Item 1. Financial Statements
ITEM 1. FINANCIAL STATEMENTS
Warner Music Group Corp.
Condensed Consolidated Balance Sheets
(In millions, except share amounts which are reflected in thousands)
(Unaudited)
June 30,
2025 September 30,
2024
Assets
Current assets:
Cash and equivalents $ 527 $ 694
Accounts receivable, net of allowances of $ 24 million and $ 26 million
1,305 1,255
Inventories 101 99
Royalty advances expected to be recouped within one year 579 470
Prepaid and other current assets 166 125
Total current assets 2,678 2,643
Royalty advances expected to be recouped after one year 1,075 874
Property, plant and equipment, net of accumulated depreciation of $ 701 million and $ 615 million
472 481
Operating lease right-of-use assets, net 216 225
Goodwill 2,064 2,021
Intangible assets subject to amortization, net 2,764 2,359
Intangible assets not subject to amortization 154 152
Deferred tax assets, net 46 52
Other assets 308 348
Total assets $ 9,777 $ 9,155
Liabilities and Equity
Current liabilities:
Accounts payable $ 241 $ 289
Accrued royalties 2,828 2,549
Accrued liabilities 533 641
Accrued interest 39 17
Operating lease liabilities, current 43 45
Deferred revenue 278 246
Other current liabilities 88 110
Total current liabilities 4,050 3,897
Acquisition Corp. long-term debt
4,061 4,014
Asset-based long-term debt
302 —
Operating lease liabilities, noncurrent 212 228
Deferred tax liabilities, net 204 195
Other noncurrent liabilities 136 146
Total liabilities $ 8,965 $ 8,480
Equity:
Class A common stock, $ 0.001 par value; 1,000,000 shares authorized, 145,887 and 142,559 shares issued and outstanding as of June 30, 2025 and September 30, 2024, respectively
$ — $ —
Class B common stock, $ 0.001 par value; 1,000,000 shares authorized, 375,380 issued and outstanding as of June 30, 2025 and September 30, 2024, respectively
1 1
Additional paid-in capital 2,102 2,077
Accumulated deficit ( 1,340 ) ( 1,313 )
Accumulated other comprehensive loss, net ( 174 ) ( 247 )
Total Warner Music Group Corp. equity 589 518
Noncontrolling interest 223 157
Total equity 812 675
Total liabilities and equity $ 9,777 $ 9,155
See accompanying notes
1
Warner Music Group Corp.
Condensed Consolidated Statements of Operations
(In millions, except share amounts which are reflected in thousands, and per share data)
(Unaudited)
Three Months Ended
June 30, Nine Months Ended
June 30,
2025 2024 2025 2024
Revenue $ 1,689 $ 1,554 $ 4,839 $ 4,796
Costs and expenses:
Cost of revenue ( 913 ) ( 830 ) ( 2,598 ) ( 2,501 )
Selling, general and administrative expenses (a) ( 471 ) ( 462 ) ( 1,395 ) ( 1,384 )
Restructuring and impairments
( 69 ) ( 1 ) ( 109 ) ( 96 )
Amortization expense ( 67 ) ( 55 ) ( 186 ) ( 167 )
Total costs and expenses ( 1,520 ) ( 1,348 ) ( 4,288 ) ( 4,148 )
Net gain on divestitures
— 1 — 32
Operating income 169 207 551 680
Interest expense, net ( 43 ) ( 40 ) ( 119 ) ( 121 )
Other (expense) income ( 137 ) 4 ( 48 ) ( 9 )
(Loss) income before income taxes ( 11 ) 171 384 550
Income tax expense ( 5 ) ( 30 ) ( 123 ) ( 120 )
Net (loss) income ( 16 ) 141 261 430
Less: Income attributable to noncontrolling interest — ( 2 ) ( 5 ) ( 36 )
Net (loss) income attributable to Warner Music Group Corp. $ ( 16 ) $ 139 $ 256 $ 394
Net income (loss) per share attributable to common stockholders:
Class A – Basic and Diluted $ ( 0.03 ) $ 0.27 $ 0.49 $ 0.75
Class B – Basic and Diluted $ ( 0.03 ) $ 0.27 $ 0.49 $ 0.75
Weighted average common shares:
Class A – Basic and Diluted 145,878 141,568 144,623 140,531
Class B – Basic and Diluted 375,380 376,315 375,380 376,868
(a) Includes depreciation expense: $ ( 29 ) $ ( 25 ) $ ( 86 ) $ ( 77 )
See accompanying notes
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Warner Music Group Corp.
Condensed Consolidated Statements of Comprehensive Income
(In millions)
(Unaudited)
Three Months Ended
June 30, Nine Months Ended
June 30,
2025 2024 2025 2024
Net (loss) income $ ( 16 ) $ 141 $ 261 $ 430
Other comprehensive income (loss), net of tax:
Foreign currency adjustment 118 ( 10 ) 73 13
Deferred loss on derivative financial instruments
— — — ( 1 )
Minimum pension liability
— — — ( 1 )
Other comprehensive income (loss), net of tax 118 ( 10 ) 73 11
Total comprehensive income 102 131 334 441
Less: Income attributable to noncontrolling interest — ( 2 ) ( 5 ) ( 36 )
Comprehensive income attributable to Warner Music Group Corp.
$ 102 $ 129 $ 329 $ 405
See accompanying notes
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Warner Music Group Corp.
Condensed Consolidated Statements of Cash Flows
(In millions)
(Unaudited)
Nine Months Ended
June 30,
2025 2024
Cash flows from operating activities
Net income $ 261 $ 430
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 272 244
Unrealized losses and remeasurement of foreign-denominated loans and foreign currency forward exchange contracts
84 10
Deferred income taxes 7 29
Net gain on investments
( 27 ) ( 4 )
Net gain on divestitures
— ( 32 )
Non-cash interest expense 4 5
Non-cash stock-based compensation expense 43 28
Non-cash impairments
102 50
Changes in operating assets and liabilities:
Accounts receivable, net ( 21 ) ( 95 )
Inventories — 34
Royalty advances ( 295 ) ( 183 )
Other noncurrent assets
— ( 85 )
Accounts payable and accrued liabilities ( 191 ) ( 119 )
Royalty payables 246 352
Accrued interest 15 8
Operating lease liabilities ( 12 ) ( 4 )
Deferred revenue 24 ( 205 )
Other balance sheet changes, net
( 65 ) ( 13 )
Net cash provided by operating activities 447 450
Cash flows from investing activities
Acquisition of music publishing rights and music catalogs
( 152 ) ( 123 )
Capital expenditures ( 111 ) ( 83 )
Investments and acquisitions of businesses, net of cash received ( 46 ) ( 26 )
Proceeds from the sale of investments 36 12
Proceeds from divestitures — 19
Net cash used in investing activities ( 273 ) ( 201 )
Cash flows from financing activities
Partial proceeds from Senior Term Loan Facility refinancing
— 42
Partial repayment of Senior Term Loan Facility refinancing
— ( 42 )
Deferred financing costs paid — ( 2 )
Repayment of Term Loan Mortgage ( 1 ) —
Distribution to noncontrolling interest holders ( 8 ) ( 6 )
Dividends paid ( 283 ) ( 267 )
Payment of deferred consideration
( 23 ) —
Taxes paid related to net share settlement of restricted stock units and common stock
( 19 ) ( 5 )
Common stock repurchased and retired
( 3 ) —
Other financing activity
( 7 ) —
Net cash used in financing activities ( 344 ) ( 280 )
Effect of exchange rate changes on cash and equivalents 3 ( 3 )
Net decrease in cash and equivalents ( 167 ) ( 34 )
Cash and equivalents at beginning of period 694 641
Cash and equivalents at end of period $ 527 $ 607
See accompanying notes
4
Warner Music Group Corp.
Condensed Consolidated Statements of Equity
(In millions, except share amounts which are reflected in thousands, and per share data)
(Unaudited)
Nine Months Ended June 30, 2025
Class A
Common Stock Class B
Common Stock Additional
Paid-in
Capital Accumulated
Deficit Accumulated
Other
Comprehensive
Loss Total
Warner Music
Group Corp. Equity Non-controlling
Interest Total Equity
Shares Value Shares Value
Balance at September 30, 2024 142,559 $ — 375,380 $ 1 $ 2,077 $ ( 1,313 ) $ ( 247 ) $ 518 $ 157 $ 675
Net income — — — — — 256 — 256 5 261
Other comprehensive income, net of tax — — — — — — 73 73 — 73
Dividends ($ 0.54 per share)
— — — — — ( 283 ) — ( 283 ) — ( 283 )
Stock-based compensation expense — — — — 49 — — 49 — 49
Distribution to noncontrolling interest holders — — — — — — — — ( 8 ) ( 8 )
Acquisition of noncontrolling interests — — — — — — — — 74 74
Vesting of restricted stock units, net of shares withheld for employee taxes 801 — — — ( 19 ) — — ( 19 ) — ( 19 )
Shares issued under the Plan 2,607 — — — — — — — — —
Common shares repurchased and retired ( 80 ) — — — ( 3 ) — — ( 3 ) — ( 3 )
Other — — — — ( 2 ) — — ( 2 ) ( 5 ) ( 7 )
Balance at June 30, 2025 145,887 $ — 375,380 $ 1 $ 2,102 $ ( 1,340 ) $ ( 174 ) $ 589 $ 223 $ 812
Three Months Ended June 30, 2025
Class A
Common Stock Class B
Common Stock Additional
Paid-in
Capital Accumulated
Deficit Accumulated
Other
Comprehensive
Loss Total
Warner Music
Group Corp. Equity Non-controlling
Interest Total Equity
Shares Value Shares Value
Balance at March 31, 2025 145,032 $ — 375,380 $ 1 $ 2,088 $ ( 1,230 ) $ ( 292 ) $ 567 $ 223 $ 790
Net loss — — — — — ( 16 ) — ( 16 ) — ( 16 )
Other comprehensive income, net of tax — — — — — — 118 118 — 118
Dividends ($ 0.18 per share)
— — — — — ( 94 ) — ( 94 ) — ( 94 )
Stock-based compensation expense — — — — 15 — — 15 — 15
Vesting of restricted stock units, net of shares withheld for employee taxes 6 — — — — — — — — —
Shares issued under the Plan 869 — — — — — — — — —
Common shares repurchased and retired ( 20 ) — — — ( 1 ) — — ( 1 ) — ( 1 )
Balance at June 30, 2025 145,887 $ — 375,380 $ 1 $ 2,102 $ ( 1,340 ) $ ( 174 ) $ 589 $ 223 $ 812
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Nine Months Ended June 30, 2024
Class A
Common Stock Class B
Common Stock Additional
Paid-in
Capital Accumulated
Deficit Accumulated
Other
Comprehensive
Loss Total
Warner Music
Group Corp. Equity (Deficit) Non-controlling
Interest Total Equity (Deficit)
Shares Value Shares Value
Balance at September 30, 2023 138,345 $ — 377,650 $ 1 $ 2,015 $ ( 1,387 ) $ ( 322 ) $ 307 $ 123 $ 430
Net income — — — — — 394 — 394 36 430
Other comprehensive income, net of tax — — — — — — 11 11 — 11
Dividends ($ 0.51 per share)
— — — — — ( 267 ) — ( 267 ) — ( 267 )
Stock-based compensation
— — — — 43 — — 43 — 43
Distribution to noncontrolling interest holders — — — — — — — — ( 6 ) ( 6 )
Acquisition of noncontrolling interests — — — — — — — — ( 1 ) ( 1 )
Shares issued under the Plan 1,738 — — — — — — — — —
Exchange of Class B shares for Class A shares
1,335 — ( 1,335 ) — — — — — — —
Shares issued under Omnibus Incentive Plan 185 — — — ( 5 ) — — ( 5 ) — ( 5 )
Balance at June 30, 2024 141,603 $ — 376,315 $ 1 $ 2,053 $ ( 1,260 ) $ ( 311 ) $ 483 $ 152 $ 635
Three Months Ended June 30, 2024
Class A
Common Stock Class B
Common Stock Additional
Paid-in
Capital Accumulated
Deficit Accumulated
Other
Comprehensive
Loss Total
Warner Music
Group Corp. Equity Non-controlling
Interest Total Equity
Shares Value Shares Value
Balance at March 31, 2024 141,596 $ — 376,315 $ 1 $ 2,043 $ ( 1,310 ) $ ( 301 ) $ 433 $ 152 $ 585
Net income — — — — — 139 — 139 2 141
Other comprehensive loss, net of tax — — — — — — ( 10 ) ( 10 ) — ( 10 )
Dividends ($ 0.17 per share)
— — — — — ( 89 ) — ( 89 ) — ( 89 )
Stock-based compensation
— — — — 10 — — 10 — 10
Distribution to noncontrolling interest holders — — — — — — — — ( 1 ) ( 1 )
Acquisition of noncontrolling interests
— — — — — — — — ( 1 ) ( 1 )
Shares issued under Omnibus Incentive Plan 7 — — — — — — — — —
Balance at June 30, 2024 141,603 $ — 376,315 $ 1 $ 2,053 $ ( 1,260 ) $ ( 311 ) $ 483 $ 152 $ 635
See accompanying notes
6
Warner Music Group Corp.
Notes to Condensed Consolidated Financial Statements (Unaudited)
1. Description of Business
Warner Music Group Corp. (the “Company”) was formed on November 21, 2003. The Company is the direct parent of WMG Holdings Corp. (“Holdings”), which is the direct parent of WMG Acquisition Corp. (“Acquisition Corp.”). Acquisition Corp. is one of the world’s major music entertainment companies. We classify our business interests into two fundamental operations: Recorded Music and Music Publishing.
Recorded Music Operations
Our Recorded Music business primarily consists of the discovery and development of recording artists and the related marketing, promotion, distribution, sale and licensing of music created by such recording artists. We play an integral role in virtually all aspects of the recorded music value chain from discovering and developing talent to producing, distributing and selling music to marketing and promoting recording artists and their music.
Music Publishing Operations
While Recorded Music is focused on marketing, promoting, distributing and licensing a particular recording of a musical composition, Music Publishing is an intellectual property business focused on generating revenue from uses of the musical composition itself. In return for promoting, placing, marketing and administering the creative output of a songwriter, or engaging in those activities for other rightsholders, our Music Publishing business shares the revenues generated from use of the musical compositions with the songwriter or other rightsholders.
2. Summary of Significant Accounting Policies
Interim Financial Statements
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended June 30, 2025 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2025.
The consolidated balance sheet at September 30, 2024 has been derived from the audited consolidated financial statements at that date but does not include all the information and notes required by U.S. GAAP for complete financial statements.
For further information, refer to the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2024 (File No. 001-32502).
Basis of Consolidation
The accompanying financial statements present the consolidated accounts of all entities in which the Company has a controlling voting interest and/or variable interest required to be consolidated in accordance with U.S. GAAP. All intercompany balances and transactions have been eliminated.
Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, Consolidation (“ASC 810”) requires the Company first evaluate its investments to determine if any investments qualify as a variable interest entity (“VIE”). A VIE is consolidated if the Company is deemed to be the primary beneficiary of the VIE, which is the party involved with the VIE that has both (i) the power to control the most significant activities of the VIE and (ii) either the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. If an entity is not deemed to be a VIE, the Company consolidates the entity if the Company has a controlling voting interest. As of June 30, 2025 and September 30, 2024, there were approximately $ 68 million and $ 77 million of assets, respectively, related to VIEs included in our condensed consolidated balance sheets. As of June 30, 2025 and September 30, 2024, there were approximately $ 2 million of liabilities related to VIEs included in our condensed consolidated balance sheets.
The Company has performed a review of all subsequent events through the date the financial statements were issued and has determined that no additional disclosures are necessary.
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Income Taxes
The Company uses the estimated annual effective tax rate method in computing its interim tax provision. Certain items, including those deemed to be unusual and infrequent are excluded from the estimated annual effective tax rate. In such cases, the actual tax expense or benefit is reported in the same period as the related item. Certain tax effects are also not reflected in the estimated annual effective tax rate, primarily certain changes in the realizability of deferred tax assets and uncertain tax positions, and are recorded in the period in which the change occurs.
Global Intangible Low-Taxed Income (“GILTI”) imposes U.S. taxes on the excess of a deemed return on tangible assets of certain foreign subsidiaries. The Company made an election to recognize GILTI tax in the specific period in which it occurs.
New Accounting Pronouncements
Accounting Pronouncements Not Yet Adopted
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures . The amendment enhances reportable segment disclosure requirements, primarily by requiring enhanced disclosures about significant segment expenses, reporting for interim periods, and Chief Operating Decision Maker related information. The amendments in this ASU are effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. The Company is in the process of evaluating the effect that the adoption of these standards will have on its consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures . The amendment enhances income tax disclosure requirements, by requiring enhanced disclosures on the income tax rate reconciliation and income taxes paid. The amendments in this ASU are effective for fiscal years beginning after December 15, 2024. The Company is in the process of evaluating the effect that the adoption of these standards will have on its consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The amendment requires new financial statement disclosures to provide disaggregated information for certain types of expenses, including purchases of inventory, employee compensation, depreciation, and amortization in commonly presented expense captions such as cost of revenue and selling, general and administrative expenses. The amendments in this ASU are effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. The Company is in the process of evaluating the effect that the adoption of these standards will have on its consolidated financial statements.
3. Earnings per Share
The Company utilizes the two-class method to report earnings per share. Basic earnings per share is computed by dividing net income available to each class of stock, less earnings available to participating securities, divided by the weighted average number of outstanding common shares for each class of stock. Diluted earnings per share is computed by dividing net income available to each class of stock, less earnings available to participating securities, divided by the weighted average number of outstanding common shares, plus dilutive potential common shares, which is calculated using the treasury-stock method. The potentially dilutive common shares did not have a dilutive effect on the Company’s EPS calculation for the three and nine months ended June 30, 2025 and 2024.
The following table sets forth the calculation of basic and diluted net income per common share under the two-class method for the three and nine months ended June 30, 2025 and 2024 (in millions, except share amounts, which are reflected in thousands, and per share data):
8
Three Months Ended June 30,
2025 2024
Class A Class B Class A Class B
Basic and Diluted EPS:
Numerator
Net income (loss) attributable to Warner Music Group Corp.
$ ( 4 ) $ ( 12 ) $ 39 $ 100
Less: Net loss attributable to participating securities (a)
— — ( 2 ) —
Net income (loss) attributable to common stockholders
$ ( 4 ) $ ( 12 ) $ 37 $ 100
Denominator
Weighted average shares outstanding 145,878 375,380 141,568 376,315
Basic and Diluted Earnings (Loss) Per Share
$ ( 0.03 ) $ ( 0.03 ) $ 0.27 $ 0.27
Nine Months Ended June 30,
2025 2024
Class A Class B Class A Class B
Basic and Diluted EPS:
Numerator
Net income attributable to Warner Music Group Corp. $ 73 $ 183 $ 111 $ 283
Less: Net income attributable to participating securities (a)
( 3 ) — ( 5 ) —
Net income attributable to common stockholders $ 70 $ 183 $ 106 $ 283
Denominator
Weighted average shares outstanding 144,623 375,380 140,531 376,868
Basic and Diluted EPS $ 0.49 $ 0.49 $ 0.75 $ 0.75
______________________________________
(a) Participating securities include unvested restricted stock units, which include the right to receive non-forfeitable dividend equivalents. Participating securities are not contractually obligated to share in losses.
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4. Revenue Recognition
Disaggregation of Revenue
The Company’s revenue consists of the following categories, which aggregate into the segments – Recorded Music and Music Publishing:
Three Months Ended
June 30, Nine Months Ended
June 30,
2025 2024 2025 2024
(in millions)
Revenue by Type
Digital $ 929 $ 882 $ 2,643 $ 2,638
Physical 119 120 397 385
Total digital and physical
1,048 1,002 3,040 3,023
Artist services and expanded-rights 195 159 508 489
Licensing 111 90 326 373
Total Recorded Music 1,354 1,251 3,874 3,885
Performance 58 52 167 155
Digital 204 194 599 577
Mechanical 16 13 46 43
Synchronization 54 42 142 129
Other 4 4 15 11
Total Music Publishing 336 305 969 915
Intersegment eliminations ( 1 ) ( 2 ) ( 4 ) ( 4 )
Total revenues
$ 1,689 $ 1,554 $ 4,839 $ 4,796
Revenue by geographical location
U.S. Recorded Music $ 536 $ 517 $ 1,565 $ 1,652
U.S. Music Publishing 186 161 520 503
Total U.S. 722 678 2,085 2,155
International Recorded Music 818 734 2,309 2,233
International Music Publishing 150 144 449 412
Total international
968 878 2,758 2,645
Intersegment eliminations ( 1 ) ( 2 ) ( 4 ) ( 4 )
Total revenues
$ 1,689 $ 1,554 $ 4,839 $ 4,796
Sales Returns and Uncollectible Accounts
Based on management’s analysis of sales returns, refund liabilities of $ 16 million and $ 20 million were established at June 30, 2025 and September 30, 2024, respectively.
Based on management’s analysis of estimated credit losses, reserves of $ 24 million and $ 26 million were established at June 30, 2025 and September 30, 2024, respectively.
Deferred Revenue
Deferred revenue increased by $ 845 million during the nine months ended June 30, 2025 related to cash received from customers for fixed fees and minimum guarantees in advance of performance, including amounts recognized in the period. Revenues of $ 197 million were recognized during the nine months ended June 30, 2025 related to the balance of deferred revenue at September 30, 2024. There were no other significant changes to deferred revenue during the reporting period.
Performance Obligations
For the three months ended June 30, 2025 and June 30, 2024, the Company recognized revenue of $ 10 million and $ 35 million, respectively, from performance obligations satisfied in previous periods. For the nine months ended June 30, 2025 and June 30, 2024, the Company recognized revenue of $ 67 million and $ 109 million, respectively, from performance obligations satisfied in previous periods.
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Revenues expected to be recognized in the future related to performance obligations that are unsatisfied at June 30, 2025 are as follows:
Rest of FY25
FY26
FY27
Thereafter Total
(in millions)
Remaining performance obligations $ 422 $ 647 $ 171 $ 169 $ 1,409
Total $ 422 $ 647 $ 171 $ 169 $ 1,409
5. Comprehensive Income
Comprehensive income, which is reported in the accompanying condensed consolidated statements of equity, consists of net income and other gains and losses affecting equity that, under U.S. GAAP, are excluded from net income. For the Company, the components of other comprehensive income primarily consist of foreign currency translation gains and losses, minimum pension liabilities, and deferred gains and losses on financial instruments designated as hedges under ASC 815, Derivatives and Hedging . The following summary sets forth the changes in the components of accumulated other comprehensive loss.
Foreign Currency Translation Loss (a) Minimum Pension Liability Adjustment Accumulated Other Comprehensive Loss, net
(in millions)
Balances at September 30, 2024 $ ( 244 ) $ ( 3 ) $ ( 247 )
Other comprehensive income 73 — 73
Balances at June 30, 2025 $ ( 171 ) $ ( 3 ) $ ( 174 )
______________________________________
(a) Includes historical foreign currency translation related to certain intra-entity transactions.
6. Goodwill and Intangible Assets
Goodwill
The following analysis details the changes in goodwill for each reportable segment:
Recorded
Music Music
Publishing Total
(in millions)
Balances at September 30, 2024 $ 1,557 $ 464 $ 2,021
Acquisitions 22 — 22
Other adjustments (a) 21 — 21
Balances at June 30, 2025 $ 1,600 $ 464 $ 2,064
______________________________________
(a) Other adjustments during the nine months ended June 30, 2025 represent foreign currency movements.
The Company performs its annual goodwill impairment test in accordance with ASC 350, Intangibles—Goodwill and Other (“ASC 350”) during the fourth quarter of each fiscal year as of July 1. The Company may conduct an earlier review if events or circumstances occur that would suggest the carrying value of the Company’s goodwill may not be recoverable. No indicators of impairment were identified during the current period that required the Company to perform an interim assessment or recoverability test.
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Intangible Assets
Intangible assets consist of the following:
Weighted-Average Useful Life June 30,
2025 September 30,
2024
(in millions)
Intangible assets subject to amortization:
Recorded music catalog 12 years $ 1,780 $ 1,616
Music publishing copyrights 24 years 2,677 2,227
Artist and songwriter contracts 13 years 1,143 1,125
Trademarks 16 years 55 69
Other intangible assets 6 years 88 69
Total gross intangible assets subject to amortization 5,743 5,106
Accumulated amortization ( 2,979 ) ( 2,747 )
Total net intangible assets subject to amortization 2,764 2,359
Intangible assets not subject to amortization:
Trademarks and tradenames Indefinite 154 152
Total net intangible assets $ 2,918 $ 2,511
The increase in net intangible assets during the nine months ended June 30, 2025 is primarily related to the acquisition of Tempo Music Holdings, LLC (“Tempo”) which is further described below. Additionally, the Company completed various business combinations during the nine months ended June 30, 2025 which resulted in the recognition of intangible assets with a preliminary estimated fair value of $ 39 million in the aggregate within recorded music catalogs, artist and songwriter contracts, trademarks, and other intangibles. The increase in net intangible assets was partially offset by the impairment of trademarks and other intangible assets of $ 29 million, in the aggregate, within the Recorded Music segment .
On February 5, 2025, WMG Tempo Holdco LLC, a wholly owned subsidiary of Acquisition Corp. and an indirect subsidiary of the Company, which has majority representation on the board of WMG Tempo Holdco LLC, acquired a 50.1 % interest in Tempo, a proprietary music rights acquisition platform, for consideration of $ 76 million, including transaction costs, with an option, exercisable on or prior to November 30, 2027, to acquire the remaining 49.9 % of Tempo for approximately $ 73 million, subject to contractual adjustments. The transaction was accounted for as an asset acquisition in accordance with ASC 805, Business Combinations , and the Company recognized $ 351 million of music publishing copyrights and $ 87 million of recorded music catalogs which will each be amortized over an estimated useful life of 15 years. Additionally, the Company recognized approximately $ 13 million of net assets, which consists primarily of cash and accounts receivables. In connection with the transaction, the Company assumed long-term debt held by one of Tempo’s subsidiaries, which was recognized on the acquisition date at its estimated fair value of approximately $ 302 million. The assumed long-term debt is secured only by certain music rights owned by Tempo and is nonrecourse to the Company and its subsidiaries, other than Tempo (refer to Note 7 for more information on the acquired long-term debt). Finally, the Company recognized a corresponding noncontrolling interest of $ 73 million based on the fair value of the acquired assets.
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7. Debt
Debt Capitalization
As of June 30, 2025, our long-term debt consists of the following:
June 30,
2025 September 30,
2024
(in millions)
Revolving Credit Facility (a) $ — $ —
Senior Term Loan Facility due 2031 1,295 1,295
2.750 % Senior Secured Notes due 2028
381 363
3.750 % Senior Secured Notes due 2029
540 540
3.875 % Senior Secured Notes due 2030
535 535
2.250 % Senior Secured Notes due 2031
522 497
3.000 % Senior Secured Notes due 2031
800 800
Mortgage Term Loan due 2033 17 18
Total debt, including the current portion 4,090 4,048
Premium less unamortized discount and unamortized DFCs ( 29 ) ( 34 )
Total Acquisition Corp. long-term debt, including the current portion, net $ 4,061 $ 4,014
Tempo Asset-Based Notes due 2050 311 —
Unamortized discount
( 9 ) —
Total asset-based long-term debt, including the current portion, net (b)
$ 302 $ —
Total long-term debt, including the current portion, net $ 4,363 $ 4,014
______________________________________
(a) Reflects $ 350 million of commitments under the Revolving Credit Facility with no letters of credit outstanding at June 30, 2025 and September 30, 2024. There were no loans outstanding under the Revolving Credit Facility as of June 30, 2025 and September 30, 2024.
(b) The Tempo Asset-Based Notes due 2050 are secured only by certain music rights owned by Tempo and are nonrecourse to the Company and its subsidiaries, other than Tempo.
The Company is the direct parent of Holdings, which is the direct parent of Acquisition Corp. Acquisition Corp. is party to and the borrower under a $ 1,295 million senior secured term loan credit facility, pursuant to a credit agreement dated November 1, 2012, as amended or supplemented (the “Senior Term Loan Credit Agreement”) with JPMorgan Chase Bank NA, as administrative agent and collateral agent, and the other financial institutions and lenders from time to time party thereto (the “Senior Term Loan Facility”). Additionally, as of June 30, 2025 Acquisition Corp. had issued and outstanding the 2.750 % Senior Secured Notes due 2028, the 3.750 % Senior Secured Notes due 2029, the 3.875 % Senior Secured Notes due 2030, the 2.250 % Senior Secured Notes due 2031 and the 3.000 % Senior Secured Notes due 2031 (together, the “Acquisition Corp. Notes”).
All of the Acquisition Corp. Notes are guaranteed by all of Acquisition Corp.’s domestic wholly-owned subsidiaries. The guarantee of the Acquisition Corp. Notes by Acquisition Corp.’s domestic wholly-owned subsidiaries is full, unconditional and joint and several. The secured notes are guaranteed on a senior secured basis.
The Company and Holdings are holding companies that conduct substantially all of their business operations through Acquisition Corp. Accordingly, while Acquisition Corp. and its subsidiaries are not currently restricted from distributing funds to the Company and Holdings under the indentures for the Acquisition Corp. Notes or the credit agreements for the Acquisition Corp. Senior Credit Facilities, including the Revolving Credit Facility (as defined below) and the Senior Term Loan Facility, should Acquisition Corp.’s Total Indebtedness to EBITDA Ratio increase above 3.50 :1.00 and the term loans not achieve an investment grade rating, the covenants under the Revolving Credit Facility, which are currently suspended, will be reinstated and the ability of the Company and Holdings to obtain funds from their subsidiaries will be restricted by the Revolving Credit Facility. 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 .
Fiscal 2025 Transactions
Acquisition of Tempo
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Following its acquisition of Tempo on February 5, 2025, the Company holds approximately $ 311 million of asset-based securities due November 2050 (“Asset-Based Notes”) issued by a subsidiary of Tempo and secured only by certain music rights owned by Tempo and is nonrecourse to the Company and its subsidiaries, other than Tempo. These notes, which consist of multiple fixed rate tranches, will accrue at a fixed weighted average rate of 4.62 % until November 30, 2027, with higher interest rates thereafter. Principal and interest are payable in equal semi-annual installments.
Beethoven Credit Agreement
On June 29, 2025, the Company, through its wholly owned indirect subsidiary, WMG BC Holdco LLC, entered into a joint venture agreement (the “JV Agreement”) with BCSS W JV Investments (B), L.P. (“BainCo”), a Delaware limited partnership and wholly owned indirect subsidiary of Bain Capital Special Situations, LP, pursuant to which the Company and BainCo will operate Beethoven JV 1, LLC, a Delaware limited liability company.
In connection with the JV Agreement, on the same date, Beethoven Financing 1, LLC, a Delaware limited liability company and an indirect subsidiary of the Company, as borrower (the “Initial Borrower”), the additional borrowers from time to time party thereto (together with the Initial Borrower, the “Borrowers”), Beethoven Holdings 1, LLC, a Delaware limited liability company, as guarantor (the “Initial Guarantor”), the additional guarantors from time to time party thereto (together with the Initial Guarantor, the “Guarantors”), each of the commercial paper conduits from time to time party thereto (the “Conduit Lenders”), each of the financial institutions from time to time party thereto as committed lenders (the “Committed Lenders” and, together with the Conduit Lenders, the “Lenders”), the conduit managing agents from time to time party thereto, The Bank of New York Mellon, as administrative agent for the Lenders and as collateral agent for the Secured Parties (in each case, as defined in the Beethoven Credit Agreement), entered into a Credit and Security Agreement (the “Beethoven Credit Agreement”) pursuant to which the Lenders have agreed to extend up to $ 500 million in commitment amounts to the Borrowers (the “Beethoven Credit Facility”). The obligations of the Borrowers under the Beethoven Credit Agreement will be (a) secured by the Borrowers with a first priority security interest in all of their respective assets and (b) guaranteed by the Guarantors with a first priority security interest in all of their respective assets.
The advances under the Beethoven Credit Agreement shall bear interest at the rates described below under “—Interest Rates.”
The Beethoven Credit Agreement contains customary affirmative and negative covenants for this type of facility, and the ability, subject to the consent of the Lenders, to increase the size of the facility to $ 700 million.
Interest Rates
The loans under the Revolving Credit Facility bear interest at Acquisition Corp.’s election at a rate equal to (i) the secured overnight financing rate as administered by the Federal Reserve Bank of New York for the applicable interest period (“Revolving Term SOFR”), and other rates for alternate currencies, such as EURIBOR and SONIA, as provided in the Revolving Credit Agreement, subject to a zero floor, plus 1.75 % per annum in the case of Initial Revolving Loans (as defined in the Revolving Credit Agreement), or 1.875 % per annum in the case of 2020 Revolving Loans (as defined in the Revolving Credit Agreement), or (ii) the base rate, which is the highest of (x) the corporate base rate established by the administrative agent from time to time, (y) 0.50 % in excess of the overnight federal funds rate and (z) the one-month Revolving Term SOFR plus 1.0 % per annum, plus, in each case, 0.75 % per annum in the case of Initial Revolving Loans, or 0.875 % per annum in the case of 2020 Revolving Loans; provided that, in respect of 2020 Revolving Loans, the applicable margin with respect to such loans is subject to adjustment as set forth in the pricing grid in the Revolving Credit Agreement. Based on the Senior Secured Indebtedness to EBITDA Ratio of 2.07 x at June 30, 2025, the applicable margin for SOFR loans and risk-free rate loans would be 1.375 % instead of 1.875 % and the applicable margin for ABR loans would be 0.375 % instead of 0.875 % in the case of 2020 Revolving Loans. If there is a payment default at any time, then the interest rate applicable to overdue principal will be the rate otherwise applicable to such loan plus 2.0 % per annum. Default interest will also be payable on other overdue amounts at a rate of 2.0 % per annum above the amount that would apply to an alternative base rate loan.
The loans under the Senior Term Loan Facility bear interest at Acquisition Corp.’s election at a rate equal to (i) the forward-looking term rate based on Term SOFR subject to a zero floor, plus 1.75 % per annum or (ii) the base rate, which is the highest of (x) the corporate base rate established by the administrative agent as its prime rate in effect at its principal office in New York City from time to time, (y) 0.50 % in excess of the overnight federal funds rate and (z) one-month Term SOFR, plus 1.00 % per annum, subject to a 1.00 % floor, plus, in each case, 1.00 % per annum. If there is a payment default at any time, then the interest rate applicable to overdue principal and interest will be the rate otherwise applicable to such loan plus 2.00 % per annum. Default interest will also be payable on other overdue amounts at a rate of 2.00 % per annum above the amount that would apply to an alternative base rate loan.
The term loan entered into on January 27, 2023 (the “Term Loan Mortgage”) bears interest at a rate of 30-day SOFR plus the applicable margin of 1.40 %, subject to a zero floor.
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Interest on the Asset-Based Notes, which consist of multiple fixed rate tranches, will accrue at a fixed weighted average rate of 4.62 % until November 30, 2027. Following November 30, 2027, if the Asset-Based Notes remain outstanding, the interest rate on the outstanding Asset-Based Notes will increase by a per annum rate equal to the greater of: (i) 5.0 % and (ii) the amount, if any, by which the sum of the following exceeds the interest rate otherwise payable with respect to such Asset-Based Notes: (A) the yield to maturity (adjusted to a quarterly bond-equivalent basis) on November 30, 2027 of the U.S. treasury security having a term closest to seven years plus (B) 5.0 %, plus (C) with respect to class A notes, 3.53 % and, with respect to class B notes, 4.28 %.
The advances under the Beethoven Credit Agreement shall bear interest (a) in the case of a base rate advance, at a rate equal to the base rate, which means, for any day, the highest of (i) the prime rate in effect on such day; (ii) the federal funds rate in effect on such day plus 0.50 %; and (iii) Term SOFR for a one-month tenor in effect on such day plus 1.00 % per annum, plus the applicable margin of 1.00 % and (b) in the case of a Term SOFR advance, the Term SOFR for the interest accrual period plus the applicable margin of 2.00 %.
The Company has entered into, and in the future may enter into, interest rate swaps to manage interest rate risk. As of June 30, 2025, there are no interest rate swaps outstanding.
Maturity of Senior Term Loan Facility
The loans outstanding under the Senior Term Loan Facility mature on January 24, 2031.
Maturity of Revolving Credit Facility
The maturity date of the Revolving Credit Facility is November 30, 2028.
Maturities of Senior Secured Notes
As of June 30, 2025, there are no scheduled maturities of notes until 2028, when $ 381 million is scheduled to mature. Thereafter, $ 2.708 billion is scheduled to mature.
Maturity of Term Loan Mortgage
The maturity date of the Term Loan Mortgage is January 27, 2033, subject to a call option exercisable by Truist Bank at any time after January 27, 2028 if certain criteria relating to the Company’s creditworthiness are met.
Maturity of Tempo Asset-Based Notes
The maturity date of the Asset-Based Notes is November 30, 2050.
Maturity of Beethoven Credit Agreement
The maturity date of the Beethoven Credit Facility is June 29, 2030.
Interest Expense, net
Total interest expense, net was $ 43 million and $ 40 million for the three months ended June 30, 2025 and 2024, respectively, and $ 119 million and $ 121 million for the nine months ended June 30, 2025 and 2024, respectively. Interest expense, net includes interest expense related to our outstanding indebtedness of $ 45 million and $ 46 million for the three months ended June 30, 2025 and 2024, respectively, and $ 132 million and $ 137 million for the nine months ended June 30, 2025 and 2024, respectively. The weighted-average interest rate of the Company’s total debt was 4.1 % at June 30, 2025, 4.3 % at September 30, 2024, and 4.5 % at June 30, 2024.
8. Restructuring and Impairments
2024 Strategic Restructuring Plan
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 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.
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
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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.
As of June 30, 2025, total cumulative restructuring and impairment charges recognized in connection with the 2024 Strategic Restructuring Plan were $ 217 million with $ 207 million of costs recognized in our Recorded Music segment and $ 10 million recognized at Corporate. These costs are composed of $ 135 million of severance and other contract termination costs, of which $ 7 million was non-cash, and $ 82 million of non-cash impairment charges.
The below table sets forth the activity for the nine months ended June 30, 2025 in the restructuring accrual associated with the 2024 Strategic Restructuring Plan included within accrued liabilities in the accompanying condensed consolidated balance sheets.
Severance Costs Contract Termination Costs Total
(in millions)
Balance at September 30, 2024 $ 99 $ 5 $ 104
Restructuring charges — 7 7
Cash payments ( 63 ) ( 5 ) ( 68 )
Foreign currency movements — — —
Balance at June 30, 2025 $ 36 $ 7 $ 43
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.
9. Commitments and Contingencies
From time to time the Company is involved in claims and legal proceedings that arise in the ordinary course of business. The Company is currently subject to several such claims and legal proceedings. Based on currently available information, the Company does not believe that resolution of pending matters will have a material adverse effect on its financial condition, cash flows or results of operations. However, litigation is subject to inherent uncertainties, and there can be no assurances that the Company’s defenses will be successful or that any such lawsuit or claim would not have a material adverse impact on the Company’s business, financial condition, cash flows and results of operations in a particular period. Any claims or proceedings against the Company, whether meritorious or not, can have an adverse impact because of defense costs, diversion of management and operational resources, negative publicity and other factors.
10. Equity
Stock-Based Compensation
The Company’s stock-based compensation plans are described in Note 14, “Equity,” to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2024. Stock-based compensation consists primarily of common stock, restricted stock units, stock options, and market-based performance share units granted to eligible employees and executives under the Omnibus Incentive Plan.
For the three months ended June 30, 2025, the Company recognized a total of $ 16 million of non-cash stock-based compensation expense, of which $ 15 million was recorded to additional paid-in capital and $ 1 million was recorded as a shared-based compensation liability. For the nine months ended June 30, 2025, the Company recognized a total of $ 43 million of non-cash stock-based compensation expense, of which $ 42 million was recorded to additional paid-in capital and $ 1 million was recorded as a shared-based compensation liability. For the three and nine months ended June 30, 2024, the Company recognized a total of $ 10 million and $ 28 million of non-cash stock-based compensation expense, respectively, all of which was recorded to additional paid-in capital. During the nine months ended June 30, 2025 and 2024, $ 7 million and $ 15 million of share-based compensation liabilities were reclassified to additional paid-in capital upon a certain number of awards becoming determinable, respectively.
Common Stock
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During the three and nine months ended June 30, 2025, in connection with the Senior Management Free Cash Flow Plan (the “Plan”), the Company issued a total of 869,009 and 2,607,027 shares, respectively, of Class A Common Stock to settle all remaining participants’ deferred equity units previously issued under the Plan.
During the three and nine months ended June 30, 2025, the Company satisfied the vesting of RSUs by issuing 5,959 and 800,748 shares of Class A Common Stock under the Omnibus Incentive Plan, respectively, which is net of shares used to settle employee income tax obligations.
Noncontrolling Interest
On August 5, 2025, the Company acquired the remaining equity interest from noncontrolling interest holders for an aggregate consideration of $ 165 million, which includes cash consideration of $ 40 million and $ 125 million payable in the form of the Company’s Class A Common Stock. The Company issued 1,416,666 shares of Class A Common Stock on the closing date and expects to issue an additional 2,750,000 shares of Class A Common Stock on the first anniversary of the closing. These shares are subject to specific lock-up periods.
Share Repurchase Program
On November 14, 2024, the Company’s board of directors authorized a new $ 100 million share repurchase program (the “Share Repurchase Program”), which is intended to offset dilution from the Omnibus Incentive Plan. Under this authorization, the Company may, from time to time, purchase shares of its Class A Common Stock through open market transactions, privately negotiated transactions, forward, derivative, or accelerated repurchase transactions, tender offers or otherwise, in accordance with all applicable securities laws and regulations, including Rule 10b-18 of the Exchange Act. 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. The Company may enter into a pre-arranged stock trading plan in accordance with the guidelines specified under Rule 10b5-1 to effectuate all or a portion of the Share Repurchase Program. The Company expects to finance any repurchases from a combination of cash on hand and cash provided by operating activities. The timing and method of any repurchases, which will depend on a variety of factors, including market conditions, are subject to our results of operations, financial condition, liquidity and other factors. The authorization for the Share Repurchase Program may be suspended, terminated, increased or decreased by the Company’s board of directors at any time.
The following table summarizes our total share repurchases and retirement under the Share Repurchase Program during the three and nine months ended June 30, 2025:
Three Months Ended
June 30, 2025 Nine Months Ended
June 30, 2025
Share Repurchase Type
Shares Amount
(in millions) Shares Amount
(in millions)
Open Market Repurchases
20,000 $ 1 80,383 $ 3
11. Income Taxes
For the three and nine months ended June 30, 2025, the Company recorded an income tax expense of $ 5 million and $ 123 million, respectively. The income tax expense for the three and nine months ended June 30, 2025 is higher than the expected tax expense at the statutory rate of 21% primarily due to foreign income taxed at rates higher than in the United States, including withholding taxes, non-deductible executive compensation under Internal Revenue Code (“IRC”) Section 162(m), and the net impact of GILTI and foreign derived intangible income (“FDII”). These charges were partially offset by a tax benefit recognized on an impairment charge associated with certain of the Company’s non-core e-tailer operations. The income tax expense for the nine months ended June 30, 2025 is higher than the expected tax expense at the statutory rate of 21% primarily due to foreign income taxed at rates higher than in the United States, including withholding taxes, U.S. state and local taxes, non-deductible executive compensation under IRC Section 162(m), unrecognized tax benefit related to uncertain tax positions, and the net impact of GILTI and FDII. These charges were partially offset by tax benefits associated with Research and Development (“R&D”) credits, and non-controlling interest.
For the three and nine months ended June 30, 2024, the Company recorded an income tax expense of $ 30 million and $ 120 million, respectively. The income tax expense for the three and nine months ended June 30, 2024 is lower than the expected tax benefit at the statutory tax rate of 21% primarily due to benefits related to updated allowable costs for reported FDII, non-controlling interest, and the net impact of GILTI and FDII. These benefits were partially offset by foreign income taxed at rates higher than the United States, withholding taxes, and U.S. state and local taxes. The income tax expense for the nine months ended June 30, 2024 is lower than the expected tax expense at the statutory rate of 21% primarily due to the tax benefit from the winding down of the Company’s owned and operated media properties, updated allowable costs for FDII, non-controlling interest, the net impact of GILTI
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and FDII and tax benefits associated with R&D credits. These benefits were partially offset by withholding taxes, foreign income taxed at rates higher than the United States, U.S. state and local taxes, non-deductible executive compensation under IRC Section 162(m), and unrecognized tax benefit related to uncertain tax positions.
The Company has determined that it is reasonably possible that the gross unrecognized tax benefits as of June 30, 2025 could decrease by up to approximately $ 2 million related to various ongoing audits and settlement discussions in various jurisdictions during the next twelve months.
The Organization for Economic Co-operation and Development (“OECD”) introduced Base Erosion and Profit Shifting (“BEPS”) Pillar 2 rules that impose a global minimum tax rate of 15%. Numerous countries, including European Union member states, have enacted or are expected to enact legislation with general implementation of a global minimum tax rate by January 1, 2025. The Company has evaluated the potential impact of the rules based on the most recently available information and estimates that the impact to the Company is immaterial. The Company will continue to monitor legislative developments to determine if there are significant changes to Pillar 2 rules that could lead to a material impact.
On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act, which introduces a wide-ranging set of tax reform provisions. These provisions are scheduled to take affect beginning in our fiscal year 2026. The Company is currently evaluating the potential impact of this law.
12. Derivative Financial Instruments
The Company uses derivative financial instruments, primarily foreign currency forward exchange contracts, for the purposes of managing foreign currency exchange rate risk on expected future cash flows.
As of June 30, 2025, the Company had outstanding foreign currency forward exchange contracts for the sale of $ 197 million and the purchase of $ 124 million of foreign currencies at fixed rates that will be settled by September 2025. As of September 30, 2024, the Company had no foreign currency forward exchange contracts outstanding.
The Company recorded realized pre-tax gains of $ 7 million and unrealized pre-tax losses of $ 5 million related to its foreign currency forward exchange contracts in the condensed consolidated statement of operations as other expense for the nine months ended June 30, 2025. The Company recorded realized pre-tax losses of $ 1 million and unrealized pre-tax gains of $ 1 million related to its foreign currency forward exchange contracts in the condensed consolidated statement of operations as other expense for the nine months ended June 30, 2024.
The following is a summary of amounts recorded in the consolidated balance sheets pertaining to the Company’s derivative instruments at June 30, 2025 and September 30, 2024:
June 30,
2025 September 30,
2024
(in millions)
Other Current Assets:
Foreign currency forward exchange contracts (a)
1 —
Other Current Liabilities:
Foreign currency forward exchange contracts (a)
( 6 ) —
______________________________________
(a) Includes $ 9 million and $ 14 million of foreign exchange derivative contracts in asset and liability positions, respectively, which net to $ 1 million of current assets and $ 6 million of current liabilities, respectively.
13. Segment Information
Based on the nature of its products and services, the Company classifies its business interests into two fundamental operations: Recorded Music and Music Publishing, which also represent the reportable segments of the Company. Information as to each of these operations is set forth below. The Company evaluates performance based on several factors, of which the primary financial measure is operating income (loss) before non-cash depreciation of tangible assets and non-cash amortization of intangible assets adjusted to exclude the impact of non-cash stock-based compensation and other related expenses and certain items that affect comparability including but not limited to gains or losses on divestitures and expenses related to restructuring and transformation initiatives, which includes costs associated with the Company’s financial transformation initiative to design and implement new information technology and upgrade our finance infrastructure (“Adjusted OIBDA”). Items excluded are not viewed to contribute directly to management’s evaluation of operating results.
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The accounting policies of the Company’s business segments are the same as those described in Note 2, “Summary of Significant Accounting Policies,” to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2024. The Company accounts for intersegment sales at fair value as if the sales were to third parties. While intercompany transactions are treated like third-party transactions to determine segment performance, the revenues (and corresponding expenses recognized by the segment that is counterparty to the transaction) are eliminated in consolidation, and therefore, do not themselves impact consolidated results.
Recorded
Music Music
Publishing Corporate
expenses and
eliminations Total
Three Months Ended (in millions)
June 30, 2025
Revenues $ 1,354 $ 336 $ ( 1 ) $ 1,689
Adjusted OIBDA
321 96 ( 44 ) 373
June 30, 2024
Revenues $ 1,251 $ 305 $ ( 2 ) $ 1,554
Adjusted OIBDA
281 79 ( 44 ) 316
Recorded
Music Music
Publishing Corporate
expenses and
eliminations Total
Nine Months Ended (in millions)
June 30, 2025
Revenues $ 3,874 $ 969 $ ( 4 ) $ 4,839
Adjusted OIBDA
914 264 ( 139 ) 1,039
June 30, 2024
Revenues 3,885 915 ( 4 ) 4,796
Adjusted OIBDA
965 247 ( 133 ) 1,079
Adjusted OIBDA is not a measure defined by U.S. GAAP but is computed using amounts that are determined in accordance with U.S. GAAP. A reconciliation of the Company’s Adjusted OIBDA to operating income is presented below.
For the Three Months Ended
June 30, For the Nine Months Ended
June 30,
2025 2024 2025 2024
Operating income $ 169 $ 207 $ 551 $ 680
Amortization expense 67 55 186 167
Depreciation expense 29 25 86 77
Restructuring and impairments 69 1 109 96
Transformation initiative costs 19 18 54 56
Executive transition costs 4 — 4 —
Net gain on divestitures — ( 1 ) — ( 32 )
Non-cash stock-based compensation and other related costs 16 11 49 35
Adjusted OIBDA $ 373 $ 316 $ 1,039 $ 1,079
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14. Additional Financial Information
Supplemental Cash Flow Disclosures
The Company made interest payments of approximately $ 43 million and $ 35 million during the three months ended June 30, 2025 and 2024, respectively, and approximately $ 114 million and $ 125 million during the nine months ended June 30, 2025 and 2024, respectively. The Company paid approximately $ 50 million and $ 33 million of income and withholding taxes, net of refunds, for the three months ended June 30, 2025 and 2024, respectively, and approximately $ 151 million and $ 105 million of income and withholding taxes, net of refunds, for the nine months ended June 30, 2025 and 2024, respectively. Non-cash investing activities were approximately $ 32 million related to business combinations and the acquisition of music publishing rights and music catalogs during the nine months ended June 30, 2025, and $ 18 million related to the acquisition of music publishing rights and music catalogs during the nine months ended June 30, 2024.
Net Gain on Divestitures
The Company recognized a pre-tax gain of $ 1 million during the three months ended June 30, 2024, in connection with the divestiture of non-core owned and operated media properties. The Company recognized a pre-tax gain of $ 32 million during the nine months ended June 30, 2024 in connection with the divestiture of certain sound recordings rights. For each period, the divestiture has been reflected as a net gain on divestiture in the accompanying condensed consolidated statement of operations.
Net Gain on Sale of Investments
The Company recognized a pre-tax realized net gain of $ 29 million during the nine months ended June 30, 2025 in connection with the sale of an investment which has been presented within the Other income (expense) line of the accompanying condensed consolidated statement of operations.
Dividends
The Company’s ability to pay dividends may be restricted by covenants in the credit agreement for the Revolving Credit Facility which are currently suspended but which will be reinstated if Acquisition Corp.’s Total Indebtedness to EBITDA Ratio increases above 3.50 :1.00 and the term loans do not achieve an investment grade rating.
The Company has been paying quarterly cash dividends to holders of its Class A Common Stock and Class B Common Stock. The declaration of each dividend will continue to be at the discretion of the Company’s board of directors and will depend on the Company’s financial condition, earnings, liquidity and capital requirements, level of indebtedness, contractual restrictions with respect to payment of dividends, restrictions imposed by Delaware law, general business conditions and any other factors that the Company’s board of directors deems relevant in making such a determination. 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 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.
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.
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15. Fair Value Measurements
The following tables show the fair value of the Company’s financial instruments that are required to be measured at fair value as of June 30, 2025 and September 30, 2024.
Fair Value Measurements as of June 30, 2025
(Level 1) (Level 2) (Level 3) Total
(in millions)
Other Current Assets:
Foreign currency forward exchange contracts (a)
$ — $ 1 $ — $ 1
Other current liabilities:
Foreign currency forward exchange contracts (a)
$ — $ ( 6 ) $ — $ ( 6 )
Other noncurrent assets:
Equity investments with readily determinable fair value (b)
9 — — 9
Fair Value Measurements as of September 30, 2024
(Level 1) (Level 2) (Level 3) Total
(in millions)
Other noncurrent assets:
Equity investment with readily determinable fair value (b)
9 — — 9
______________________________________
(a) The fair value of foreign currency forward exchange contracts is based on dealer quotes of market forward rates and reflects the amount that the Company would receive or pay at their maturity dates for contracts involving the same currencies and maturity dates.
(b) These represent equity investments with a readily determinable fair value. The Company has measured its investments to fair value in accordance with ASC 321, Investments—Equity Securities, based on quoted prices in active markets.
The majority of the Company’s non-financial instruments, which include goodwill, intangible assets, inventories and property, plant and equipment, are not required to be re-measured to fair value on a recurring basis. These assets are evaluated for impairment if certain triggering events occur. If such evaluation indicates that impairment exists, the asset is written down to its fair value. In addition, an impairment analysis is performed at least annually for goodwill and indefinite-lived intangible assets.
Equity Investments Without Readily Determinable Fair Value
The Company evaluates its equity investments without readily determinable fair values for impairment if factors indicate that a significant decrease in value has occurred. The Company has elected to use the measurement alternative to fair value that will allow these investments to be recorded at cost, less impairment, and adjusted for subsequent observable price changes. In the three and nine month periods ended June 30, 2025, the Company recorded approximately $ 1 million and $ 4 million of impairment charges on these investments, respectively. The Company did not record any impairment charges on these investments during the three months ended June 30, 2024 and recorded approximately $ 1 million of impairment charges on these investments during the nine months ended June 30, 2024. In addition, there were no observable price changes events that were completed during the three and nine months ended June 30, 2025 and 2024.
Fair Value of Debt
Based on the level of interest rates prevailing at June 30, 2025, the fair value of the Company’s debt was $ 4.217 billion. Based on the level of interest rates prevailing at September 30, 2024, the fair value of the Company’s debt was $ 3.836 billion. The fair value of the Company’s debt instruments is determined using quoted market prices from less active markets or by using quoted market prices for instruments with identical terms and maturities; both approaches are considered a Level 2 measurement.
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16. Subsequent Events
2025 Restructuring Plan
On July 1, 2025, the Company announced a strategic restructuring plan (the “2025 Restructuring Plan”) designed to free up funds to invest in music and to accelerate the Company’s long-term growth. The Company expects the 2025 Restructuring Plan to generate pre-tax cost savings of approximately $ 300 million on an annualized run-rate basis by the end of fiscal year 2027 and expects the majority of the cost savings under the 2025 Restructuring Plan to be accretive to Adjusted OIBDA. There were no charges recognized under the 2025 Restructuring Plan for the three and nine months ended June 30, 2025.
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