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Item 2. Management’s Discussion and Analysis

2026-02-09 compared with 2025-08-07 · 222 added, 498 removed, 432 unchanged (63% of the section changed)

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

You should read the following discussion of our results of operations and financial condition with the unaudited interim financial statements included elsewhere in this Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2025 (the “Quarterly Report”).

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

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• Results of operations.

This section provides an analysis of our results of operations for the three and nine months ended June 30, 2025 and June 30, 2024.

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

This analysis is presented on both a consolidated and segment basis.

• Financial condition and liquidity.

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

This section provides an analysis of our cash flows for the three months ended December 31, 2025 and December 31, 2024, as well as a discussion of our financial condition and liquidity as of December 31, 2025.

The discussion of our financial condition and liquidity includes recent debt financings and a summary of the key debt covenant compliance measures under our debt agreements.

Use of Adjusted OIBDA

We evaluate our operating performance based on several factors, including our primary financial measure of 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 (“Adjusted OIBDA”).

We evaluate our operating performance based on several factors, including Adjusted OIBDA.

We define Adjusted OIBDA as operating income (loss) adjusted to exclude the following items:

(i) non-cash depreciation of tangible assets, (ii) non-cash amortization of intangible assets, (iii) non-cash stock-based compensation and other related expenses, (iv) gains or losses on divestitures, (v) expenses related to restructuring and transformation initiatives, which includes costs associated with the Company’s financial transformation initiative to design and implement new information technology and upgrade our finance infrastructure, and (vi) executive transition costs.

Items excluded are not viewed to contribute directly to management’s evaluation of operating results.

We consider Adjusted OIBDA to be an important indicator of the operational strengths and performance of our businesses.

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We calculate constant-currency by calculating prior-year revenue and Adjusted OIBDA using current-year foreign currency exchange rates.

We generally refer to such amounts calculated on a constant-currency basis as “excluding the impact of foreign currency exchange rates.” Revenue and Adjusted OIBDA on a constant-currency basis should be considered in addition to, not as a substitute for, revenue and Adjusted OIBDA reported in

accordance with U.S.

We generally refer to such amounts calculated on a constant-currency basis as “excluding the impact of foreign currency exchange rates.” Revenue and Adjusted OIBDA

on a constant-currency basis should be considered in addition to, not as a substitute for, revenue and Adjusted OIBDA reported in accordance with U.S.

Revenue and Adjusted OIBDA on a constant-currency basis, as we present it, may not be comparable to similarly titled measures used by other companies and are not a measure of performance presented in accordance with U.S.

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In the United States, our Recorded Music business is conducted principally through our major record labels—Atlantic Records and Warner Records.

In October 2018, we launched Elektra Music Group in the United States as a standalone label group, which comprises the Elektra, Fueled by Ramen and Roadrunner labels, and in December 2021, we acquired 300 Entertainment and subsequently launched 300 Elektra Entertainment, or 3EE, a frontline label group that brings together the multi-genre power of 300 Entertainment and Elektra Music Group.

Our Recorded Music business also includes Rhino Entertainment, a division that specializes in marketing our recorded music catalog through compilations, reissuances of previously released music and video titles and releasing previously unreleased material from our vault.

We also conduct our Recorded Music business through a collection of additional record labels including Asylum, Big Beat, Canvasback, East West, Erato, FFRR, Nonesuch, Parlophone, Reprise, Sire, Spinnin’ Records, TenThousand Projects, Warner Classics and Warner Music Nashville.

Outside the United States, our Recorded Music business is conducted in more than 70 countries through various subsidiaries, affiliates and non-affiliated licensees.

Outside the United States, our Recorded Music business is conducted through various subsidiaries, affiliates and non-affiliated licensees.

Internationally, we engage in the same activities as in the United States:

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In certain smaller markets, we license the right to distribute and sell our music to non-affiliated third-party record labels.

Our Recorded Music business’ operations include WMX, a next generation services division that connects artists with fans and amplifies brands in creative, immersive, and engaging ways.

This division includes a rebranded WEA commercial services & marketing network (formerly Warner-Elektra-Atlantic Corporation, or WEA Corp.), which markets, distributes and sells music and video products to retailers and wholesale distributors, as well as acting as the Company’s media and creative content arm.

Our business’ distribution operations also include Alternative Distribution Alliance (“ADA”), which markets, distributes and sells the products of independent labels to retail and wholesale distributors;

Our Recorded Music business’s operations include WMX, a next generation services division that connects artists with fans and amplifies brands in creative, immersive, and engaging ways.

This division includes a rebranded WEA commercial services and marketing network (formerly Warner-Elektra-Atlantic Corporation, or WEA Corp.), which markets, distributes and sells music and video products to retailers and wholesale distributors, and enhances relationships with fans by creating artist merchandise, which we operate, market and sell across various channels, including e-commerce and retail.

and through touring.

Our business’s distribution operations also include Alternative Distribution Alliance (“ADA”), which markets, distributes and sells the products of independent labels to retail and wholesale distributors;

and various distribution centers and ventures operated internationally.

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We have diversified our revenues beyond our traditional businesses by entering into expanded-rights deals with recording artists in order to partner with such artists in other aspects of their careers.

Under these agreements, we provide services to and participate in recording artists’ activities outside the traditional recorded music business such as touring, merchandising and sponsorships.

Under these agreements, we provide services to and

participate in recording artists’ activities outside the traditional recorded music business such as touring, merchandising and sponsorships.

We have built and acquired artist services capabilities and platforms for marketing and distributing this broader set of music-related rights and participating more widely in the monetization of the artist brands we help create.

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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.

The operations of our Music Publishing business are conducted principally through Warner Chappell Music, our global music publishing company headquartered in Los Angeles, with operations in over 70 countries through various subsidiaries, affiliates, and non-affiliated licensees and sub-publishers.

We own or control rights to more than one and a half million musical compositions, including numerous pop hits, American standards, folk songs and motion picture and theatrical compositions.

The operations of our Music Publishing business are conducted principally through Warner Chappell Music, our global music publishing company headquartered in Los Angeles, through various subsidiaries, affiliates, and non-affiliated licensees and sub-publishers.

We own or control rights to more than two million musical compositions, including numerous pop hits, American standards, folk songs and motion picture and theatrical compositions.

Assembled over decades, our award-winning catalog includes over 190,000 songwriters and composers and a diverse range of genres including pop, rock, jazz, classical, country, R&B, hip-hop, rap, reggae, Latin, folk, blues, symphonic, soul, Broadway, electronic, alternative and gospel.

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• Performance :

the rightsholder receives revenues if the musical composition is performed publicly through broadcast of music on television, radio and cable and in retail locations (e.g., bars and restaurants), live performance at a

concert or other venue ( e.g.

, arena concerts and nightclubs), and performance of music in staged theatrical productions;

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Recent Events and Factors Affecting Results of Operations and Comparability

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 the fiscal year 2027 and expects the majority of the cost savings under the 2025 Restructuring Plan to be accretive to Adjusted OIBDA.

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 at 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.

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.

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.

The cost savings under the 2024 Strategic Restructuring Plan will be achieved through a combination of the disposal or winding down of non-core operations, continuing to manage overhead, sharpening focus, expanding shared services, and implementing previously disclosed expected operational efficiencies made possible by the Company’s financial transformative initiative.

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

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

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

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

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

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

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 at 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.

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

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, 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.

BMG Termination

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Alternative Distribution Alliance (“ADA”), which is part of our Recorded Music business, had previously been distributing BMG’s recorded music catalog and revenues are reported within our Recorded Music segment.

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

The shift to digital direct deals by BMG was a phased in-sourcing of distribution during the prior fiscal year with BMG rolled off at the end of the prior fiscal year.

RESULTS OF OPERATIONS

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

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

Consolidated Results

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For the Three Months Ended

June 30, 2025 vs.

December 31, 2025 vs.

2025 2024 $ Change % Change

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Total Revenues

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

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

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

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

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

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

Total revenues increased by $174 million, or 10%, to $1,840 million for the three months ended December 31, 2025 from $1,666 million for the three months ended December 31, 2024.

Revenue growth was impacted by a digital revenue settlement of $12 million in the quarter and a $7 million downward revenue true-up in the prior-year quarter (the “DSP True-Up and Settlement Payments”).

Recorded Music revenue growth was also unfavorably impacted by the BMG Termination, which resulted in $6 million less Recorded Music digital revenue compared to the prior-year quarter.

Music Publishing revenue was impacted by $17 million of revenue in the prior-year quarter recognized in connection with historical matched royalties that were processed to date by the Mechanical Licensing Collective (the “MLC Historical Matched Royalties”).

Adjusted for these items, total revenues increased by $178 million, or 11%, which includes $52 million of favorable currency exchange fluctuations.

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

Prior to intersegment eliminations, U.S.

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

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

and international revenues represented 42% and 58% of total revenues for each of the three months ended December 31, 2025 and December 31, 2024.

Total digital revenues after intersegment eliminations increased by $108 million, or 10%, to $1,190 million for the three months ended December 31, 2025 from $1,082 million for the three months ended December 31, 2024.

Total streaming revenue increased by $113 million, driven by growth in Recorded Music and Music Publishing.

Total streaming revenue includes $30 million of favorable currency exchange fluctuations.

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

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

revenues of $534 million and international revenues of $657 million, or 45% and 55% of total digital revenues, respectively.

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

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

revenues of $508 million and international revenues of $572 million, or 47% and 53% of total digital revenues, respectively.

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

Recorded Music revenues increased by $135 million, or 10%, to $1,480 million for the three months ended December 31, 2025 from $1,345 million for the three months ended December 31, 2024.

The increase includes $43 million of favorable currency exchange fluctuations.

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

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

Recorded Music revenues were $577 million and $532 million, or 39% and 40% of consolidated Recorded Music revenues for each of the three months ended December 31, 2025 and December 31, 2024, respectively.

International Recorded Music revenues were $903 million and $813 million, or 61% and 60%, of consolidated Recorded Music revenues for each of the three months ended December 31, 2025 and December 31, 2024, respectively.

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

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

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

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

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

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

and China, and timing of other copyright infringement settlements.

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

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

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

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

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

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

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

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

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

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

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

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

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

Digital revenue increased by $103 million, or 12%, which includes a favorable impact of currency exchange fluctuations of $26 million, primarily due to growth in streaming revenue as a result of the continued growth in streaming services, including growth in subscription and ad-supported revenues.

Revenue from streaming services increased by $106 million, or 12%, to $960 million for the three months ended December 31, 2025 from $854 million for the three months ended December 31, 2024.

Adjusted for the impacts of the DSP True-Up and Settlement Payments in the current and prior-year quarters and the BMG Termination in the prior-year quarter, Recorded Music streaming revenue increased $93 million, or 11%, to $948 million for the three months ended December 31, 2025 from $855 million for the three months ended December 31, 2024.

Download and other digital revenues decreased by $3 million, or 16%, to $16 million for the three months ended December 31, 2025 from $19 million for the three months ended December 31, 2024.

Artist services and expanded-rights revenue increased by $35 million, or 18%, due to higher concert promotion revenue primarily in France, and a favorable impact of foreign currency exchange rates of $9 million.

Licensing revenue increased by $11 million, or 10%, driven by higher licensing activity, a $2 million increase in copyright infringement settlements in the quarter, and a favorable impact of foreign currency exchange rates of $3 million.

Physical revenue, which includes a favorable impact of foreign currency exchange rates of $5 million, decreased by $14 million, or 8%, primarily driven by strong releases in Japan and Korea in the prior-year quarter.

Top sellers in the quarter included Alex Warren, sombr, Cardi B, Ed Sheeran, and Teddy Swims.

Music Publishing revenues increased by $39 million, or 12%, to $362 million for the three months ended December 31, 2025 from $323 million for the three months ended December 31, 2024.

Music Publishing revenues were $190 million and $173 million, or 52% and 54% of consolidated Music Publishing revenues, for the three months ended December 31, 2025 and December 31, 2024, respectively.

International Music Publishing revenues were $172 million and $150 million, or 48% and 46% of consolidated Music Publishing revenues, for the three months ended December 31, 2025 and December 31, 2024, respectively.

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

Digital revenue increased by $8 million, or 4%, driven by an increase in streaming revenue.

Revenue from streaming services grew by $7 million, or 3%, to $212 million for the three months ended December 31, 2025 from $205 million for the three months ended December 31, 2024, driven by the impact of new deals and renewals and a favorable impact of foreign currency exchange rates of $4 million, partially offset by the $17 million impact of the MLC Historical Matched Royalties in the prior-year quarter.

Adjusted for this item, Music Publishing streaming revenue increased $24 million, or 13%, to $212 million for the three months ended December 31, 2025 from $188 million for the three months ended December 31, 2024.

Synchronization revenue increased by $21 million, or 54%, attributable to higher television and commercial licensing activity, a $3 million increase in copyright infringement settlements in the quarter, and the $3 million impact of our acquisition of Tempo Music.

Performance revenue increased by $8 million, or 14%, driven by growth from concerts, radio and live events, and a favorable impact of foreign currency exchange rates of $2 million.

Mechanical revenue increased by $4 million, or 29%, driven by the timing of distributions and includes a favorable impact of foreign currency exchange rates of $1 million.

Revenue by Geographical Location

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

revenue increased by $62 million, or 9%, to $767 million for the three months ended December 31, 2025 from $705 million for the three months ended December 31, 2024.

Recorded Music revenue increased by $45 million, or 8%.

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

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

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

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

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

Music Publishing streaming revenue reflects impact of digital deal renewals.

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

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

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

Recorded Music digital revenue increased by $36 million, or 9%, driven by higher streaming revenue of $36 million, or 10%, including the impacts of the DSP True-Up and Settlement Payments in the current and prior-year quarters, and the BMG Termination in the prior-year quarter.

Recorded Music licensing revenue increased by $7 million, or 20%, driven by higher copyright infringement settlements.

Recorded Music physical revenue increased $2 million, or 3%, driven by strong releases in the quarter and carryover success.

Recorded Music artist services and expanded-rights revenues remained constant for the three months ended December 31, 2025 compared to the three months ended December 31, 2024.

Music Publishing revenue increased by $17 million, or 10%, to $190 million for the three months ended December 31, 2025 from $173 million for the three months ended December 31, 2024.

Music Publishing digital revenue decreased by $10 million, or 8%, attributable to lower streaming revenue of $10 million, or 8%, which includes the impact of the MLC Historical Matched Royalties in the prior-year quarter.

Music Publishing synchronization revenue increased by $21 million, or 95%, driven by timing of certain copyright infringement settlements, higher television and commercial licensing activity and the impact of acquisitions.

Music Publishing performance increased by $4 million, or 21%, due to radio activity, and mechanical revenue increased by $2 million driven by the timing of distributions.

International revenue increased by $112 million, or 12%, to $1,075 million for the three months ended December 31, 2025 from $963 million for the three months ended December 31, 2024.

Excluding the favorable impact of foreign currency exchange rates of $51 million, International revenue increased by $61 million, or 6%.

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

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

and China, and timing of other copyright infringement settlements.

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

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

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

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

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

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

International Recorded Music revenue increased by $90 million, which includes a favorable impact of foreign currency exchange rates of $43 million, driven by growth across digital, artist services and expanded rights and licensing revenues, partially offset by a decrease in physical revenue.

International Recorded Music digital revenue increased by $67 million, attributable to higher streaming revenue of $70 million, or 14%, which includes the impacts of the DSP True-Up and Settlement Payments in the current and prior-year quarters, and the BMG Termination in the prior-year quarter, and reflects a favorable impact of foreign currency exchange rates of $26 million.

International Recorded Music artist services and expanded-rights revenue increased by $35 million, or 24%, driven by higher concert promotion revenue primarily in France, and the favorable impact of foreign currency exchange rates of $9 million.

International Recorded Music licensing revenue increased by $4 million, or 5%, primarily driven by favorable movements in foreign currency exchange rates of $3 million.

These increases were partially offset by a decrease in physical revenue of $16 million driven by strong releases in Japan and Korea in the prior-year quarter, partially offset by the favorable impact of foreign currency exchange rates of $5 million.

International Music Publishing revenue increased by $22 million, or 15%, to $172 million for the three months ended December 31, 2025 from $150 million for the three months ended December 31, 2024.

International Music Publishing revenue growth was driven by increases in digital revenue of $18 million due to growth in streaming, performance revenue of $4 million due to growth from concerts and live events primarily in Europe, and mechanical revenue of $2 million driven by the timing of distributions.

Synchronization revenue remained constant for the three months ended December 31, 2025 compared to the three months ended December 31, 2024.

Cost of revenues

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For the Three Months Ended

June 30, 2025 vs.

December 31, 2025 vs.

2025 2024 $ Change % Change

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Total cost of revenues $ 987 $ 894 $ 93 10 %

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

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

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

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

Artist and repertoire costs increased by $70 million, to $644 million for the three months ended December 31, 2025 from $574 million for the three months ended December 31, 2024.

Artist and repertoire costs as a percentage of revenue increased to 35% for the three months ended December 31, 2025 from 34% for the three months ended December 31, 2024, primarily due to revenue mix.

Product costs increased by $23 million, to $343 million for the three months ended December 31, 2025 from $320 million for the three months ended December 31, 2024.

Product costs as a percentage of revenue remained constant at 19% for each of the three months ended December 31, 2025 and December 31, 2024.

Selling, general and administrative expenses

1 unchanged sentence

For the Three Months Ended

June 30, 2025 vs.

December 31, 2025 vs.

2025 2024 $ Change % Change

4 unchanged sentences

______________________________________

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

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

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

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

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

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

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

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

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

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

(1) Includes depreciation expense of $31 million and $29 million for the three months ended December 31, 2025 and December 31, 2024, respectively.

Total selling, general and administrative expense decreased by $16 million, to $458 million for the three months ended December 31, 2025 from $474 million for the three months ended December 31, 2024.

Expressed as a percentage of revenue, total selling, general and administrative expense decreased to 25% for the three months ended December 31, 2025 from 28% for the three months ended December 31, 2024 due to the factors noted below.

General and administrative expense decreased by $12 million to $272 million for the three months ended December 31, 2025 from $284 million for the three months ended December 31, 2024.

The decrease in general and administrative expense was primarily driven by cost savings from the Company’s restructuring plans, of which a portion has been reinvested in the Company’s business, partially offset by higher depreciation expense of $2 million due to the core financials component of our new technology platform being placed into service, and the impact of acquisitions of $2 million.

Expressed as a percentage of revenue, general and administrative expense decreased to 15% for the three months ended December 31, 2025 compared to 17% for the three months ended December 31, 2024.

Selling and marketing expense decreased by $3 million, or 2%, to $155 million for the three months ended December 31, 2025 from $158 million for the three months ended December 31, 2024.

Expressed as a percentage of revenue, selling and marketing expense decreased to 8% for the three months ended December 31, 2025 from 9% for the three months ended December 31, 2024 due to savings from the Company’s restructuring plans, of which a portion has been reinvested in the Company’s business.

Distribution expense decreased by $1 million to $31 million for the three months ended December 31, 2025 from $32 million for the three months ended December 31, 2024.

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

Reconciliation of Net Income Attributable to Warner Music Group Corp.

4 unchanged sentences

For the Three Months Ended

June 30, 2025 vs.

December 31, 2025 vs.

2025 2024 $ Change % Change

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

Net income attributable to Warner Music Group Corp.

$ 176 $ 236 $ (60) (25) %

Income attributable to noncontrolling interest (1) 5 (6) — %

Net (loss) income (16) 141 (157) — %

Net income 175 241 (66) (27) %

Income tax expense 71 89 (18) (20) %

Net (loss) income before income taxes

Net income before income taxes

246 330 (84) (25) %

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

Other income (3) (153) 150 (98) %

Interest expense, net 45 37 8 22 %

4 unchanged sentences

Transformation initiative costs 17 17 — — %

Executive transition costs 4 — 4 (100) %

Net gain on divestitures — (1) 1 — %

Net loss on divestitures 5 — 5 — %

Non-cash stock-based compensation and other related costs 20 19 1 5 %

1 unchanged sentence

Adjusted OIBDA

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

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

Adjusted OIBDA increased by $100 million to $463 million for the three months ended December 31, 2025 from $363 million for the three months ended December 31, 2024, driven by the impact of the DSP True-Up and Settlement Payments of $7 million in the quarter and $4 million in the prior-year quarter, and the MLC Historical Matched Royalties of $4 million in the prior-year quarter, as well as revenue mix, savings from the Company’s restructuring plans, a portion of which has been reinvested in the Company’s business, and favorable movements in currency exchange rates of approximately $25 million compared to the prior-year quarter.

Expressed as a percentage of total revenue, Adjusted OIBDA margin increased to 25% for the three months ended December 31, 2025 from 22% for the three months ended December 31, 2024.

Non-cash stock-based compensation and other related costs

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

Net gain on divestitures

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

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

Executive transition costs

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

Our non-cash stock-based compensation and other related costs increased by $1 million to $20 million for the three months ended December 31, 2025 from $19 million for the three months ended December 31, 2024.

Net loss on divestitures

Net loss on divestitures during the three months ended December 31, 2025 includes a pre-tax loss of $5 million in connection with the divestiture of certain assets.

There was no net loss on divestitures during the three months ended December 31, 2024.

Transformation initiative costs

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

Our transformation initiative costs, which include costs associated with our finance transformation, remained constant at $17 million for each of the three months ended December 31, 2025 and December 31, 2024.

Restructuring and Impairments

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

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

Our restructuring and impairment charges increased to $34 million for the three months ended December 31, 2025 from $27 million for the three months ended December 31, 2024.

The three months ended December 31, 2025 includes an impairment charge of

$9 million for long-lived assets associated with EMP, which was the result of remeasuring the carrying value to fair value as it has been classified as held for sale since September 30, 2025.

Depreciation expense

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

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

Our depreciation expense increased by $2 million to $31 million for the three months ended December 31, 2025 from $29 million for the three months ended December 31, 2024.

The increase is primarily driven by the core financials and global revenue solution components of our new technology platform being placed into service.

Amortization expense

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

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

Our amortization expense increased by $11 million, to $68 million for the three months ended December 31, 2025 from $57 million for the three months ended December 31, 2024.

The increase is driven by incremental amortization related to acquisitions of music-related assets, partially offset by EMP intangible assets, which have been classified as held for sale.

Operating income

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

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

Our operating income increased by $74 million to $288 million for the three months ended December 31, 2025 from $214 million for the three months ended December 31, 2024, primarily due to the factors impacting Adjusted OIBDA described above.

The increase in operating income was partially offset by higher amortization expenses of $11 million, an increase in restructuring and impairment charges of $7 million, and the impact of a $5 million net loss on divestitures for the three months ended December 31, 2025 compared to the three months ended December 31, 2024.

Interest expense, net

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

Other expense (income)

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

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

Our interest expense, net, increased to $45 million for the three months ended December 31, 2025 from $37 million for the three months ended December 31, 2024 due to incremental debt related to the Tempo Asset-Based Notes acquired in connection with the acquisition of Tempo Music in the prior year, partially offset by lower interest rates on variable rate debt in the quarter.

Other income for the three months ended December 31, 2025 primarily includes income earned on equity method investments of $2 million and a currency exchange gain on our intercompany loans of $1 million, partially offset by a foreign currency loss on our Euro-denominated debt of $1 million, and a realized and unrealized loss on hedging activity of $1 million.

This compares to foreign currency gains on our Euro-denominated debt of $61 million, currency exchange gains on our intercompany loans of $46 million, and realized and unrealized gains on hedging activity of $15 million for the three months ended December 31, 2024.

Income tax expense

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

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

Net (loss) income

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

Our income tax expense decreased by $18 million to $71 million for the three months ended December 31, 2025 from $89 million for the three months ended December 31, 2024.

The decrease of $18 million in income tax expense is primarily due to a decrease in pre-tax income in the quarter.

Net income decreased by $66 million to $175 million for the three months ended December 31, 2025 from $241 million for the three months ended December 31, 2024 as a result of the factors described above.

Noncontrolling interest

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

There was a loss attributable to noncontrolling interest of $1 million during the three months ended December 31, 2025 compared to income of $5 million for the three months ended December 31, 2024.

Business Segment Results

1 unchanged sentence

For the Three Months Ended

June 30, 2025 vs.

December 31, 2025 vs.

2025 2024 $ Change % Change

19 unchanged sentences

Recorded Music

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

Recorded Music revenue increased by $135 million, or 10%, to $1,480 million for the three months ended December 31, 2025 from $1,345 million for the three months ended December 31, 2024.

Recorded Music revenues were $577 million and $532 million, or 39% and 40% of consolidated Recorded Music revenues, for the three months ended December 31, 2025 and December 31, 2024, respectively.

International Recorded Music revenues were $903 million and $813 million, or 61% and 60% of consolidated Recorded Music revenues, for the three months ended December 31, 2025 and December 31, 2024, respectively.

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

2 unchanged sentences

For the Three Months Ended

June 30, 2025 vs.

December 31, 2025 vs.

2025 2024 $ Change % Change

2 unchanged sentences

Total cost of revenues $ 760 $ 686 $ 74 11 %

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

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

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

Recorded Music cost of revenues increased by $74 million, to $760 million for the three months ended December 31, 2025 from $686 million for the three months ended December 31, 2024.

Expressed as a percentage of Recorded Music revenue, Recorded Music artist and repertoire costs increased to 28% for the three months ended December 31, 2025 from 27% for the three months ended December 31, 2024 primarily due to revenue mix.

Expressed as a percentage of Recorded Music revenue, Recorded Music product costs decreased to 23% for the three months ended December 31, 2025 from 24% for the three months ended December 31, 2024, driven by revenue and deal mix.

Selling, general and administrative expense

1 unchanged sentence

For the Three Months Ended

June 30, 2025 vs.

December 31, 2025 vs.

2025 2024 $ Change % Change

4 unchanged sentences

______________________________________

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

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

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

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

(1) Includes depreciation expense of $12 million and $15 million for the three months ended December 31, 2025 and December 31, 2024, respectively.

Recorded Music selling, general and administrative expense decreased by $28 million, to $335 million for the three months ended December 31, 2025 from $363 million for the three months ended December 31, 2024.

The decrease in general and administrative expense was largely driven by cost savings from the Company’s restructuring plans, a portion of which has been reinvested into the Company’s business.

The decrease in selling and marketing expense was also driven by savings from the Company’s restructuring plans, as well as lower variable marketing spend.

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

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

Expressed as a percentage of Recorded Music revenue, Recorded Music selling, general and administrative expense decreased to 23% for the three months ended December 31, 2025 from 27% for the three months ended December 31, 2024.

Operating Income and Adjusted OIBDA

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

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

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

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

Recorded Music operating income increased by $91 million to $329 million for the three months ended December 31, 2025 from $238 million for the three months ended December 31, 2024.

In addition to the factors impacting Adjusted OIBDA described below, the increase in operating income was driven by decreases in restructuring and impairment charges of $6 million and depreciation expense of $3 million compared to the prior-year quarter, partially offset by higher amortization expenses of $4 million related to acquisitions of music-related assets.

Recorded Music Adjusted OIBDA increased by $80 million to $403 million for the three months ended December 31, 2025 from $323 million for the three months ended December 31, 2024, largely driven by the impact of the DSP True-Up and Settlement Payments of $7 million in the quarter and $4 million in the prior-year quarter, as well as savings from the Company’s restructuring plans, of which a portion has been reinvested in the Company’s business, and favorable movements in foreign currency exchange rates of approximately $18 million.

Expressed as a percentage of Recorded Music revenue, Recorded Music Adjusted OIBDA margin increased to 27% for the three months ended December 31, 2025 from 24% for the three months ended December 31, 2024 due to the factors noted above.

Music Publishing

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

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

Music Publishing revenues increased by $39 million, or 12%, to $362 million for the three months ended December 31, 2025 from $323 million for the three months ended December 31, 2024.

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

Cost of revenues

1 unchanged sentence

For the Three Months Ended

June 30, 2025 vs.

December 31, 2025 vs.

2025 2024 $ Change % Change

1 unchanged sentence

Total cost of revenues $ 228 $ 210 $ 18 9 %

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

Expressed as a percentage of Music Publishing revenue, Music

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

Music Publishing cost of revenues increased by $18 million, or 9%, to $228 million for the three months ended December 31, 2025 from $210 million for the three months ended December 31, 2024.

Expressed as a percentage of Music Publishing revenue, Music Publishing cost of revenues decreased to 63% for the three months ended December 31, 2025 from 65% for the three months ended December 31, 2024, largely due to revenue mix.

Selling, general and administrative expense

1 unchanged sentence

For the Three Months Ended

June 30, 2025 vs.

2025 2024 $ Change % Change

General and administrative expense (1) $ 33 $ 30 $ 3 10 %

Selling and marketing expense 1 1 — — %

Total selling, general and administrative expense $ 34 $ 31 $ 3 10 %

______________________________________

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

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

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

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

Operating Income and Adjusted OIBDA

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

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

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

Corporate Expenses and Eliminations

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

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

RESULTS OF OPERATIONS

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

Consolidated Results

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

For the Nine Months Ended

June 30, 2025 vs.

2025 2024 $ Change % Change

Revenue by Type

Digital $ 2,643 $ 2,638 $ 5 — %

Physical 397 385 12 3 %

Total digital and physical

3,040 3,023 17 1 %

Artist services and expanded-rights 508 489 19 4 %

Licensing 326 373 (47) -13 %

Total Recorded Music 3,874 3,885 (11) — %

Performance 167 155 12 8 %

Digital 599 577 22 4 %

Mechanical 46 43 3 7 %

Synchronization 142 129 13 10 %

Other 15 11 4 36 %

Total Music Publishing 969 915 54 6 %

Intersegment eliminations (4) (4) — — %

Total revenues

$ 4,839 $ 4,796 $ 43 1 %

Revenue by Geographical Location

Recorded Music $ 1,565 $ 1,652 $ (87) -5 %

Music Publishing 520 503 17 3 %

2,085 2,155 (70) -3 %

International Recorded Music 2,309 2,233 76 3 %

International Music Publishing 449 412 37 9 %

Total international

2,758 2,645 113 4 %

Intersegment eliminations (4) (4) — — %

Total revenues

$ 4,839 $ 4,796 $ 43 1 %

Total Revenues

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

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

The prior year included $75 million in Recorded Music licensing revenue from a licensing agreement extension for an artist’s catalog (the “Licensing Extension”), $43 million of incremental Recorded Music streaming revenue recognized from the DSP True-Up Payments, and $30 million of Recorded Music streaming revenue from a deal with one of the Company’s digital partners (the “Digital License Renewal”), which resulted in upfront revenue recognition for the nine months ended June 30, 2024.

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

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

Prior to intersegment eliminations, U.S.

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

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

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

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

Prior to intersegment eliminations, total digital revenues

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Revenue by Geographical Location

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

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

The decrease in U.S.

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

Recorded Music physical revenue.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Cost of revenues

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

For the Nine Months Ended

June 30, 2025 vs.

2025 2024 $ Change % Change

Artist and repertoire costs $ 1,689 $ 1,627 $ 62 4 %

Product costs 909 874 35 4 %

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

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

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

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

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

Selling, general and administrative expenses

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

For the Nine Months Ended

June 30, 2025 vs.

2025 2024 $ Change % Change

General and administrative expense (1) $ 842 $ 791 $ 51 6 %

Selling and marketing expense 482 518 (36) -7 %

Distribution expense 71 75 (4) -5 %

Total selling, general and administrative expense $ 1,395 $ 1,384 $ 11 1 %

______________________________________

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

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

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

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

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

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

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

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

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

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

Reconciliation of Net Income Attributable to Warner Music Group Corp.

and Operating Income to Consolidated Adjusted OIBDA

As previously described, we use Adjusted OIBDA as our primary measure of financial performance.

The following table reconciles operating income to Adjusted OIBDA, and further provides the components from net income attributable to Warner Music Group Corp.

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

For the Nine Months Ended

June 30, 2025 vs.

2025 2024 $ Change % Change

Net income attributable to Warner Music Group Corp.

$ 256 $ 394 $ (138) -35 %

Income attributable to noncontrolling interest 5 36 (31) -86 %

Net income 261 430 (169) -39 %

Income tax expense 123 120 3 3 %

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

Other expense 48 9 39 — %

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

Operating income 551 680 (129) -19 %

Amortization expense 186 167 19 11 %

Depreciation expense 86 77 9 12 %

Restructuring and impairments 109 96 13 14 %

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

Executive transition costs 4 — 4 — %

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

Non-cash stock-based compensation and other related costs 49 35 14 40 %

Adjusted OIBDA $ 1,039 $ 1,079 $ (40) -4 %

Adjusted OIBDA

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

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

Non-cash stock-based compensation and other related costs

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

Net gain on divestitures

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

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

Executive transition costs

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

Transformation initiatives and other related costs

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

Restructuring and Impairments

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

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

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

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

Depreciation expense

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

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

Amortization expense

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

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

Operating income

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

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

Interest expense, net

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

Other expense

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

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

Income tax expense

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

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

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

Noncontrolling interest

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

Business Segment Results

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

For the Nine Months Ended

June 30, 2025 vs.

2025 2024 $ Change % Change

Recorded Music

Revenues $ 3,874 $ 3,885 $ (11) — %

Operating income 642 739 (97) -13 %

Adjusted OIBDA

914 965 (51) -5 %

Music Publishing

Revenues $ 969 $ 915 $ 54 6 %

Operating income 167 185 (18) -10 %

Adjusted OIBDA

264 247 17 7 %

Corporate expenses and eliminations

Revenue eliminations $ (4) $ (4) $ — — %

Operating loss (258) (244) (14) 6 %

Adjusted OIBDA loss

(139) (133) (6) 5 %

Revenues $ 4,839 $ 4,796 $ 43 1 %

Operating income 551 680 (129) -19 %

Adjusted OIBDA

1,039 1,079 (40) -4 %

Recorded Music

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

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

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

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

Cost of revenues

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

For the Nine Months Ended

June 30, 2025 vs.

2025 2024 $ Change % Change

Artist and repertoire costs $ 1,082 $ 1,050 $ 32 3 %

Product costs 909 874 35 4 %

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

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

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

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

Selling, general and administrative expense

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

For the Nine Months Ended

June 30, 2025 vs.

2025 2024 $ Change % Change

General and administrative expense (1) $ 503 $ 479 $ 24 5 %

Selling and marketing expense 461 500 (39) -8 %

Distribution expense 71 75 (4) -5 %

Total selling, general and administrative expense $ 1,035 $ 1,054 $ (19) -2 %

______________________________________

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

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

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

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

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

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

Operating Income and Adjusted OIBDA

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

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

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

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

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

Music Publishing

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

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

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

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

Cost of revenues

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

For the Nine Months Ended

June 30, 2025 vs.

2025 2024 $ Change % Change

Artist and repertoire costs $ 612 $ 582 $ 30 5 %

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

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

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

Selling, general and administrative expense

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

For the Nine Months Ended

June 30, 2025 vs.

December 31, 2025 vs.

2025 2024 $ Change % Change

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______________________________________

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

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

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

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

Music Publishing selling, general and administrative expense increased by $3 million, or 9%, to $35 million for the three months ended December 31, 2025 from $32 million for the three months ended December 31, 2024, which includes the impact of our acquisition of Tempo Music in the prior year.

Expressed as a percentage of Music Publishing revenue, Music Publishing selling, general and administrative expense remained constant at 10% for each of the three months ended December 31, 2025 and December 31, 2024.

Operating Income and Adjusted OIBDA

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

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

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

Music Publishing operating income increased by $10 million to $65 million for the three months ended December 31, 2025 from $55 million for the three months ended December 31, 2024, driven by the same factors affecting Adjusted OIBDA discussed below, partially offset by an increase in amortization expense of $8 million related to the impact of acquisitions for the three months ended December 31, 2025 compared to the three months ended December 31, 2024.

Music Publishing Adjusted OIBDA increased by $19 million, or 23%, to $102 million for the three months ended December 31, 2025 from $83 million for the three months ended December 31, 2024, primarily driven by revenue mix, the $4 million impact of the MLC Historical Matched Royalties in the prior-year quarter, and favorable movements in foreign exchange rates of approximately $7 million.

Expressed as a percentage of Music Publishing revenue, Music Publishing Adjusted OIBDA margin increased to 28% for the three months ended December 31, 2025 from 26% for the three months ended December 31, 2024.

Corporate Expenses and Eliminations

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

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

Our operating loss from corporate expenses and eliminations increased by $27 million for the three months ended December 31, 2025 to $106 million from $79 million for the three months ended December 31, 2024, driven by an increase in restructuring and impairment costs of $13 million, an increase in non-cash stock-based compensation and other related expenses of $6 million, higher depreciation expense of $5 million driven by the core financials and global revenue solution components of our new technology platform being placed into service, and a net loss on divestitures of $5 million in the quarter.

Our Adjusted OIBDA loss from corporate expenses and eliminations decreased by $1 million to $42 million for the three months ended December 31, 2025 from $43 million for the three months ended December 31, 2024, primarily due to the factors discussed above, as well as savings from the Company’s restructuring plans, of which a portion has been reinvested into the Company’s business.

FINANCIAL CONDITION AND LIQUIDITY

Financial Condition at June 30, 2025

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

Financial Condition at December 31, 2025

At December 31, 2025, we had $4.371 billion of debt (which is net of $35 million of premiums, discounts and deferred financing costs), $751 million of cash and equivalents (net debt of $3.620 billion, defined as total debt, less cash and equivalents and premiums, discounts and deferred financing costs) and $720 million of Warner Music Group Corp.

This compares to $4.365 billion of debt (which is net of $36 million of premiums, discounts and deferred financing costs), $532 million of cash and equivalents (net debt of $3.833 billion) and $647 million of Warner Music Group Corp.

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

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

Nine Months Ended

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

Three Months Ended

Cash provided by (used in):

3 unchanged sentences

Operating Activities

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

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

Cash provided by operating activities was $440 million for the three months ended December 31, 2025 as compared with cash provided by operating activities of $332 million for the three months ended December 31, 2024.

The $108 million increase in cash provided by operating activities was largely a result of operating performance.

Investing Activities

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

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

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

Cash used in investing activities was $52 million for the three months ended December 31, 2025 as compared with cash used in investing activities of $81 million for the three months ended December 31, 2024.

The $52 million of cash used in investing activities in the three months ended December 31, 2025 consisted of $12 million relating to investments and acquisitions of businesses, $30 million to acquire music-related assets and $20 million relating to capital expenditures, partially offset by $10 million of proceeds from net divestitures.

The $81 million of cash used in investing activities in the three months ended December 31, 2024 consisted of $40 million relating to investments and acquisitions of businesses, $41 million to acquire music-related assets, and $36 million relating to capital expenditures, partially offset by $36 million of proceeds from the sale of investments.

Financing Activities

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

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

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

Cash used in financing activities was $159 million for the three months ended December 31, 2025 as compared with cash used in financing activities of $127 million for the three months ended December 31, 2024.

The $159 million of cash used in financing activities for the three months ended December 31, 2025 consisted of dividends paid of $100 million, payment of deferred consideration of $25 million, distributions to noncontrolling interest holders of $4 million, taxes paid related to net share settlement of restricted stock units and common stock of $5 million, common stock repurchased and retired of $26 million, deferred financing costs paid of $8 million, partially offset by proceeds from the Beethoven Credit Agreement of $4 million and contributions from redeemable noncontrolling interest holder of $5 million.

The $127 million of cash used in financing activities for the three months ended December 31, 2024 consisted of dividends paid of $94 million, payment of deferred consideration of $17 million, distributions to noncontrolling interest holders of $7 million, taxes paid related to net share settlement of restricted stock units and common stock of $2 million, common stock repurchased and retired of $2 million and other financing activity of $5 million.

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

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Since Access acquired us in 2011, we have sought to extend the maturity dates on our outstanding indebtedness, reduce interest expense and improve our debt ratings.

For example, our S&P corporate credit rating improved from B in 2017 to BBB- in August 2024 with a stable outlook, and our Moody’s corporate family rating improved from B1 in 2016 to Ba1 in March 2025 with a positive outlook updated in March 2025.

In September 2025, Fitch assigned us a BBB- long-term credit rating with a stable outlook.

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

In addition, our weighted-average interest rate on our outstanding indebtedness has decreased from 10.5% in 2011 to 4.0% as of December 31, 2025.

Our nearest-term maturity date is in 2028.

Subject to market conditions, we expect to continue to take opportunistic steps to extend our maturity dates and reduce related interest expense.

Subject to market conditions, we continue to take opportunistic steps to extend our maturity dates, reduce related interest expense and make other changes.

From time to time, we may incur additional indebtedness for, among other things, working capital, repurchasing, redeeming or tendering for existing indebtedness and acquisitions or other strategic transactions.

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

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

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

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

Existing Debt as of June 30, 2025

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

The Company repurchased and retired 920,000 shares for $26 million during the three months ended December 31, 2025.

As of December 31, 2025, approximately $58 million of the $100 million share repurchase authorization remained available.

Existing Debt as of December 31, 2025

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

Revolving Credit Facility (a) $ —

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Total debt, including the current portion 4,091

Premium less unamortized discount and unamortized DFCs (29)

Premium less unamortized discount and unamortized deferred financing costs

Total Acquisition Corp.

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

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

______________________________________

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

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

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

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

There were no loan outstanding under the Revolving Credit Facility at December 31, 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 and are nonrecourse to the Company and its subsidiaries, other than Beethoven.

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

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

For further discussion of our debt agreements, see “Liquidity” in the “Financial Condition and Liquidity” section of our Annual Report on Form 10-K for the fiscal year ended September 30, 2025.

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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, respectively.

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

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.

Covenant Compliance

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

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

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

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

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

In addition, the reconciliation includes the calculation of the Senior Secured Indebtedness to Adjusted EBITDA ratio, which we refer to as the Leverage Ratio, under the Revolving Credit Agreement for the most recently ended four fiscal quarters, or the twelve months ended June 30, 2025.

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

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

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Twelve Months Ended

June 30, Three Months Ended

December 31, Three Months Ended

2025 2024 2025 2024

Net Income (loss)

$ 304 $ 526 $ 175 $ 241

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Depreciation and amortization 389 332 99 86

Net gains on divestitures and sale of securities

Net losses (gains) on divestitures and sale of securities

4 (47) 5 (29)

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Other non-cash charges (e)

Unrestricted subsidiary income (loss)

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

Unrestricted subsidiary (losses) (f)

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

257 137 39 16

Adjusted EBITDA $ 1,811 $ 1,519 $ 502 $ 383

Senior Secured Indebtedness (g)

Leverage Ratio (h)

Senior Secured Indebtedness (f, h)

Leverage Ratio (i)

______________________________________

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

(a) Reflects severance costs and other restructuring related expenses, including those related to the Company’s restructuring plans.

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

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

(c) Reflects costs associated with our transformation initiatives and technology system updates, which includes costs of $17 million and $67 million related to our finance transformation for the three and twelve months ended December 31, 2025, respectively, as well as $17 million and $74 million for the three and twelve months ended December 31, 2024, respectively.

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

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

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

(e) Reflects non-cash activity, including the unrealized losses (gains) on the mark-to-market adjustment of equity investments, investment losses (gains) and non-cash impairment losses resulting from the Company’s restructuring plans as well as an additional impairment charge of $9 million in the quarter 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.

(f) In connection with the acquisition of Tempo Music, the acquired entity was designated as an unrestricted subsidiary, and therefore net income and Adjusted EBITDA do not include the results of Tempo Music, and the Asset-Based Notes issued by a subsidiary of Tempo Music are not included in our indebtedness for purposes of calculating the Leverage Ratio.

Similarly, Beethoven was also designated as an unrestricted subsidiary, and therefore its results are not included in net income and Adjusted EBITDA, and the Beethoven Credit Facility is not included in our indebtedness for purposes of calculating the Leverage Ratio.

(g) Reflects expected savings resulting from transformation initiatives, including the 2025 Restructuring Plan, the 2024 Strategic Restructuring Plan, and the 2023 Restructuring Plan, as well as the pro forma impact of certain specified transactions for the three and twelve months ended December 31, 2025.

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

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

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

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

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

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

The pro forma impact of these specified transactions and initiatives resulted in a $65 million increase in the twelve months ended December 31, 2025 Adjusted EBITDA.

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

of approximately $4.064 billion less cash of $750 million, which excludes cash and debt held at Tempo Music and Beethoven, which are unrestricted subsidiaries.

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

This is calculated net of cash and equivalents of the Company as of December 31, 2025 not exceeding $750 million

in accordance with the Sixth Revolving Credit Agreement Amendment.

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

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

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

In connection with the acquisition of Tempo, the acquired entity was designated as an unrestricted subsidiary, and therefore net income and Adjusted EBITDA do not include the results of Tempo, and the Asset-Based Notes issued by a subsidiary of Tempo are not included in our indebtedness for purposes of calculating the Leverage Ratio.

Management believes that funds generated from our operations and borrowings under the Revolving Credit Facility and available cash and equivalents will be sufficient to fund our debt service requirements, working capital requirements and capital expenditure requirements for the foreseeable future.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis