What changed in this filing

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Item 1. Financial Statements

2026-02-09 compared with 2025-08-07 · 234 added, 275 removed, 453 unchanged (53% of the section changed)

9 unchanged sentences

Royalty advances expected to be recouped within one year 584 581

Assets held for sale

Prepaid and other current assets 169 166

9 unchanged sentences

Total assets $ 10,011 $ 9,829

Liabilities and Equity

Liabilities, Redeemable Noncontrolling Interest and Equity

Current liabilities:

5 unchanged sentences

Deferred revenue 246 286

Liabilities held for sale

Other current liabilities 124 129

2 unchanged sentences

long-term debt

Asset-based long-term debt

Other long-term debt

Operating lease liabilities, noncurrent 188 200

2 unchanged sentences

Total liabilities $ 9,182 $ 9,072

Redeemable noncontrolling interest

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

1,000,000 shares authorized, 146,146 and 146,906 shares issued and outstanding as of December 31, 2025 and September 30, 2025, 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

1,000,000 shares authorized, 375,380 issued and outstanding as of December 31, 2025 and September 30, 2025, respectively

Additional paid-in capital 2,154 2,166

5 unchanged sentences

Total equity 824 757

Total liabilities and equity $ 9,777 $ 9,155

Total liabilities, redeemable noncontrolling interest and equity $ 10,011 $ 9,829

See accompanying notes

3 unchanged sentences

Three Months Ended

June 30, Nine Months Ended

2025 2024 2025 2024

Revenue $ 1,840 $ 1,666

6 unchanged sentences

Total costs and expenses ( 1,547 ) ( 1,452 )

Net gain on divestitures

Net loss on divestitures

Operating income 288 214

Interest expense, net ( 45 ) ( 37 )

Other (expense) income ( 137 ) 4 ( 48 ) ( 9 )

(Loss) income before income taxes ( 11 ) 171 384 550

Other income 3 153

Income before income taxes 246 330

Income tax expense ( 71 ) ( 89 )

Net (loss) income ( 16 ) 141 261 430

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:

Net income 175 241

(Income) loss attributable to noncontrolling interest

Net income attributable to Warner Music Group Corp.

Net income per share attributable to common stockholders:

Class A – Basic and Diluted $ 0.33 $ 0.45

10 unchanged sentences

Three Months Ended

June 30, Nine Months Ended

2025 2024 2025 2024

Net (loss) income $ ( 16 ) $ 141 $ 261 $ 430

Net income $ 175 $ 241

Other comprehensive income (loss), net of tax:

Foreign currency adjustment 9 ( 129 )

Deferred loss on derivative financial instruments

Minimum pension liability

Other comprehensive income (loss), net of tax 9 ( 129 )

Total comprehensive income 184 112

Income attributable to noncontrolling interest — ( 2 ) ( 5 ) ( 36 )

(Income) loss attributable to noncontrolling interest

Comprehensive income attributable to Warner Music Group Corp.

$ 102 $ 129 $ 329 $ 405

See accompanying notes

2 unchanged sentences

(In millions)

Nine Months Ended

Three Months Ended

Cash flows from operating activities

5 unchanged sentences

Net gain on investments

Net gain on divestitures

Net loss on divestitures

Non-cash interest expense 1 2

12 unchanged sentences

Other balance sheet changes, net

( 65 ) ( 13 )

Net cash provided by operating activities 440 332

8 unchanged sentences

Cash flows from financing activities

Partial proceeds from Senior Term Loan Facility refinancing

Partial repayment of Senior Term Loan Facility refinancing

Proceeds from Beethoven Credit Agreement

Deferred financing costs paid ( 8 ) —

Repayment of Term Loan Mortgage ( 1 ) —

Distribution to noncontrolling interest holders ( 4 ) ( 7 )

Contributions from redeemable noncontrolling interest holder

Dividends paid ( 100 ) ( 94 )

Payment of deferred consideration

( 25 ) ( 17 )

Taxes paid related to net share settlement of restricted stock units and common stock

3 unchanged sentences

Effect of exchange rate changes on cash and equivalents 3 ( 16 )

Net decrease in cash and equivalents ( 167 ) ( 34 )

Cash balances classified as assets held for sale ( 16 ) —

Net increase in cash and equivalents 216 108

Cash and equivalents at beginning of period 535 694

4 unchanged sentences

(In millions, except share amounts which are reflected in thousands, and per share data)

Nine Months Ended June 30, 2025

Three Months Ended December 31, 2025

Common Stock Class B

4 unchanged sentences

Equity Non-controlling

Interest Total Equity

Interest Total

Equity Redeemable Non-controlling Interest

Shares Value Shares Value

2 unchanged sentences

Other comprehensive income, net of tax

Dividends ($ 0.54 per share)

— — — — — — 9 9 — 9 —

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

Common Stock Class B

Common Stock Additional

Capital Accumulated

Deficit Accumulated

Comprehensive

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 ($ 0.19 per share)

— — — — — ( 100 ) — ( 100 ) — ( 100 ) —

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

Nine Months Ended June 30, 2024

Common Stock Class B

Common Stock Additional

Capital Accumulated

Deficit Accumulated

Comprehensive

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

1 unchanged sentence

Distribution to noncontrolling interest holders — — — — — — — — ( 5 ) ( 5 ) —

Acquisition of noncontrolling interests — — — — — — — — ( 1 ) ( 1 )

Shares issued under the Plan 1,738 — — — — — — — — —

Exchange of Class B shares for Class A shares

Vesting of restricted stock units, net of shares withheld for employee taxes

160 — — — ( 5 ) — — ( 5 ) — ( 5 ) —

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

Common shares repurchased and retired ( 920 ) — — — ( 26 ) — — ( 26 ) — ( 26 ) —

Contributions from redeemable non-controlling interest holders

— — — — — — — — — — 5

Balance at December 31, 2025 146,146 $ — 375,380 $ 1 $ 2,154 $ ( 1,255 ) $ ( 180 ) $ 720 $ 104 $ 824 $ 5

Three Months Ended December 31, 2024

Common Stock Class B

4 unchanged sentences

Equity Non-controlling

Interest Total Equity

Interest Total

Equity Redeemable Non-controlling Interest

Shares Value Shares Value

Balance at March 31, 2024 141,596 $ — 376,315 $ 1 $ 2,043 $ ( 1,310 ) $ ( 301 ) $ 433 $ 152 $ 585

Balance at September 30, 2024 142,559 $ — 375,380 $ 1 $ 2,077 $ ( 1,313 ) $ ( 247 ) $ 518 $ 157 $ 675 $ —

Net income — — — — — 236 — 236 5 241 —

5 unchanged sentences

Distribution to noncontrolling interest holders — — — — — — — — ( 8 ) ( 8 ) —

Acquisition of noncontrolling interests

Vesting of restricted stock units, net of shares withheld 64 — — — ( 2 ) — — ( 2 ) — ( 2 ) —

Shares issued under the Plan

1,738 — — — — — — — — — —

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

Common shares repurchased and retired ( 60 ) — — — ( 2 ) — — ( 2 ) — ( 2 ) —

Other — — — — ( 2 ) — — ( 2 ) ( 2 ) ( 4 ) —

Balance at December 31, 2024 144,301 $ — 375,380 $ 1 $ 2,091 $ ( 1,171 ) $ ( 376 ) $ 545 $ 152 $ 697 $ —

See accompanying notes

24 unchanged sentences

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.

Operating results for the three months ended December 31, 2025 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2026.

The consolidated balance sheet at September 30, 2025 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.

2 unchanged sentences

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.

The accompanying financial statements present the consolidated accounts of all entities in which the Company has a controlling financial interest required to be consolidated in accordance with U.S.

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.

As of December 31, 2025 and September 30, 2025, there were approximately $ 59 million and $ 65 million of assets, respectively, related to variable interest entities (“VIEs”) included in our condensed consolidated balance sheets.

As of December 31, 2025 and September 30, 2025, there were approximately $ 2 million and $ 2 million of liabilities, respectively, 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.

Noncontrolling Interests

Interests held by third parties in consolidated subsidiaries are presented as noncontrolling interests, which represents the noncontrolling shareholders’ interests in the underlying net assets of the Company’s consolidated subsidiaries.

Noncontrolling interests that are not redeemable are reported in the equity section of the Consolidated Balance Sheets.

Noncontrolling interests, where the Company may be required to redeem the noncontrolling interest under contractual redemption requirements that are not solely within the control of Company, are reported in the Consolidated Balance Sheets between liabilities and equity, as redeemable noncontrolling interests.

The Company adjusts the redeemable noncontrolling interests to the higher of the current redemption value or the carrying value of the interests, the capital contributed by the third party adjusted for the noncontrolling interest’s share of net income (loss) and distributions, on each balance sheet date with changes in redemption value recognized as an adjustment to retained earnings attributable to common shareholders.

The Company uses the estimated annual effective tax rate method in computing its interim tax provision.

7 unchanged sentences

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):

In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

1 unchanged sentence

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.

The Company will include the required disclosures in its Annual Report on Form 10-K for the fiscal year ending September 30, 2026.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

1 unchanged sentence

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 amendments in this ASU are effective for our fiscal year ending September 30, 2028, and interim periods within our fiscal year ending September 30, 2029.

The Company is in the process of evaluating the effect that the adoption of these standards will have on its consolidated financial statements.

In September 2025, the FASB issued ASU 2025-06, Internal-Use Software (Subtopic 350-40) :

Targeted Improvements to the Accounting for Internal-Use Software .

The amendment aligns internal use software capitalization practices with agile development methodologies and an external use software model by introducing updated capitalization criteria and removing existing project staging guidance.

The amendments in this ASU are effective for our fiscal year ending September 30, 2029.

The Company is in the process of evaluating the effect that the adoption of these standards will have on its consolidated financial statements.

Earnings per Share

2 unchanged sentences

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):

Three Months Ended June 30,

The potentially dilutive common shares did not have a dilutive effect on the Company’s EPS calculation for the three months ended December 31, 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 months ended December 31, 2025 and 2024 (in millions, except share amounts, which are reflected in thousands, and per share data):

Three Months Ended December 31,

Class A Class B Class A Class B

3 unchanged sentences

Net loss attributable to participating securities (a)

( 2 ) — ( 3 ) —

Net income (loss) attributable to common stockholders

1 unchanged sentence

Weighted average shares outstanding 146,755 375,380 143,053 375,380

Basic and Diluted Earnings (Loss) Per Share

$ ( 0.03 ) $ ( 0.03 ) $ 0.27 $ 0.27

Nine Months Ended June 30,

Class A Class B Class A Class B

Basic and Diluted EPS:

Net income attributable to Warner Music Group Corp.

$ 73 $ 183 $ 111 $ 283

Net income attributable to participating securities (a)

Basic and Diluted Earnings Per Share (b)

$ 0.33 $ 0.33 $ 0.45 $ 0.45

Net income attributable to common stockholders $ 70 $ 183 $ 106 $ 283

Weighted average shares outstanding 144,623 375,380 140,531 376,868

Basic and Diluted EPS $ 0.49 $ 0.49 $ 0.75 $ 0.75

______________________________________

1 unchanged sentence

Participating securities are not contractually obligated to share in losses.

(b) For the three months ended December 31, 2025, the weighted average shares outstanding for Diluted EPS includes the dilutive effect of approximately 2,750 shares.

As the resulting Diluted EPS rounds to the same reported amount as Basic EPS, both Basic and Diluted EPS for the three months ended December 31, 2025 are presented as $ 0.33 per share.

There were no dilutive potentially issuable shares for the three months ended December 31, 2024.

Revenue Recognition

2 unchanged sentences

Three Months Ended

June 30, Nine Months Ended

2025 2024 2025 2024

(in millions)

3 unchanged sentences

Total digital and physical

1,048 1,002 3,040 3,023

Artist services and expanded-rights 231 196

5 unchanged sentences

Synchronization 60 39

Other 4 4 15 11

Total Music Publishing 362 323

5 unchanged sentences

Music Publishing 190 173

722 678 2,085 2,155

International Recorded Music 903 813

1 unchanged sentence

Total international

968 878 2,758 2,645

Intersegment eliminations ( 2 ) ( 2 )

2 unchanged sentences

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.

Based on management’s analysis of sales returns, refund liabilities of $ 21 million and $ 17 million were established at December 31, 2025 and September 30, 2025, respectively.

Based on management’s analysis of estimated credit losses, reserves of $ 28 million and $ 27 million were established at December 31, 2025 and September 30, 2025, 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.

Deferred revenue increased by $ 142 million during the three months ended December 31, 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 $ 127 million were recognized during the three months ended December 31, 2025 related to the balance of deferred revenue at September 30, 2025.

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.

Revenues expected to be recognized in the future related to performance obligations that are unsatisfied at June 30, 2025 are as follows:

Thereafter Total

For the three months ended December 31, 2025 and December 31, 2024, the Company recognized revenue of $ 18 million and $ 40 million, respectively, from performance obligations satisfied in previous periods.

Revenues expected to be recognized in the future related to performance obligations that are unsatisfied at December 31, 2025 are as follows:

Rest of FY26 FY27 FY28 Thereafter Total

(in millions)

9 unchanged sentences

Balances at September 30, 2024 $ ( 244 ) $ ( 3 ) $ ( 247 )

Other comprehensive loss ( 129 ) — ( 129 )

Balances at December 31, 2024 $ ( 373 ) $ ( 3 ) $ ( 376 )

Balances at September 30, 2025 $ ( 188 ) $ ( 1 ) $ ( 189 )

Other comprehensive income 9 — 9

Balances at June 30, 2025 $ ( 171 ) $ ( 3 ) $ ( 174 )

Balances at December 31, 2025 $ ( 179 ) $ ( 1 ) $ ( 180 )

______________________________________

7 unchanged sentences

Other adjustments (a) 2 — 2

Balances at June 30, 2025 $ 1,600 $ 464 $ 2,064

Balances at December 31, 2025 $ 1,599 $ 464 $ 2,063

______________________________________

(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.

(a) Other adjustments during the three months ended December 31, 2025 represent foreign currency movements.

The Company performs its annual goodwill impairment test in accordance with ASC 350, Intangibles—Goodwill and Other, 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.

2 unchanged sentences

Intangible assets consist of the following:

Weighted-Average Useful Life June 30,

Weighted-Average Useful Life December 31,

2025 September 30,

12 unchanged sentences

Total net intangible assets $ 2,844 $ 2,879

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.

Debt Capitalization

As of June 30, 2025, our long-term debt consists of the following:

As of December 31, 2025, our long-term debt consists of the following:

2025 September 30,

12 unchanged sentences

long-term debt, including the current portion, net $ 4,064 $ 4,063

Tempo Asset-Based Notes due 2050 311 —

Beethoven Credit Agreement (b)

Tempo Asset-Based Notes due 2050 (c)

Unamortized discount

Total asset-based long-term debt, including the current portion, net (b)

Total other long-term debt, including the current portion, net

Total long-term debt, including the current portion, net $ 4,371 $ 4,365

______________________________________

(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.

(a) Reflects $ 350 million of commitments under the Revolving Credit Facility with no letters of credit outstanding at December 31, 2025 and September 30, 2025.

There were no loans outstanding under the Revolving Credit Facility as of December 31, 2025 and September 30, 2025.

(b) Reflects $ 500 million of commitments under the Beethoven Credit Agreement.

There were $ 4 million in loans outstanding under the Beethoven Credit Agreement at December 31, 2025.

Loans outstanding under the Beethoven Credit Agreement are secured only by certain music rights owned by Beethoven JV 1, LLC, a Delaware limited liability company (“Beethoven”), and are nonrecourse to the Company and its subsidiaries, other than Beethoven.

(c) The Tempo Asset-Based Notes due 2050 are secured only by certain music rights owned by Tempo Music Holdings, LLC (“Tempo Music”) and are nonrecourse to the Company and its subsidiaries, other than Tempo Music.

Acquisition Corp.

Long-Term Debt

The Company is the direct parent of Holdings, which is the direct parent of Acquisition Corp.

1 unchanged sentence

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.

Additionally, as of December 31, 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.

9 unchanged sentences

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

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.

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

Other Long-Term Debt

The Company holds approximately $ 311 million of asset-based securities due November 2050 (“Asset-Based Notes”) issued by a subsidiary of Tempo Music secured only by certain music rights owned by Tempo Music and is nonrecourse to the Company and its subsidiaries, other than Tempo Music.

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.

As of December 31, 2025, Tempo Music is in compliance with the covenants under the Asset-Based Notes.

Additionally, WMG BC Holdco LLC (“WMGCo”), a wholly-owned indirect subsidiary of the Company, and BCSS W JV Investments (B), L.P.

(“BainCo”), a wholly-owned indirect subsidiary of Bain Capital Special Situations, LP, operate Beethoven, which is party to a Credit and Security Agreement (the “Beethoven Credit Agreement”), dated as of June 29, 2025, with 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) pursuant to which the Lenders have agreed to extend up to $ 500 million in commitment amounts to Beethoven Financing 1, LLC, a Delaware limited liability company and wholly-owned indirect subsidiary of Beethoven, as the initial borrower (the “Initial Borrower” and, together with each additional borrower from time to time party thereto, the “Borrowers”) (the “Beethoven Credit Facility”).

The obligations of the Borrowers under the Beethoven Credit Agreement are (a) secured by the Borrowers with a first priority security interest in all of their respective assets and (b) guaranteed by Beethoven Holdings 1 LLC, a Delaware limited liability company and a wholly-owned direct subsidiary of Beethoven and the direct parent of the Initial Borrower, as the initial guarantor (together with the additional guarantors from time to time party thereto, the “Guarantors”) with a first priority security interest in all of the Guarantors’ 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.

There were $ 4 million of loans outstanding under the Beethoven Credit Agreement at December 31, 2025.

As of December 31, 2025, the Initial Borrower is in compliance with the covenants under the Beethoven Credit Agreement.

On February 4, 2026, WMGCo entered into an amendment (the “Amendment”) to a Master Operations and Economics Agreement, dated as of June 29, 2025 (as amended from time to time, the “Master Operations and Economics Agreement”), by and among WMGCo, BainCo, and certain affiliates of the foregoing parties.

Pursuant to the Amendment, WMGCo and BainCo have committed to increase their respective initial equity commitment amounts by $ 100 million each.

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;

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.

Based on the Senior Secured Indebtedness to EBITDA Ratio of 1.83 x at December 31, 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.

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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.

As of December 31, 2025, there are no interest rate swaps outstanding.

Maturity of Senior Term Loan Facility

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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.

As of December 31, 2025, there are no scheduled maturities of notes until 2028, when $ 382 million is scheduled to mature.

Thereafter, $ 2.397 billion is scheduled to mature.

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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.

Total interest expense, net was $ 45 million and $ 37 million for the three months ended December 31, 2025 and 2024, respectively.

Interest expense, net includes interest expense related to our outstanding indebtedness of $ 46 million and $ 43 million for the three months ended December 31, 2025 and 2024, respectively.

The weighted-average interest rate of the Company’s total debt was 4.0 % at December 31, 2025, 4.1 % at September 30, 2025, and 4.2 % at December 31, 2024.

Restructuring and Impairments

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 2025 Restructuring Plan is expected to be fully implemented by the end of calendar year 2026.

The Company expects to incur total charges of approximately $ 200 million on a pre-tax basis or approximately $ 150 million on an after-tax basis.

Approximately $ 170 million of the charges will be for severance payments and other related termination costs and approximately $ 30 million of certain other charges.

The Company anticipates that the Plan will result in cash expenditures of approximately $ 200 million, of which $ 170 million is expected to be paid by the end of fiscal year 2026.

For the three months ended December 31, 2025, total severance and other termination costs recorded in connection with the 2025 Strategic Restructuring Plan were $ 25 million, of which $ 13 million of expense was recognized in our Recorded Music segment and $ 12 million was recognized in Corporate.

As of December 31, 2025, total cumulative restructuring and impairment charges recognized in connection with the 2025 Strategic Restructuring Plan were $ 143 million with $ 93 million of costs recognized in our Recorded Music segment, $ 5 million of costs recognized in our Music Publishing segment, and $ 45 million recognized in Corporate.

These costs are composed of $ 115 million of severance costs and $ 28 million of non-cash impairment charges primarily related to impairments of operating lease right-of-use assets that are no longer in use and royalty advances based on operational changes in the intended use of these assets.

The following table sets forth the activity for the three months ended December 31, 2025 in the restructuring accrual associated with the 2025 Restructuring Plan included within accrued liabilities in the accompanying consolidated balance sheets:

Severance Costs

(in millions)

Balance at September 30, 2025 $ 85

Restructuring charges 25

Cash payments ( 35 )

Balance at December 31, 2025 $ 75

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

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.

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

As of September 30, 2025, total cumulative restructuring and impairment charges recognized in connection with the 2024 Strategic Restructuring Plan were $ 216 million with $ 206 million of costs recognized in our Recorded Music segment and $ 10 million recognized in Corporate.

These costs are composed of $ 134 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.

There were no restructuring costs recognized for the three months ended December 31, 2025 related to the 2024 Strategic Restructuring Plan.

The below table sets forth the activity for the three months ended December 31, 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

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Balance at September 30, 2025 $ 23 $ 7 $ 30

Restructuring charges — 7 7

Cash payments ( 10 ) ( 2 ) ( 12 )

Foreign currency movements — — —

Balance at June 30, 2025 $ 36 $ 7 $ 43

Balance at December 31, 2025 $ 13 $ 5 $ 18

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.

For the three months ended December 31, 2025, the Company recognized an impairment charge of $ 9 million within the Recorded Music segment for long-lived assets associated with EMP Merchandising (“EMP”), which was the result of remeasuring the carrying value to fair value as it has been classified as held for sale since September 30, 2025.

Please refer to Note 15 for further discussion.

Commitments and Contingencies

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The Company’s stock-based compensation plans are described in Note 13, “Equity,” to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2025.

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.

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.

Stock-based compensation consists primarily of common stock, restricted stock units (“RSUs”), deferred share units, stock options, and market-based performance share units (“PSUs”) granted to eligible employees and executives under the Omnibus Incentive Plan.

The Company recognized $ 19 million and $ 13 million of non-cash stock-based compensation expense for the three months ended December 31, 2025 and 2024, respectively, which was recorded to additional paid-in capital.

During the three months ended December 31, 2025, the Company satisfied the vesting of PSUs and RSUs by issuing 159,580 shares of Class A Common Stock under the Omnibus Incentive Plan, which is net of shares used to settle employee income tax obligations.

Share Repurchase Program

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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:

The following table summarizes our total share repurchases and retirement under the Share Repurchase Program during the three months ended December 31, 2025:

Three Months Ended

June 30, 2025 Nine Months Ended

June 30, 2025

December 31, 2025 Three Months Ended

December 31, 2024

Share Repurchase Type

4 unchanged sentences

920,000 $ 26 60,383 $ 2

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

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.

Redeemable Noncontrolling Interest

As of December 31, 2025, the redeemable noncontrolling interests (“RNCI”) consist of interests in Beethoven, a consolidated subsidiary.

The Company consolidates Beethoven based on its controlling financial interest of the joint venture through the Company's majority representation on the board.

The noncontrolling interest holder in Beethoven, which is BainCo as described in Note 7, has a 50 % ownership share and is entitled to receive 50 % of the required quarterly distributions made by the joint venture from available cash.

For distributions resulting from a liquidity event, including the sale of the joint venture, an initial public offering, or other liquidity event as defined in the Master Operations and Economics Agreement, the noncontrolling interest holder is entitled to proceeds from such event until its contributed capital is returned with an annualized return of 8 %, after which the Company will receive distributions for an equal amount, with any additional amounts distributed equally.

Beginning on the sixth anniversary of formation, the noncontrolling interest holder has an exit right, that upon providing notice, the Company has the option to acquire the noncontrolling interest holders interest for a price negotiated with noncontrolling interest holder or otherwise determined by an independent fair market valuation, if elected.

If not acquired by the Company, the noncontrolling interest holder can initiate and complete a sale of Beethoven or an initial public offering that include the interests held by the Company.

Beginning on the eighth anniversary, the Company will also have a similar exit right, that provides similar rights to negotiate the sale of the Company’s interests to the noncontrolling interest holder.

Given the exit rights held by the noncontrolling interest holder may result in the interests being redeemed by the Company based on events that are not solely in its control, the noncontrolling interest is presented in the Consolidated Balance Sheets at the greater of the current estimated redemption value or carrying value of the interests including adjustments for the attribution of income to the noncontrolling interest holder.

The Company adjusts the redeemable noncontrolling interest to the redemption at the end of each reporting period with changes recognized as adjustments to retained earnings.

The Company recognized $ 5 million as the redeemable noncontrolling interest balance as of December 31, 2025.

For the three months ended December 31, 2025, the Company recorded an income tax expense of $ 71 million.

The income tax expense for the three months ended December 31, 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, the net impact of GILTI and foreign derived intangible income (“FDII”), and non-deductible executive compensation under IRC Section 162(m).

For the three months ended December 31, 2024, the Company recorded an income tax expense of $ 89 million.

The income tax expense for the three months ended December 31, 2024 is higher than the expected tax expense at the statutory rate of 21% primarily due to foreign income taxed at rates higher than the United States, including withholding taxes, and U.S.

state and local taxes, unrecognized tax benefit related to uncertain tax positions, and non-deductible executive compensation under IRC Section 162(m).

These charges were partially offset by tax benefits associated with R&D credits, and the net impact of GILTI and FDII.

The Company has determined that it is reasonably possible that the gross unrecognized tax benefits as of December 31, 2025 could decrease by up to approximately $ 1 million related to various ongoing audits and settlement discussions in various jurisdictions during the next twelve months.

The Organization 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 legislation as of January 1, 2025 and others are expected to enact legislation in the next few years.

The Company has evaluated the potential impact of the rules based on the most recently available information.

For the fiscal year ended September 30, 2026, the impact on the Company is expected to be 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.

In fiscal year 2026, the Company is benefitting from the changes to the business interest expense deduction limitation, allowing for an accelerated deduction, and restored expensing for domestic research and development costs.

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:

As of December 31, 2025, the Company had outstanding foreign currency forward exchange contracts for the sale of $ 541 million and the purchase of $ 327 million of foreign currencies at fixed rates.

As of September 30, 2025, the Company had outstanding foreign currency forward exchange contracts for the sale of $ 460 million and the purchase of $ 170 million of foreign currencies at fixed rates.

The Company recorded no realized pre-tax gains and unrealized pre-tax losses of $ 1 million related to its foreign currency forward exchange contracts in the condensed consolidated statement of operations as other expense for the three months ended December 31, 2025.

The Company recorded realized pre-tax gains of $ 3 million and unrealized pre-tax gains of $ 12 million related to its foreign currency forward exchange contracts in the condensed consolidated statement of operations as other expense for the three months ended December 31, 2024.

The following is a summary of amounts recorded in the consolidated balance sheets pertaining to the Company’s derivative instruments at December 31, 2025 and September 30, 2025:

2025 September 30,

5 unchanged sentences

______________________________________

(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.

(a) For December 31, 2025 includes $ 6 million and $ 7 million of foreign exchange derivative contracts in asset and liability positions, respectively, which net to $ 0 million of current assets and $ 1 million of current liabilities, respectively.

For September 30, 2025 includes $ 3 million and $ 6 million of foreign exchange derivative contracts in asset and liability positions, respectively, which net to $ 0 million of current assets and $ 3 million of current liabilities, respectively.

Segment Information

1 unchanged sentence

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.

Information as to each of these operations and further description of these segments is set forth below and can be found in Note 1.

The Company’s Chief Operating Decision Maker, which is our Chief Executive Officer, allocates resources and evaluates performance based on several factors, including operating income (loss) and other financial measures.

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, 2025.

4 unchanged sentences

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

Publishing Corporate

eliminations Total

Nine Months Ended (in millions)

June 30, 2025

December 31, 2025

Revenues $ 1,480 $ 362 $ ( 2 ) $ 1,840

Adjusted OIBDA

Cost of revenue 760 228 ( 1 ) 987

Selling and marketing expense 150 1 4 155

Distribution expense 31 — — 31

General and administrative expense 154 34 84 272

Restructuring & Impairment 22 — 12 34

Amortization expense 34 34 — 68

Net loss on divestitures

— — ( 5 ) ( 5 )

June 30, 2024

Operating income (loss) $ 329 $ 65 $ ( 106 ) $ 288

Depreciation expense (a) 12 1 18 31

December 31, 2024

Revenues $ 1,345 $ 323 $ ( 2 ) $ 1,666

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.

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

2025 2024 2025 2024

Operating income $ 169 $ 207 $ 551 $ 680

Cost of revenue 686 210 ( 2 ) 894

Selling and marketing expense 151 1 6 158

Distribution expense 32 — — 32

General and administrative expense 180 31 73 284

Restructuring & Impairment 28 — ( 1 ) 27

Amortization expense 30 26 1 57

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

Operating income (loss) $ 238 $ 55 $ ( 79 ) $ 214

Depreciation expense (a) 15 1 13 29

(a) Depreciation expense is a component of general and administrative expense

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.

The Company made interest payments of approximately $ 38 million and $ 18 million during the three months ended December 31, 2025 and 2024, respectively.

The Company paid approximately $ 68 million and $ 43 million of income and withholding taxes, net of refunds, for the three months ended December 31, 2025 and 2024, respectively.

Non-cash investing activities were approximately $ 8 million related to the receipt of noncash consideration and the acquisition of music publishing rights and music catalogs during the three months ended December 31, 2025 and $ 18 million related to business combinations and the acquisition of music publishing rights and music catalogs during the three months ended December 31, 2024.

Assets and Liabilities Held for Sale

In the fourth quarter of fiscal year 2025, the Company signed a non-binding letter of intent to sell its EMP business within our Recorded Music segment and was classified as held for sale.

The sale is expected to be completed in the second quarter of fiscal year 2026.

Upon classification as held for sale, the business was measured at the lower of its carrying amount or its estimated fair value less costs to sell.

For the three months ended December 31, 2025, the Company recognized an impairment charge of $ 9 million within the Recorded Music segment for long-lived assets associated with EMP, which was the result of remeasuring the carrying value to fair value as it has been classified as held for sale since September 30, 2025.

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

The major classes of assets and liabilities of the business held for sale as of December 31, 2025 are as follows:

December 31, 2025 September 30, 2025

(in millions) (in millions)

Cash $ 16 $ 3

Inventories 40 50

Property, plant and equipment, net 13 20

Intangible assets subject to amortization, net 7 10

Other assets 4 6

Assets of business held for sale $ 80 $ 89

Accounts payable and accrued liabilities $ 29 $ 34

Other liabilities 19 15

Liabilities of business held for sale $ 48 $ 49

Net Gain (Loss) on Divestitures

The Company recognized a pre-tax loss of $ 5 million during the three months ended December 31, 2025, in connection with the divestiture of certain assets which have been reflected as a net loss (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.

The Company recognized a pre-tax realized net gain of $ 29 million during the three months ended December 31, 2024 in connection with the sale of an investment that has been presented within the Other income (expense) line of the accompanying condensed consolidated statement of operations.

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.

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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 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.

On November 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, which was paid to stockholders on December 2, 2025.

The Company paid an aggregate of approximately $ 100 million, or $ 0.19 per share, in cash dividends to stockholders and participating security holders for the three months ended December 31, 2025.

On February 5, 2026, 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 March 3, 2026 to stockholders of record as of the close of business on February 18, 2026.

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

The following tables show the fair value of the Company’s financial instruments that are required to be measured at fair value as of December 31, 2025 and September 30, 2025.

Fair Value Measurements as of December 31, 2025

(Level 1) (Level 2) (Level 3) Total

2 unchanged sentences

Foreign currency forward exchange contracts (a) $ — $ — $ — $ —

$ — $ 1 $ — $ 1

Other current liabilities:

Foreign currency forward exchange contracts (a) $ — $ ( 1 ) $ — $ ( 1 )

$ — $ ( 6 ) $ — $ ( 6 )

Other noncurrent assets:

3 unchanged sentences

(in millions)

Other current liabilities:

Foreign currency forward exchange contracts (a)

$ — $ ( 3 ) $ — $ ( 3 )

Other noncurrent assets:

1 unchanged sentence

$ 8 $ — $ — $ 8

______________________________________

(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.

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In addition, an impairment analysis is performed at least annually for goodwill and indefinite-lived intangible assets.

Furthermore, assets classified as held for sale are measured at the lower of their carrying amount or fair value less costs to sell.

When the Company determines that the fair value of an asset group held for sale is less than its carrying value, a non-recurring fair value adjustment is recognized as a loss in the period the held-for-sale criteria are met.

The Company estimated the fair value of the assets held for sale based on current market indicators.

Equity Investments Without Readily Determinable Fair Value

1 unchanged sentence

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.

The Company did not record any impairment charges on these investments during the three months ended December 31, 2025 and recorded approximately $ 1 million of impairment charges on these investments during the three months ended December 31, 2024.

In addition, there were no observable price changes events that were completed during the three months ended December 31, 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 December 31, 2025, the fair value of the Company’s debt was $ 4.290 billion.

Based on the level of interest rates prevailing at September 30, 2025, the fair value of the Company’s debt was $ 4.270 billion.

1 unchanged sentence

both approaches are considered a Level 2 measurement.

Subsequent Events

2025 Restructuring Plan

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.

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 1. Financial Statements