming revenue.

Revenue from streaming services grew by $12 million, or 3%, to $390 million for the six months ended March 31, 2025 from $378 million for the six months ended March 31, 2024, reflecting the continued market growth, partially offset by an unfavorable impact of foreign currency exchange rates of $4 million.

The growth in performance revenue is attributable to growth from concerts, radio and live events, and the growth in synchronization revenue is attributable to the timing of copyright infringement settlements.

Revenue from streaming services grew by $22 million, or 4%, to $592 million for the nine months ended June 30, 2025 from $570 million for the nine months ended June 30, 2024, reflecting the impact of deal renewals, primarily in the U.S., partially offset by an unfavorable impact of foreign currency exchange rates of $2 million.

The growth in performance revenue is attributable to growth from concerts, radio and live events in Europe, and the growth in synchronization revenue is attributable to the timing of other copyright infringement settlements, higher television and commercial licensing activity, and the $5 million impact of our acquisition of Tempo.

Revenue by Geographical Location

revenue decreased by $114 million, or 8%, to $1,363 million for the six months ended March 31, 2025 from $1,477 million for the six months ended March 31, 2024.

revenue decreased by $70 million, or 3%, to $2,085 million for the nine months ended June 30, 2025 from $2,155 million for the nine months ended June 30, 2024.

Recorded Music revenue decreased by $87 million, or 5%, primarily driven by a decrease in licensing revenue of $67 million largely attributable to $75 million from the Licensing Extension in the prior year.

The decrease in U.S.

Recorded Music revenue was also attributable to lower digital revenues, partially offset by growth in U.S.

Recorded Music physical and artist services and expanded-rights revenue.

Recorded Music digital revenue decreased by $40 million, or 5%, which reflects lower streaming revenue of $38 million, or 5%, and lower download and other digital revenue of $2 million, or 10%.

The decrease in streaming revenue is largely attributable to the unfavorable impact of the BMG Termination compared to the prior year.

U.S Recorded Music physical revenue increased by $8 million, or 7%, driven by strong releases in the current year as well as catalog and carryover success.

Recorded Music artist services and expanded-rights revenue increased by $1 million, or 1%, driven by the impact of acquisitions, partially offset by a decrease in revenue related to the exit of the Company’s non-core owned and operated media properties in the prior year in connection with the Strategic Restructuring Plan.

Music Publishing revenue decreased by $8 million, or 2%, to $334 million for the six months ended March 31, 2025 from $342 million for the six months ended March 31, 2024.

Music Publishing digital revenue decreased by $9 million, attributable to lower streaming revenue of $9 million, or 4%, while download and other digital revenue remained constant.

This was partially offset by growth in U.S.

Music Publishing mechanical revenue of $2 million driven by higher physical revenue.

Music Publishing synchronization revenue and performance revenue remained constant for the six months ended March 31, 2025 compared to the six months ended March 31, 2024.

International revenue increased by $23 million, or 1%, to $1,790 million for the six months ended March 31, 2025 from $1,767 million for the six months ended March 31, 2024.

Recorded Music revenue was also attributable to lower digital and expanded-rights revenues, partially offset by growth in U.S.

Recorded Music physical revenue.

Recorded Music digital revenue decreased by $20 million, or 2%, which reflects lower streaming revenue of $33 million, or 3%, partially offset by higher download and other digital revenue of $13 million, or 42%.

The decrease in streaming revenue is largely attributable to the impacts of the DSP True-Up Payments in both the current and prior years, as well as the BMG Termination in the prior year.

The increase in download and other digital revenue is due to the impact of the Copyright Settlement of $16 million in the current year.

U.S Recorded Music physical revenue increased by $4 million, or 2%, driven by strong releases in the current year as well as catalog and carryover success, partially offset by the impact of the BMG Termination.

Recorded Music artist services and expanded-rights revenue decreased by $4 million, or 3%, driven by a decrease in revenue related to the exit of the Company’s non-core owned and operated media properties in the prior year in connection with the

2024 Strategic Restructuring Plan, partially offset by the impact of acquisitions.

Music Publishing revenue increased by $17 million, or 3%, to $520 million for the nine months ended June 30, 2025 from $503 million for the nine months ended June 30, 2024.

Music Publishing digital revenue increased by $2 million, attributable to higher streaming revenue of $2 million, or 1%, while download and other digital revenue remained constant.

Music Publishing mechanical revenue increased by $2 million, or 25%.

Music Publishing synchronization revenue increased by $13 million, or 17%, driven by timing of other copyright infringement settlements, higher television and commercial licensing activity and the impact of acquisitions.

Music Publishing performance revenue remained constant for the nine months ended June 30, 2025 compared to the nine months ended June 30, 2024.

International revenue increased by $113 million, or 4%, to $2,758 million for the nine months ended June 30, 2025 from $2,645 million for the nine months ended June 30, 2024.

Excluding the unfavorable impact of foreign currency exchange rates of $22 million, International revenue increased by $135 million, or 5%.

International Recorded Music revenue decreased by $8 million, driven by decreases in artist services and expanded-rights revenue of $18 million and digital revenue of $2 million, partially offset by increases in licensing revenue of $7 million and physical revenue of $5 million.

International Recorded Music artist services and expanded-rights revenue decreased by $18 million due to lower direct-to-consumer merchandising revenue at EMP, lower concert promotion revenue primarily in France, and the unfavorable impact of foreign currency exchange rates of $4 million.

International Recorded Music digital revenue decreased by $2 million, attributable to lower download and other digital revenue of $4 million, partially offset by higher streaming revenue of $2 million, which reflects the unfavorable impacts of the BMG Termination and the Digital License Renewal in the prior year, and an unfavorable impact of foreign currency exchange rates of $29 million.

International Recorded Music licensing revenue increased by $7 million, driven by higher licensing activity primarily in Japan, the timing of copyright infringement settlements, and unfavorable foreign currency exchange rates of $2 million.

International Recorded Music physical revenue increased by $5 million, driven by strength of new releases primarily in Japan, partially offset by an unfavorable impact of foreign currency exchange rates of $2 million.

International Music Publishing revenue increased by $31 million, or 12%, to $299 million for the six months ended March 31, 2025 from $268 million for the six months ended March 31, 2024.

This was driven by increases in digital revenue of $21 million, performance revenue of $6 million driven by higher touring revenue, other publishing revenue of $5 million, and synchronization of $1 million, partially offset by lower mechanical revenue of $2 million.

International Music Publishing digital growth is primarily driven by streaming revenue growth of $21 million, or 15%, while International Music Publishing downloads and other digital revenue remained constant for the six months ended March 31, 2025 compared to the six months ended March 31, 2024.

International Recorded Music revenue increased by $76 million, driven by increases in digital revenue of $25 million, artist services and expanded-rights revenue of $23 million, licensing revenue of $20 million and physical revenue of $8 million.

International Recorded Music digital revenue increased by $25 million, attributable to higher streaming revenue of $29 million which includes the impact of certain DSP True-Up Payments, the Digital License Renewal and the BMG Termination in the prior year, and a favorable impact of foreign currency exchange rates of $20 million, partially offset by lower download and other digital revenue of $4 million.

International Recorded Music artist services and expanded-rights revenue increased by $23 million, primarily due to higher concert promotion revenue.

International Recorded Music licensing revenue increased by $20 million, driven by higher licensing activity primarily in the U.K.

and Japan, the timing of other copyright infringement settlements, and favorable foreign currency exchange rates of $1 million.

International Recorded Music physical revenue increased by $8 million, driven by strength of new releases primarily in Japan, and a favorable impact of foreign currency exchange rates of $2 million, partially offset by the unfavorable impact of the BMG Termination in the prior year.

International Music Publishing revenue increased by $37 million, or 9%, to $449 million for the nine months ended June 30, 2025 from $412 million for the nine months ended June 30, 2024.

This was driven by increases in digital revenue of $20 million, performance revenue of $12 million driven by higher touring revenue, mechanical revenue of $1 million, and other publishing revenue of $4 million.

Synchronization revenue remained constant for the nine months ended June 30, 2025 compared to the nine months ended June 30, 2024.

International Music Publishing digital growth is primarily driven by streaming revenue growth of $20 million, or 9%.

Cost of revenues

Our cost of revenues was composed of the following amounts (in millions):

For the Six Months Ended

March 31, 2025 vs.

For the Nine Months Ended

June 30, 2025 vs.

2025 2024 $ Change % Change

2 unchanged sentences

Total cost of revenues $ 2,598 $ 2,501 $ 97 4 %

Artist and repertoire costs increased by $26 million, to $1,105 million for the six months ended March 31, 2025 from $1,079 million for the six months ended March 31, 2024.

Artist and repertoire costs as a percentage of revenue increased to 35% for the six months ended March 31, 2025 from 33% for the six months ended March 31, 2024, primarily due to revenue mix compared to the six months ended March 31, 2024, which included items with upfront revenue recognition without associated artist and repertoire costs, and unfavorable movements in currency exchange rates.

Product costs decreased by $12 million, to $580 million for the six months ended March 31, 2025 from $592 million for the six months ended March 31, 2024.

Product costs as a percentage of revenue remained constant at 18% for each of the six months ended March 31, 2025 and March 31, 2024, primarily due to the impact of the Licensing Extension, revenue mix and the BMG Termination.

Artist and repertoire costs increased by $62 million, to $1,689 million for the nine months ended June 30, 2025 from $1,627 million for the nine months ended June 30, 2024.

Artist and repertoire costs as a percentage of revenue increased to 35% for the nine months ended June 30, 2025 from 34% for the nine months ended June 30, 2024, primarily due to revenue mix compared to the nine months ended June 30, 2024, which included items with upfront revenue recognition without associated artist and repertoire costs, partially offset by favorable movements in currency exchange rates.

Product costs increased by $35 million, to $909 million for the nine months ended June 30, 2025 from $874 million for the nine months ended June 30, 2024.

Product costs as a percentage of revenue increased to 19% for the nine months ended June 30, 2025 from 18% for the nine months ended June 30, 2024, primarily due to the impact of the Licensing Extension, revenue mix and the BMG Termination.

Selling, general and administrative expenses

Our selling, general and administrative expenses were composed of the following amounts (in millions):

For the Six Months Ended

March 31, 2025 vs.

For the Nine Months Ended

June 30, 2025 vs.

2025 2024 $ Change % Change

4 unchanged sentences

______________________________________

(1) Includes depreciation expense of $57 million and $52 million for the six months ended March 31, 2025 and March 31, 2024, respectively.

Total selling, general and administrative expense increased by $2 million, to $924 million for the six months ended March 31, 2025 from $922 million for the six months ended March 31, 2024.

Expressed as a percentage of revenue, total selling, general and administrative expense increased to 29% for the six months ended March 31, 2025 from 28% for the six months ended March 31, 2024 due to the factors noted below.

General and administrative expense increased by $33 million to $560 million for the six months ended March 31, 2025 from $527 million for the six months ended March 31, 2024.

The increase in general and administrative expense was driven by higher non-cash stock-based compensation expense of $9 million, higher depreciation expense related to technology assets of $5 million, and unfavorable movements in foreign currency exchange rates of $8 million, offset by lower expenses related to transformation initiatives and related costs of $3 million, the impact of acquisitions, and savings from the Strategic Restructuring Plan, of which a portion has been reinvested into the Company’s business.

Expressed as a percentage of revenue, general and administrative expense increased to 18% for the six months ended March 31, 2025 from 16% for the six months ended March 31, 2024 due to the factors noted above.

Selling and marketing expense decreased by $30 million, or 9%, to $315 million for the six months ended March 31, 2025 from $345 million for the six months ended March 31, 2024.

Expressed as a percentage of revenue, selling and marketing expense decreased to 10% for the six months ended March 31, 2025, from 11% for the six months ended March 31, 2024 due to lower variable marketing spend and savings from the Strategic Restructuring Plan, of which a portion has been reinvested in the Company’s business.

Distribution expense decreased by $1 million to $49 million for the six months ended March 31, 2025 from $50 million for the six months ended March 31, 2024.

Expressed as a percentage of revenue, distribution expense remained constant at 2% for each of the six months ended March 31, 2025 and March 31, 2024.

(1) Includes depreciation expense of $86 million and $77 million for the nine months ended June 30, 2025 and June 30, 2024, respectively.

Total selling, general and administrative expense increased by $11 million, to $1,395 million for the nine months ended June 30, 2025 from $1,384 million for the nine months ended June 30, 2024.

Expressed as a percentage of revenue, total selling, general and administrative expense remained constant at 29% for each of the nine months ended June 30, 2025 and June 30, 2024 due to the factors noted below.

General and administrative expense increased by $51 million to $842 million for the nine months ended June 30, 2025 from $791 million for the nine months ended June 30, 2024.

The increase in general and administrative expense was driven by incremental investment in technology of $20 million, higher non-cash stock-based compensation expense of $14 million, the impact of acquisitions of $7 million, and higher depreciation expense of $9 million related to technology assets being placed into service, including the core financials component of our new technology platform, partially offset by lower expenses related to transformation initiatives and related costs of $2 million, and savings from the 2024 Strategic Restructuring Plan, of which a portion has been reinvested into the Company’s business.

Expressed as a percentage of revenue, general and administrative expense increased to 17% for the nine months ended June 30, 2025 from 16% for the nine months ended June 30, 2024 due to the factors noted above.

Selling and marketing expense decreased by $36 million, or 7%, to $482 million for the nine months ended June 30, 2025 from $518 million for the nine months ended June 30, 2024.

Expressed as a percentage of revenue, selling and marketing expense decreased to 10% for the nine months ended June 30, 2025, from 11% for the nine months ended June 30, 2024 due to lower variable marketing spend and savings from the 2024 Strategic Restructuring Plan, of which a portion has been reinvested in the Company’s business.

Distribution expense decreased by $4 million to $71 million for the nine months ended June 30, 2025 from $75 million for the nine months ended June 30, 2024.

Expressed as a percentage of revenue, distribution expense decreased to 1% for the nine months ended June 30, 2025 from 2% for the nine months ended June 30, 2024.

Reconciliation of Net Income Attributable to Warner Music Group Corp.

3 unchanged sentences

to operating income for purposes of the discussion that follows (in millions):

For the Six Months Ended

March 31, 2025 vs.

For the Nine Months Ended

June 30, 2025 vs.

2025 2024 $ Change % Change

5 unchanged sentences

Income before income taxes 384 550 (166) -30 %

Other (income) expense (89) 13 (102) — %

Other expense 48 9 39 — %

Interest expense, net 119 121 (2) -2 %

4 unchanged sentences

Transformation initiatives and other related costs 54 56 (2) -4 %

Executive transition costs 4 — 4 — %

Net gain on divestitures — (32) 32 -100 %

2 unchanged sentences

Adjusted OIBDA

Adjusted OIBDA decreased by $97 million to $666 million for the six months ended March 31, 2025 as compared to $763 million for the six months ended March 31, 2024.

Expressed as a percentage of total revenue, Adjusted OIBDA margin decreased to 21% for the six months ended March 31, 2025 from 24% for the six months ended March 31, 2024.

The decreases in Adjusted OIBDA and Adjusted OIBDA margin are driven by the $74 million impact of the Licensing Extension in the prior year and the $12 million impact of the Digital License Renewal in the prior year, as well as revenue mix and unfavorable movements in currency exchange rates, partially offset by savings from the Strategic Restructuring Plan, a portion of which has been reinvested in the Company’s business.

Adjusted OIBDA decreased by $40 million to $1,039 million for the nine months ended June 30, 2025 as compared to $1,079 million for the nine months ended June 30, 2024, largely attributable to the impact of the Copyright Settlement of $9 million in Recorded Music and the $3 million impact of the DSP True-Up Payments in the current year, and the $74 million impact of the Licensing Extension, the $23 million impact of the DSP True-Up Payments, the $12 million impact of the Digital License Renewal, and the $1 million impact of the BMG Termination in the prior year, as well as revenue mix, partially offset by savings from the 2024 Strategic Restructuring Plan, a portion of which has been reinvested in the Company’s business, and favorable movements in currency exchange rates.

Expressed as a percentage of total revenue, Adjusted OIBDA margin decreased to 21% for the nine months ended June 30, 2025 from 23% for the nine months ended June 30, 2024.

Non-cash stock-based compensation and other related costs

Our non-cash stock-based compensation and other related costs increased by $9 million to $33 million for the six months ended March 31, 2025 from $24 million for the six months ended March 31, 2024, primarily related to issuance of additional restricted stock units and market-based performance stock units.

Our non-cash stock-based compensation and other related costs increased by $14 million to $49 million for the nine months ended June 30, 2025 from $35 million for the nine months ended June 30, 2024, primarily related to issuance of additional restricted stock units and market-based performance stock units and the departure of our former CFO in the current year of $5 million.

Net gain on divestitures

There was no net gain on divestitures during the six months ended March 31, 2025.

During the six months ended March 31, 2024, the Company recognized a pre-tax gain of $31 million in connection with the divestiture of certain sound recording and publishing rights.

There was no net gain on divestitures during the nine months ended June 30, 2025.

During the nine months ended June 30, 2024, the Company recognized a pre-tax gain of $32 million in connection with the divestiture of certain sound recording and publishing rights.

Executive transition costs

Executive transition costs were $4 million during the nine months ended June 30, 2025, which consisted of severance costs associated with the departure of our former CFO in the current year.

Transformation initiatives and other related costs

Our transformation initiatives and other related costs decreased by $3 million to $35 million for the six months ended March 31, 2025 from $38 million for the six months ended March 31, 2024.

Our transformation initiatives and other related costs decreased by $2 million to $54 million for the nine months ended June 30, 2025 from $56 million for the nine months ended June 30, 2024.

Restructuring and Impairments

Our restructuring and impairment charges decreased by $55 million to $40 million for the six months ended March 31, 2025 from $95 million for the six months ended March 31, 2024.

The current year includes severance costs of approximately $8 million, and approximately $32 million of impairment losses related to the Strategic Restructuring Plan.

Impairment charges recognized during

the current year primarily relate to the write-off of certain long-form audiovisual production assets and lease termination costs for office closures.

The six months ended March 31, 2024 includes severance costs of approximately $45 million, and $50 million of impairment losses primarily related to the Strategic Restructuring Plan.

Our restructuring and impairment charges increased by $13 million to $109 million for the nine months ended June 30, 2025 from $96 million for the nine months ended June 30, 2024.

The current year includes contract termination costs of approximately $7 million, and approximately $32 million of impairment losses related to the 2024 Strategic Restructuring Plan as well as an impairment charge of $70 million for long-lived assets associated with certain of the Company’s non-core e-tailer operations.

Impairment charges recognized in connection with the 2024 Strategic Restructuring Plan during the current year primarily relate to the write-off of certain long-form audiovisual production assets and lease termination costs for office closures.

The nine months ended June 30, 2024 also includes severance costs of approximately $46 million, and $50 million of impairment losses primarily related to the 2024 Strategic Restructuring Plan.

Depreciation expense

Our depreciation expense increased by $5 million to $57 million for the six months ended March 31, 2025 from $52 million for the six months ended March 31, 2024.

This increase is primarily due to an increase in IT assets being placed into service.

Our depreciation expense increased by $9 million to $86 million for the nine months ended June 30, 2025 from $77 million for the nine months ended June 30, 2024.

This increase is primarily due to an increase in IT assets being placed into service, including the core financials component of our new technology platform.

Amortization expense

Our amortization expense increased by $7 million, or 6%, to $119 million for the six months ended March 31, 2025 from $112 million for the six months ended March 31, 2024.

Our amortization expense increased by $19 million, or 11%, to $186 million for the nine months ended June 30, 2025 from $167 million for the nine months ended June 30, 2024.

The increase is driven by incremental amortization related to acquisitions of music-related assets, partially offset by certain intangible assets becoming fully amortized.

Operating income

Our operating income decreased by $91 million to $382 million for the six months ended March 31, 2025 from $473 million for the six months ended March 31, 2024.

The decrease in operating income was due to the same factors affecting Adjusted OIBDA discussed above, as well as higher depreciation expenses primarily due to an increase in technology assets being placed into service and a $31 million net gain on divestitures in the prior year, partially offset by lower restructuring and impairment charges as noted above.

Our operating income decreased by $129 million to $551 million for the nine months ended June 30, 2025 from $680 million for the nine months ended June 30, 2024.

The decrease in operating income was due to the same factors affecting Adjusted OIBDA discussed above, as well as higher depreciation expenses primarily due to an increase in technology assets being placed into service, including the core financials component of our new technology platform, a $32 million net gain on divestitures in the prior year and higher restructuring and impairment charges as noted above.

Interest expense, net

Our interest expense, net, decreased to $76 million for the six months ended March 31, 2025 from $81 million for the six months ended March 31, 2024 due to lower interest rates on variable rate debt.

Other (income) expense

Other income for the six months ended March 31, 2025 primarily includes foreign currency gains on our Euro-denominated debt of $27 million, currency exchange gains on our intercompany loans of $19 million, realized gains on the sale of an investment of $29 million, and realized and unrealized gains on hedging activity of $9 million.

This compares to foreign currency losses on our Euro-denominated debt of $19 million and currency exchange losses on the Company’s intercompany loans of $2 million for the six months ended March 31, 2024.

Our interest expense, net, decreased to $119 million for the nine months ended June 30, 2025 from $121 million for the nine months ended June 30, 2024 due to lower interest rates on variable rate debt, partially offset by the impact of the Tempo Asset-Based Notes.

Other expense

Other expense for the nine months ended June 30, 2025 primarily includes foreign currency losses on our Euro-denominated debt of $43 million, currency exchange gains on our intercompany loans of $43 million, realized gains on the sale of an investment of $29 million, and realized and unrealized gains on hedging activity of $1 million.

This compares to foreign currency losses on our Euro-denominated debt of $19 million and currency exchange losses on the Company’s intercompany loans of $2 million for the nine months ended June 30, 2024.

Income tax expense

Our income tax expense increased by $28 million to $118 million for the six months ended March 31, 2025 from $90 million for the six months ended March 31, 2024.

The increase of $28 million in income tax expense is primarily due to the impact of higher pre-tax income in the current year and benefit from the winding down of the Company’s owned and operated media properties in the prior year.

Net income decreased by $12 million to $277 million for the six months ended March 31, 2025 from $289 million for the six months ended March 31, 2024 as a result of the factors described above.

Our income tax expense increased by $3 million to $123 million for the nine months ended June 30, 2025 from $120 million for the nine months ended June 30, 2024.

The increase of $3 million in income tax expense is primarily due to benefits in the prior year from the winding down of the Company’s owned and operated media properties, updated allowable costs for reported foreign derived intangible income, and no tax on non-controlling interest were partially offset by lower pre-tax income in the current year.

Net income decreased by $169 million to $261 million for the nine months ended June 30, 2025 from $430 million for the nine months ended June 30, 2024 as a result of the factors described above.

Noncontrolling interest

Income attributable to noncontrolling interest decreased by $29 million to $5 million for the six months ended March 31, 2025 from $34 million for the six months ended March 31, 2024, driven by lower income from non-wholly-owned subsidiaries in the current year, primarily due to the impact of the Licensing Extension in the prior year.

Income attributable to noncontrolling interest decreased by $31 million to $5 million for the nine months ended June 30, 2025 from $36 million for the nine months ended June 30, 2024, driven by lower income from non-wholly-owned subsidiaries in the current year, primarily due to the impact of the Licensing Extension in the prior year.

Business Segment Results

Revenues, operating income (loss) and Adjusted OIBDA by business segment were as follows (in millions):

For the Six Months Ended

March 31, 2025 vs.

For the Nine Months Ended

June 30, 2025 vs.

2025 2024 $ Change % Change

19 unchanged sentences

Recorded Music

Recorded Music revenue decreased by $114 million, or 4%, to $2,520 million for the six months ended March 31, 2025 from $2,634 million for the six months ended March 31, 2024.

Recorded Music revenues were $1,029 million and $1,135 million, or 41% and 43% of consolidated Recorded Music revenues, for the six months ended March 31, 2025 and March 31, 2024, respectively.

International Recorded Music revenues were $1,491 million and $1,499 million, or 59% and 57% of consolidated Recorded Music revenues, for the six months ended March 31, 2025 and March 31, 2024, respectively.

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

Recorded Music revenues decreased by $11 million to $3,874 million for the nine months ended June 30, 2025 compared to $3,885 million for the nine months ended June 30, 2024, U.S.

Recorded Music revenues were $1,565 million and $1,652 million, or 40% and 43% of consolidated Recorded Music revenues, for the nine months ended June 30, 2025 and June 30, 2024, respectively.

International Recorded Music revenues were $2,309 million and $2,233 million, or 60% and 57% of consolidated Recorded Music revenues, for the nine months ended June 30, 2025 and June 30, 2024, respectively.

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

Cost of revenues

Recorded Music cost of revenues was composed of the following amounts (in millions):

For the Six Months Ended

March 31, 2025 vs.

For the Nine Months Ended

June 30, 2025 vs.

2025 2024 $ Change % Change

2 unchanged sentences

Total cost of revenues $ 1,991 $ 1,924 $ 67 3 %

Recorded Music cost of revenues decreased by $3 million, to $1,285 million for the six months ended March 31, 2025 from $1,288 million for the six months ended March 31, 2024.

Expressed as a percentage of Recorded Music revenue, Recorded Music artist and repertoire costs increased to 28% for the six months ended March 31, 2025, from 26% for the six months ended March 31, 2024 primarily driven by revenue mix compared to the six months ended March 31, 2024, which included items with upfront revenue recognition without associated artist and repertoire costs, and unfavorable movements in currency exchange rates.

Expressed as a percentage of Recorded Music revenue, Recorded Music product costs increased to 23% for the six months ended March 31, 2025 from 22% for the six months ended March 31, 2024, primarily due to the impact of the Licensing Extension in the prior year and an unfavorable impact of foreign currency exchange rates in the current year.

Recorded Music cost of revenues increased by $67 million, to $1,991 million for the nine months ended June 30, 2025 from $1,924 million for the nine months ended June 30, 2024.

Expressed as a percentage of Recorded Music revenue, Recorded Music artist and repertoire costs increased to 28% for the nine months ended June 30, 2025, from 27% for the nine months ended June 30, 2024 primarily driven by revenue mix compared to the nine months ended June 30, 2024, which included items with upfront revenue recognition without associated artist and repertoire costs, partially offset by favorable movements in currency exchange rates.

Expressed as a percentage of Recorded Music revenue, Recorded Music product costs increased to 23% for the nine months ended June 30, 2025 from 22% for the nine months ended June 30, 2024, primarily due to revenue and deal mix and the impact of the Licensing Extension in the prior year, partially offset by a favorable impact of foreign currency exchange rates in the current year.

Selling, general and administrative expense

Recorded Music selling, general and administrative expenses were composed of the following amounts (in millions):

For the Six Months Ended

March 31, 2025 vs.

For the Nine Months Ended

June 30, 2025 vs.

2025 2024 $ Change % Change

4 unchanged sentences

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(1) Includes depreciation expense of $28 million and $26 million for the six months ended March 31, 2025 and March 31, 2024, respectively.

Recorded Music selling, general and administrative expense decreased by $11 million, to $690 million for the six months ended March 31, 2025 from $701 million for the six months ended March 31, 2024.

The increase in general and administrative expense was primarily due to unfavorable movements in foreign currency exchange rates of $7 million, the impact of acquisitions, and higher non-cash stock-based compensation and other related expenses of $7 million.

This is partially offset by savings from the Strategic Restructuring Plan, a portion of which has been reinvested into the Company’s business.

(1) Includes depreciation expense of $42 million and $39 million for the nine months ended June 30, 2025 and June 30, 2024, respectively.

Recorded Music selling, general and administrative expense decreased by $19 million, to $1,035 million for the nine months ended June 30, 2025 from $1,054 million for the nine months ended June 30, 2024.

The increase in general and administrative expense was primarily due to higher non-cash stock-based compensation and other related expenses of $5 million, partially offset by the impact of acquisitions of $7 million and savings from the 2024 Strategic Restructuring Plan, a portion of which has been reinvested into the Company’s business.

The decrease in selling and marketing expense was primarily due to lower variable marketing spend and savings from the 2024 Strategic Restructuring Plan.

The decrease in distribution expense was primarily due to revenue mix.

Expressed as a percentage of Recorded Music revenue, Recorded Music selling, general and administrative expense remained constant at 27% for each of the six months ended March 31, 2025 and March 31, 2024.

Expressed as a percentage of Recorded Music revenue, Recorded Music selling, general and administrative expense remained constant at 27% for each of the nine months ended June 30, 2025 and June 30, 2024.

Operating Income and Adjusted OIBDA

Recorded Music operating income decreased by $67 million to $441 million for the six months ended March 31, 2025 from $508 million for the six months ended March 31, 2024.

Recorded Music Adjusted OIBDA decreased by $91 million, to $593 million for the six months ended March 31, 2025 from $684 million for the six months ended March 31, 2024, largely driven by the impact of the Licensing Extension of $74 million in the prior year, the Digital License Renewal of $12 million in the prior year, and the impact of unfavorable movements in foreign currency exchange rates, partially offset by savings from the Strategic Restructuring Plan, of which a portion has been reinvested in the Company’s business.

Expressed as a percentage of Recorded Music revenue, Recorded Music Adjusted OIBDA margin decreased to 24% for the six months ended March 31, 2025 from 26% for the six months ended March 31, 2024, due to the factors noted above.

Recorded Music operating income decreased by $97 million to $642 million for the nine months ended June 30, 2025 from $739 million for the nine months ended June 30, 2024.

In addition to the factors impacting Recorded Music Adjusted OIBDA noted below, the decrease in operating income was driven by a $17 million net gain on divestitures recognized in the prior year, $110 million of restructuring and non-cash impairment charges compared to $89 million recognized in the prior year, primarily related to an impairment charge of $70 million recognized in the current period for long-lived assets associated with certain of the Company’s non-core e-tailer operations offset with lower non-cash impairment charges recognized in connection with the 2024 Strategic Restructuring plan, higher non-cash stock-based compensation expense and other related costs of $5 million and higher depreciation expense of $3 million primarily due to an increase in IT assets being placed into service, including the core financials component of our new technology platform.

Recorded Music Adjusted OIBDA decreased by $51 million, to $914 million for the nine months ended June 30, 2025 from $965 million for the nine months ended June 30, 2024, largely attributable to the impact of the Copyright Settlement of $9 million and the $3 million impact of the DSP True-Up Payments in the current year, as well as the Licensing Extension of $74 million, the $23 million impact of the DSP True-up Payments, the Digital License Renewal of $12 million, and the $1 million impact of the BMG

Termination in the prior year, partially offset by the impact of favorable movements in foreign currency exchange rates and savings from the 2024 Strategic Restructuring Plan, of which a portion has been reinvested in the Company’s business.

Expressed as a percentage of Recorded Music revenue, Recorded Music Adjusted OIBDA margin decreased to 24% for the nine months ended June 30, 2025 from 25% for the nine months ended June 30, 2024, due to the factors noted above.

Music Publishing

Music Publishing revenues increased by $23 million, or 4%, to $633 million for the six months ended March 31, 2025 from $610 million for the six months ended March 31, 2024.

Music Publishing revenues were $334 million and $342 million, or 53% and 56% of consolidated Music Publishing revenues, for the six months ended March 31, 2025 and March 31, 2024, respectively.

International Music Publishing revenues were $299 million and $268 million, or 47% and 44% of consolidated Music Publishing revenues, for the six months ended March 31, 2025 and March 31, 2024, respectively.

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

Music Publishing revenues increased by $54 million, or 6%, to $969 million for the nine months ended June 30, 2025 from $915 million for the nine months ended June 30, 2024.

Music Publishing revenues were $520 million and $503 million, or 54% and 55% of consolidated Music Publishing revenues, for the nine months ended June 30, 2025 and June 30, 2024, respectively.

International Music Publishing revenues were $449 million and $412 million, or 46% and 45% of consolidated Music Publishing revenues, for the nine months ended June 30, 2025 and June 30, 2024, respectively.

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

Cost of revenues

Music Publishing cost of revenues were composed of the following amounts (in millions):

For the Six Months Ended

March 31, 2025 vs.

For the Nine Months Ended

June 30, 2025 vs.

2025 2024 $ Change % Change

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Total cost of revenues $ 612 $ 582 $ 30 5 %

Music Publishing cost of revenues increased by $18 million, or 5%, to $404 million for the six months ended March 31, 2025 from $386 million for the six months ended March 31, 2024.

Expressed as a percentage of Music Publishing revenue, Music Publishing cost of revenues increased to 64% for the six months ended March 31, 2025 from 63% for the six months ended March 31, 2024 largely due to revenue mix and unfavorable movements in foreign currency exchange rates.

Music Publishing cost of revenues increased by $30 million, or 5%, to $612 million for the nine months ended June 30, 2025 from $582 million for the nine months ended June 30, 2024.

Expressed as a percentage of Music Publishing revenue, Music Publishing cost of revenues decreased to 63% for the nine months ended June 30, 2025 from 64% for the nine months ended June 30, 2024.

Selling, general and administrative expense

Music Publishing selling, general and administrative expenses were composed of the following amounts (in millions):

For the Six Months Ended

March 31, 2025 vs.

For the Nine Months Ended

June 30, 2025 vs.

2025 2024 $ Change % Change

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______________________________________

(1) Includes depreciation expense of $3 million and $2 million for the six months ended March 31, 2025 and March 31, 2024, respectively.

Music Publishing selling, general and administrative expense increased to $67 million for the six months ended March 31, 2025 from $60 million for the six months ended March 31, 2024.

Expressed as a percentage of Music Publishing revenue, Music Publishing selling, general and administrative expense increased to 11% for the six months ended March 31, 2025 from 10% for the six months ended March 31, 2024 largely due to revenue mix and the unfavorable movements in foreign currency exchange rates.

(1) Includes depreciation expense of $4 million and $2 million for the nine months ended June 30, 2025 and June 30, 2024, respectively.

Music Publishing selling, general and administrative expense increased to $101 million for the nine months ended June 30, 2025 from $91 million for the nine months ended June 30, 2024.

Expressed as a percentage of Music Publishing revenue, Music Publishing selling, general and administrative expense remained constant at 10% for the nine months ended June 30, 2025 and June 30, 2024.

Operating Income and Adjusted OIBDA

Music Publishing operating income decreased by $25 million to $107 million for the six months ended March 31, 2025 from $132 million operating income for the six months ended March 31, 2024 largely due to the factors that impacted Music Publishing Adjusted OIBDA noted below, as well as a $14 million net gain on a divestiture recognized in the prior year.

Music Publishing Adjusted OIBDA remained constant for the six months ended March 31, 2025 and the six months ended March 31, 2024.

Expressed as a percentage of Music Publishing revenue, Music Publishing Adjusted OIBDA margin decreased to 27% for the six months ended March 31, 2025 from 28% for the six months ended March 31, 2024, primarily driven by revenue mix and the unfavorable movements in foreign currency exchange rates.

Music Publishing operating income decreased by $18 million to $167 million for the nine months ended June 30, 2025 from $185 million operating income for the nine months ended June 30, 2024 largely due to the factors that impacted Music Publishing Adjusted OIBDA noted below, as well as a $14 million net gain on a divestiture recognized in the prior year.

Music Publishing Adjusted OIBDA increased by $17 million to $264 million for the nine months ended June 30, 2025 from $247 million for the nine months ended June 30, 2024.

Expressed as a percentage of Music Publishing revenue, Music Publishing Adjusted OIBDA margin remained constant at 27% for the nine months ended June 30, 2025 and June 30, 2024, primarily driven by revenue mix and the impact of acquisitions.

Corporate Expenses and Eliminations

Our operating loss from corporate expenses and eliminations decreased by $1 million to $166 million for the six months ended March 31, 2025 from $167 million for the six months ended March 31, 2024, primarily due to lower expenses related to transformation initiatives and related costs of $3 million, lower restructuring and impairment charges associated with the Strategic Restructuring Plan of $8 million, partially offset by higher non-cash stock-based compensation and other related expenses of $1 million, incremental investment in technology and higher depreciation expense of $2 million.

Our Adjusted OIBDA loss from corporate expenses and eliminations increased by $6 million to $95 million for the six months ended March 31, 2025 from $89 million for the six months ended March 31, 2024 primarily due to the operating loss factors noted above.

Our operating loss from corporate expenses and eliminations increased by $14 million to $258 million for the nine months ended June 30, 2025 from $244 million for the nine months ended June 30, 2024, primarily due to incremental investment in technology of $20 million compared to the prior year, higher non-cash stock-based compensation and other related expenses of $8 million, executive transition costs of $4 million and higher depreciation expense of $4 million, partially offset by lower expenses related to transformation initiatives and related costs of $2 million and lower restructuring and impairment charges associated with the 2024 Strategic Restructuring Plan.

Our Adjusted OIBDA loss from corporate expenses and eliminations increased by $6 million to $139 million for the nine months ended June 30, 2025 from $133 million for the nine months ended June 30, 2024 primarily due to the operating loss factors noted above.

FINANCIAL CONDITION AND LIQUIDITY

Financial Condition at March 31, 2025

At March 31, 2025, we had $4.292 billion of debt (which is net of $39 million of premiums, discounts and deferred financing costs), $637 million of cash and equivalents (net debt of $3.655 billion, defined as total debt, less cash and equivalents and premiums, discounts and deferred financing costs) and $567 million of Warner Music Group Corp.

Financial Condition at June 30, 2025

At June 30, 2025, we had $4.363 billion of debt (which is net of $38 million of premiums, discounts and deferred financing costs), $527 million of cash and equivalents (net debt of $3.836 billion, defined as total debt, less cash and equivalents and premiums, discounts and deferred financing costs) and $589 million of Warner Music Group Corp.

This compares to $4.014 billion of debt (which is net of $34 million of premiums, discounts and deferred financing costs), $694 million of cash and equivalents (net debt of $3.320 billion) and $518 million of Warner Music Group Corp.

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The following table summarizes our historical cash flows (in millions).

The financial data for the six months ended March 31, 2025 and March 31, 2024 are unaudited and have been derived from our condensed consolidated interim financial statements included elsewhere herein.

Six Months Ended

The financial data for the nine months ended June 30, 2025 and June 30, 2024 are unaudited and have been derived from our condensed consolidated interim financial statements included elsewhere herein.

Nine Months Ended

Cash provided by (used in):

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Operating Activities

Cash provided by operating activities was $401 million for the six months ended March 31, 2025 as compared with cash provided by operating activities of $262 million for the six months ended March 31, 2024.

The $139 million increase in cash provided by operating activities was largely a result of movement in deferred revenue due to timing of digital advances and other movements within working capital, including the timing of variable compensation payments.

Cash provided by operating activities was $447 million for the nine months ended June 30, 2025 as compared with cash provided by operating activities of $450 million for the nine months ended June 30, 2024.

The $3 million decrease in cash provided by operating activities was largely a result of movement within working capital.

Investing Activities

Cash used in investing activities was $202 million for the six months ended March 31, 2025 as compared with cash used in investing activities of $125 million for the six months ended March 31, 2024.

The $202 million of cash used in investing activities in the six months ended March 31, 2025 consisted of $46 million relating to investments and acquisitions of businesses, $120 million to acquire music-related assets and $72 million relating to capital expenditures, partially offset by $36 million of proceeds from the sale of investments.

The $125 million of cash used in investing activities in the six months ended March 31, 2024 consisted of $17 million relating to investments and acquisitions of businesses, $82 million to acquire music-related assets, and $55 million relating to capital expenditures, partially offset by $17 million of proceeds from divestitures and $12 million of proceeds from the sale of investments.

Cash used in investing activities was $273 million for the nine months ended June 30, 2025 as compared with cash used in investing activities of $201 million for the nine months ended June 30, 2024.

The $273 million of cash used in investing activities in the nine months ended June 30, 2025 consisted of $46 million relating to investments and acquisitions of businesses, $152 million to acquire music-related assets and $111 million relating to capital expenditures, partially offset by $36 million of proceeds from the sale of investments.

The $201 million of cash used in investing activities in the nine months ended June 30, 2024 consisted of $26 million relating to investments and acquisitions of businesses, $123 million to acquire music-related assets, and $83 million relating to capital expenditures, partially offset by $19 million of proceeds from divestitures and $12 million of proceeds from the sale of investments.

Financing Activities

Cash used in financing activities was $248 million for the six months ended March 31, 2025 as compared with cash used in financing activities of $190 million for the six months ended March 31, 2024.

The $248 million of cash used in financing activities for the six months ended March 31, 2025 consisted of dividends paid of $189 million, payment of deferred consideration of $23 million, distributions to noncontrolling interest holders of $8 million, taxes paid related to net share settlement of restricted stock units and common stock of $19 million, common stock repurchased and retired of $2 million and other financing activity of $7 million.

The $190 million of cash used in financing activities for the six months ended March 31, 2024 consisted of dividends paid of $178 million and distributions to noncontrolling interest holders of $5 million, taxes paid related to net share settlement of restricted stock units and common stock of $5 million and deferred financing costs paid of $2 million.

Cash used in financing activities was $344 million for the nine months ended June 30, 2025 as compared with cash used in financing activities of $280 million for the nine months ended June 30, 2024.

The $344 million of cash used in financing activities for the nine months ended June 30, 2025 consisted of dividends paid of $283 million, payment of deferred consideration of $23 million, distributions to noncontrolling interest holders of $8 million, taxes paid related to net share settlement of restricted stock units and common stock of $19 million, common stock repurchased and retired of $3 million, repayment of the Term Loan Mortgage of $1 million and other financing activity of $7 million.

The $280 million of cash used in financing activities for the nine months ended June 30, 2024 consisted of dividends paid of $267 million and distributions to noncontrolling interest holders of $6 million, taxes paid related to net share settlement of restricted stock units and common stock of $5 million and deferred financing costs paid of $2 million.

Our primary sources of liquidity are the cash flows generated from our subsidiaries’ operations, available cash and equivalents and funds available for drawing under our Revolving Credit Facility.

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In September 2024, Fitch assigned us a BBB- long-term credit rating with a stable outlook.

In addition, our weighted-average interest rate on our outstanding indebtedness has decreased from 10.5% in 2011 to 4.1% as of March 31, 2025.

In addition, our weighted-average interest rate on our outstanding indebtedness has decreased from 10.5% in 2011 to 4.1% as of June 30, 2025.

Our nearest-term maturity date is in 2028.

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The $100 million share repurchase authorization does not obligate the Company to purchase any shares and the Share Repurchase Program does not have a fixed expiration date.

We did not repurchase any common shares during the three months ended March 31, 2025.

The Company repurchased and retired 60,383 shares for $2 million during the six months ended March 31, 2025.

Existing Debt as of March 31, 2025

As of March 31, 2025, our long-term debt was as follows (in millions):

As of June 30, 2025, approximately $97 million of the $100 million share repurchase authorization remained available.

The Company repurchased and retired 20,000 shares for $1 million during the three months ended June 30, 2025.

The Company repurchased and retired 80,383 shares for $3 million during the nine months ended June 30, 2025.

Existing Debt as of June 30, 2025

As of June 30, 2025, our long-term debt was as follows (in millions):

Revolving Credit Facility (a) $ —

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______________________________________

(a) Reflects $350 million of commitments under the Revolving Credit Facility available at March 31, 2025, less letters of credit outstanding of approximately $2 million at March 31, 2025.

There were one loan outstanding under the Revolving Credit Facility at March 31, 2025.

(a) Reflects $350 million of commitments under the Revolving Credit Facility with no letters of credit outstanding at June 30, 2025.

There were no loan outstanding under the Revolving Credit Facility at June 30, 2025.

(b) The Asset-Based Notes are secured only by certain music rights owned by Tempo and are nonrecourse to the Company and its subsidiaries, other than Tempo.

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Therefore, there can be no assurance that the Company will pay any dividends to holders of the Company’s common stock, or as to the amount of any such dividends.

On February 14, 2025, the Company’s board of directors declared a cash dividend of $0.18 per share on the Company’s Class A Common Stock and Class B Common Stock, as well as related payments under certain stock-based compensation plans, which was paid to stockholders on March 4, 2025.

The Company paid an aggregate of approximately $95 million and $189 million, or $0.18 and $0.36 per share, in cash dividends to stockholders and participating security holders for the three and six months ended March 31, 2025, respectively.

On May 16, 2025, the Company’s board of directors declared a cash dividend of $0.18 per share on the Company’s Class A Common Stock and Class B Common Stock, as well as related payments under certain stock-based compensation plans, which was paid to stockholders on June 3, 2025.

The Company paid an aggregate of approximately $94 million and $283 million, or $0.18 and $0.54 per share, in cash dividends to stockholders and participating security holders for the three and nine months ended June 30, 2025, respectively.

On August 7, 2025, the Company’s board of directors declared a cash dividend of $0.19 per share on the Company’s Class A Common Stock and Class B Common Stock, as well as related payments under certain stock-based compensation plans, payable on September 3, 2025 to stockholders of record as of the close of business on August 20, 2025.

Covenant Compliance

The Company was in compliance with its covenants under its outstanding notes, the Revolving Credit Facility and the Senior Term Loan Facility as of March 31, 2025.

The Company was in compliance with its covenants under its outstanding notes, the Revolving Credit Facility and the Senior Term Loan Facility as of June 30, 2025.

On January 18, 2019, we delivered a notice to the trustee under the 2012 Secured Indenture and 2014 Unsecured Indenture changing the Fixed GAAP Date, as defined under the indentures, to October 1, 2018.

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The following is a reconciliation of net income (loss), which is a U.S.

GAAP measure of our operating results, to Adjusted EBITDA as defined, for the most recently ended four fiscal quarters, or the twelve months ended March 31, 2025, for the twelve months ended March 31, 2024 and for the three months ended March 31, 2025 and March 31, 2024.

In addition, the reconciliation includes the calculation of the Senior Secured Indebtedness to Adjusted EBITDA ratio, which we refer to as the Leverage Ratio, under the Revolving Credit Agreement for the most recently ended four fiscal quarters, or the twelve months ended March 31, 2025.

GAAP measure of our operating results, to Adjusted EBITDA as defined, for the most recently ended four fiscal quarters, or the twelve months ended June 30, 2025, for the twelve months ended June 30, 2024 and for the three months ended June 30, 2025 and June 30, 2024.

The terms and related calculations are defined in the Revolving Credit Agreement.

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Twelve Months Ended

March 31, Three Months Ended

June 30, Three Months Ended

2025 2024 2025 2024

Net Income $ 466 $ 567 $ 36 $ 96

Net Income (loss)

$ 309 $ 584 $ (16) $ 141

Income tax expense 126 178 5 30

1 unchanged sentence

Depreciation and amortization 355 323 96 80

Loss on extinguishment of debt (a) — 4 — —

Net gains on divestitures and sale of securities

(29) (42) — (1)

Restructuring costs (b)

Net foreign exchange losses (gains) (c)

Restructuring costs (a)

Net foreign exchange losses (gains) (b)

140 (17) 142 (2)

Transaction costs

Business optimization expenses (d)

Non-cash stock-based compensation expense (e)

Other non-cash charges (f)

Unrestricted subsidiary income

Pro forma impact of cost savings initiatives and specified transactions (g)

Business optimization expenses (c)

Non-cash stock-based compensation expense (d)

Other non-cash charges (e)

Unrestricted subsidiary income (loss)

Pro forma impact of cost savings initiatives and specified transactions (f)

302 113 75 22

Adjusted EBITDA $ 1,719 $ 1,554 $ 456 $ 352

Senior Secured Indebtedness (h)

Leverage Ratio (i)

Senior Secured Indebtedness (g)

Leverage Ratio (h)

______________________________________

(a) Reflects loss on extinguishment of debt, primarily including tender fees and unamortized deferred financing costs.

(b) Reflects severance costs and other restructuring related expenses, including those related to the Strategic Restructuring Plan and 2023 Restructuring Plan as well as the Executive Transition Costs in the prior year.

(c) Reflects unrealized losses (gains) due to foreign exchange on our Euro-denominated debt, losses (gains) from foreign currency forward exchange contracts and intercompany transactions.

(d) Reflects costs associated with our transformation initiatives and technology system updates, which includes costs of $18 million and $74 million related to our finance transformation for the three and twelve months ended March 31, 2025, respectively, as well as $19 million and $65 million for the three and twelve months ended March 31, 2024, respectively.

(e) Reflects non-cash stock-based compensation expense related to the Omnibus Incentive Plan.

(f) Reflects non-cash activity, including the unrealized losses (gains) on the mark-to-market adjustment of equity investments, investment losses (gains) and non-cash impairment losses resulting from the Strategic Restructuring Plan.

(g) Reflects expected savings resulting from transformation initiatives, including the Strategic Restructuring Plan and the 2023 Restructuring Plan, and the pro forma impact of certain specified transactions for the three and twelve months ended March 31, 2025.

(a) Reflects severance costs and other restructuring related expenses, including those related to the 2024 Strategic Restructuring Plan as well as the Executive Transition Costs in both the current and prior year.

(b) Reflects unrealized losses (gains) due to foreign exchange on our Euro-denominated debt, losses (gains) from foreign currency forward exchange contracts and intercompany transactions.

(c) Reflects costs associated with our transformation initiatives and technology system updates, which includes costs of $19 million and $74 million related to our finance transformation for the three and twelve months ended June 30, 2025, respectively, as well as $18 million and $70 million for the three and twelve months ended June 30, 2024, respectively.

(d) Reflects non-cash stock-based compensation expense related to the Omnibus Incentive Plan.

(e) Reflects non-cash activity, including the unrealized losses (gains) on the mark-to-market adjustment of equity investments, investment losses (gains) and non-cash impairment losses resulting from the 2024 Strategic Restructuring Plan as well as an impairment charge of $70 million for long-lived assets associated with certain of the Company’s non-core e-tailer operations recognized in the current period.

(f) Reflects expected savings resulting from transformation initiatives, including the 2025 Restructuring Plan, the 2024 Strategic Restructuring Plan, and the 2023 Restructuring Plan, as well as the pro forma impact of certain specified transactions for the three and twelve months ended June 30, 2025.

Certain of these cost savings initiatives and transactions impacted quarters prior to the quarter during which they were identified within the last twelve-month period.

The pro forma impact of these specified transactions and initiatives resulted in a $20 million increase in the twelve months ended March 31, 2025 Adjusted EBITDA.

(h) Reflects the balance of senior secured debt at Acquisition Corp.

of approximately $3.990 billion less cash of $619 million, which excludes cash acquired as part of the acquisition of Tempo.

(i) Reflects the ratio of Senior Secured Indebtedness, including Revolving Credit Agreement Indebtedness, to Adjusted EBITDA.

This is calculated net of cash and equivalents of the Company as of March 31, 2025 not exceeding $750 million in accordance with the Sixth Revolving Credit Agreement Amendment.

The pro forma impact of these specified transactions and initiatives resulted in a $168 million increase in the twelve months ended June 30, 2025 Adjusted EBITDA.

(g) Reflects the balance of senior secured debt at Acquisition Corp.

of approximately $4.061 billion less cash of $510 million, which excludes cash held at Tempo, an unrestricted subsidiary.

(h) Reflects the ratio of Senior Secured Indebtedness, including Revolving Credit Agreement Indebtedness, to Adjusted EBITDA.

This is calculated net of cash and equivalents of the Company as of June 30, 2025 not exceeding $750 million in accordance with the Sixth Revolving Credit Agreement Amendment.

If the outstanding aggregate principal amount of borrowings and drawings under letters of credit which have not been reimbursed under our Revolving Credit Facility is greater than $140 million at the end of a fiscal quarter, the maximum leverage ratio permitted under the Revolving Credit Facility is 5.00:1.00.

The Company’s Revolving Credit Facility does not impose any “leverage ratio” maintenance requirement on the Company when the aggregate principal amount of borrowings and drawings under letters of credit, which have not been reimbursed under the Revolving Credit Facility, is less than or equal to $140 million at the end of a fiscal quarter.

On May 4, 2021, certain covenants set forth in our Revolving Credit Facility were suspended, including the restriction on incurring certain additional indebtedness, based on the determination that the total indebtedness to EBITDA ratio is below the required threshold specified therein.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis