What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-07 compared with 2026-02-09 · 488 added, 199 removed, 455 unchanged (60% 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 December 31, 2025 (the “Quarterly Report”).

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

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• Results of operations.

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

This section provides an analysis of our results of operations for the three and six months ended March 31, 2026 and March 31, 2025.

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

• Financial condition and liquidity.

This section provides an analysis of our cash flows for the 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.

This section provides an analysis of our cash flows for the six months ended March 31, 2026 and March 31, 2025, as well as a discussion of our financial condition and liquidity as of March 31, 2026.

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

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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;

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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.

For the three months ended March 31, 2026, total severance and other termination costs recorded in connection with the 2025 Strategic Restructuring Plan were $5 million, all of which was recognized in our Recorded Music segment.

For the six months ended March 31, 2026, total severance and other termination costs recorded in connection with the 2025 Strategic Restructuring Plan were $30 million, of which $18 million of expense was recognized in our Recorded Music segment and $12 million was recognized in Corporate.

As of March 31, 2026, total cumulative restructuring and impairment charges recognized in connection with the 2025 Strategic Restructuring Plan were $148 million with $98 million of costs recognized in our Recorded Music segment, $5 million of costs recognized in our Music Publishing segment, and $45 million recognized in Corporate.

These costs are composed of $120 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.

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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 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.

As of March 31, 2026, total cumulative restructuring and impairment charges recognized in connection with the 2024 Strategic Restructuring Plan were $215 million with $206 million of costs recognized in our Recorded Music segment and $9 million recognized in Corporate.

These costs are composed of $133 million of severance and other contract termination costs, of which $7 million was non-cash, and $82 million of non-cash impairment charges.

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

There was a $1 million benefit recognized for the three and six months ended March 31, 2026 related to the 2024 Strategic Restructuring Plan.

Other Impairments

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.

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

BMG Termination

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RESULTS OF OPERATIONS

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

Three Months Ended March 31, 2026 Compared with Three Months Ended March 31, 2025

Consolidated Results

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For the Three Months Ended

December 31, 2025 vs.

March 31, 2026 vs.

2026 2025 $ Change % Change

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Total Revenues

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”).

Total revenues increased by $248 million, or 17%, to $1,732 million for the three months ended March 31, 2026 from $1,484 million for the three months ended March 31, 2025.

Revenue growth was impacted by a digital revenue settlement of $11 million 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 $265 million, or 18%, which includes $61 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, Recorded Music and Music Publishing revenues represented 80% and 20% of total revenue for the three months ended March 31, 2026, respectively, and 79% and 21% of total revenue for the three months ended March 31, 2025, respectively.

Prior to intersegment eliminations, U.S.

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.

and international revenues represented 43% and 57% of total revenues for the three months ended March 31, 2026 and 44% and 56% of total revenues for the three months ended March 31, 2025.

Total digital revenues after intersegment eliminations increased by $172 million, or 17%, to $1,199 million for the three months ended March 31, 2026 from $1,027 million for the three months ended March 31, 2025.

Total streaming revenue increased by $173 million, driven by growth in Recorded Music and Music Publishing.

Total streaming revenue includes $38 million of favorable currency exchange fluctuations.

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

Prior to intersegment eliminations, total digital revenues for the three months ended March 31, 2026 were composed of U.S.

revenues of $537 million and international revenues of $662 million, or 45% and 55% of total digital revenues, respectively.

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

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

revenues of $490 million and international revenues of $539 million, or 48% and 52% of total digital revenues, respectively.

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.

Recorded Music revenues increased by $205 million, or 17%, to $1,380 million for the three months ended March 31, 2026 from $1,175 million for the three months ended March 31, 2025.

The increase includes $50 million of favorable currency exchange fluctuations.

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.

Recorded Music revenues were $565 million and $497 million, or 41% and 42% of consolidated Recorded Music revenues for each of the three months ended March 31, 2026 and March 31, 2025, respectively.

International Recorded Music revenues were $815 million and $678 million, or 59% and 58%, of consolidated Recorded Music revenues for each of the three months ended March 31, 2026 and March 31, 2025, respectively.

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

Digital revenue increased by $134 million, or 16%, which includes a favorable impact of currency exchange fluctuations of $34 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.

Revenue from streaming services increased by $136 million, or 16%, to $961 million for the three months ended March 31, 2026 from $825 million for the three months ended March 31, 2025.

Adjusted for the impacts of the DSP True-Up and Settlement Payments and the BMG Termination in the prior-year quarter, Recorded Music streaming revenue increased $153 million, or 19%, to $961 million for the three months ended March 31, 2026 from $808 million for the three months ended March 31, 2025.

Download and other digital revenues decreased by $2 million, or 13%, to $14 million for the three months ended March 31, 2026 from $16 million for the three months ended March 31, 2025.

Artist services and expanded-rights revenue increased by $47 million, or 40%, due to higher concert promotion revenue primarily in France, higher merchandising revenue, and a favorable impact of foreign currency exchange rates of $6 million.

Physical revenue increased by $25 million, or 22%, primarily driven by strong releases in the quarter as well as catalog and carryover success, and a favorable impact of foreign currency exchange rates of $4 million.

Licensing revenue decreased by $1 million, or 1%.

Top sellers in the quarter included Bruno Mars, Alex Warren, sombr, Ed Sheeran and Melanie Martinez.

Music Publishing revenues increased by $43 million, or 14%, to $353 million for the three months ended March 31, 2026 from $310 million for the three months ended March 31, 2025.

Music Publishing revenues were $178 million and $161 million, or 50% and 52% of consolidated Music Publishing revenues, for the three months ended March 31, 2026 and March 31, 2025, respectively.

International Music Publishing revenues were $175 million and $149 million, or 50% and 48% of consolidated Music Publishing revenues, for the three months ended March 31, 2026 and March 31, 2025, respectively.

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

Digital revenue increased by $36 million, or 19%, 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 from streaming services grew by $37 million, or 20%, to $222 million for the three months ended March 31, 2026 from $185 million for the three months ended March 31, 2025, driven by the impact of new deals and renewals, continued market growth and a favorable impact of foreign currency exchange rates of $6 million.

Performance revenue increased by $5 million, or 9%, driven by growth from touring and live events primarily in Europe, and a favorable impact of foreign currency exchange rates of $3 million.

Synchronization revenue increased by $1 million, or 2%, attributable to a favorable impact of foreign currency exchange rates of $2 million.

Mechanical revenue increased by $1 million, or 6%, driven by the timing of distributions.

Revenue by Geographical Location

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.

revenue increased by $85 million, or 13%, to $743 million for the three months ended March 31, 2026 from $658 million for the three months ended March 31, 2025.

Recorded Music revenue increased by $68 million, or 14%.

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 digital revenue increased by $29 million, or 8%, driven by higher streaming revenue of $31 million, or 8%, including the impact of the BMG Termination in the prior-year quarter.

Recorded Music licensing revenue increased by $2 million, or 5%, 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.

Recorded Music physical revenue increased $23 million, or 43%, driven by strong releases in the quarter as well as catalog and carryover success.

Recorded Music artist services and expanded-rights revenues increased by $14 million, or 61%, driven by higher merchandising revenue.

Music Publishing revenue increased by $17 million, or 11%, to $178 million for the three months ended March 31, 2026 from $161 million for the three months ended March 31, 2025.

Music Publishing digital revenue increased by $18 million, or 17%, attributable to higher streaming revenue of $19 million, or 18%.

Music Publishing synchronization revenue increased by $3 million, or 10%, driven by timing of certain copyright infringement settlements and the impact of acquisitions.

Music Publishing performance decreased by $3 million, or 16%, and mechanical revenue decreased by $1 million driven by the timing of distributions.

International revenue increased by $163 million, or 20%, to $990 million for the three months ended March 31, 2026 from $827 million for the three months ended March 31, 2025.

Excluding the favorable impact of foreign currency exchange rates of $62 million, International revenue increased by $101 million, or 11%.

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 revenue increased by $137 million, which includes a favorable impact of foreign currency exchange rates of $50 million, driven by growth across digital, artist services and expanded rights and physical revenues, partially offset by a decrease in licensing revenue.

International Recorded Music digital revenue increased by $105 million, attributable to higher streaming revenue of $105 million, or 23%, which includes the impacts of the DSP True-Up and Settlement Payments and the BMG Termination in the prior-year quarter, and a favorable impact of foreign currency exchange rates of $32 million.

International Recorded Music artist services and expanded-rights revenue increased by $33 million, or 35%, driven by higher concert promotion revenue primarily in France, and the favorable impact of foreign currency exchange rates of $6 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 Recorded Music physical revenue increased by $2 million driven by the favorable impact of foreign currency exchange rates of $4 million.

These increases were partially offset by a decrease in licensing revenue of $3 million, or 4%.

International Music Publishing revenue increased by $26 million, or 17%, to $175 million for the three months ended March 31, 2026 from $149 million for the three months ended March 31, 2025.

International Music Publishing revenue growth was driven by increases in digital revenue of $18 million due to growth in streaming, performance revenue of $8 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.

Synchronization revenue decreased by $2 million, or 10%.

Cost of revenues

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For the Three Months Ended

December 31, 2025 vs.

March 31, 2026 vs.

2026 2025 $ Change % Change

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Total cost of revenues $ 930 $ 791 $ 139 18 %

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.

Artist and repertoire costs increased by $86 million, to $617 million for the three months ended March 31, 2026 from $531 million for the three months ended March 31, 2025.

Artist and repertoire costs as a percentage of revenue remained constant at 36% for each of the three months ended March 31, 2026 and March 31, 2025.

Product costs increased by $53 million, to $313 million for the three months ended March 31, 2026 from $260 million for the three months ended March 31, 2025.

Product costs as a percentage of revenue remained constant at 18% for each of the three months ended March 31, 2026 and March 31, 2025.

Selling, general and administrative expenses

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For the Three Months Ended

December 31, 2025 vs.

March 31, 2026 vs.

2026 2025 $ Change % Change

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______________________________________

(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.

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

Total selling, general and administrative expense increased by $10 million, to $460 million for the three months ended March 31, 2026 from $450 million for the three months ended March 31, 2025, primarily driven by unfavorable movements in foreign currency exchange rates of $12 million.

Expressed as a percentage of revenue, total selling, general and administrative expense decreased to 27% for the three months ended March 31, 2026 from 30% for the three months ended March 31, 2025 due to the factors noted below.

General and administrative expense decreased by $13 million to $263 million for the three months ended March 31, 2026 from $276 million for the three months ended March 31, 2025.

The decrease in general and administrative expense was primarily driven by cost savings from the Company’s restructuring plans, of which a portion has been reinvested in the Company’s business, partially offset by higher depreciation expense of $3 million due to the core financials component of our new technology platform being placed into service.

Expressed as a percentage of revenue, general and administrative expense decreased to 15% for the three months ended March 31, 2026 compared to 19% for the three months ended March 31, 2025.

Selling and marketing expense increased by $10 million, or 6%, to $167 million for the three months ended March 31, 2026 from $157 million for the three months ended March 31, 2025.

Expressed as a percentage of revenue, selling and marketing expense decreased to 10% for the three months ended March 31, 2026 from 11% for the three months ended March 31, 2025 due to savings from the Company’s restructuring plans, of which a portion has been reinvested in the Company’s business, partially offset by higher marketing and advertising spend for key releases.

Distribution expense increased by $13 million to $30 million for the three months ended March 31, 2026 from $17 million for the three months ended March 31, 2025.

Expressed as a percentage of revenue, distribution expense increased to 2% for the three months ended March 31, 2026 compared to 1% for the three months ended March 31, 2025, driven by higher physical and merchandising revenues.

Reconciliation of Net Income Attributable to Warner Music Group Corp.

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For the Three Months Ended

December 31, 2025 vs.

March 31, 2026 vs.

2026 2025 $ Change % Change

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Net income before income taxes 254 65 189 — %

246 330 (84) (25) %

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

Other (income) expense (38) 64 (102) — %

Interest expense, net 41 39 2 5 %

Loss on extinguishment of debt 7 — 7 — %

Operating income 264 168 96 57 %

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Transformation initiative costs 12 18 (6) (33) %

Net loss on divestitures 5 — 5 — %

Non-cash stock-based compensation and other related costs 12 14 (2) (14) %

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Adjusted OIBDA

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.

Adjusted OIBDA increased by $94 million to $397 million for the three months ended March 31, 2026 from $303 million for the three months ended March 31, 2025, driven by the impact of the DSP True-Up and Settlement Payments of $7 million and the BMG Termination of $1 million in the prior-year quarter, as well as revenue mix and savings from the Company’s restructuring plans, a portion of which has been reinvested in the Company’s business, partially offset by unfavorable movements in foreign currency exchange rates of approximately $13 million.

Expressed as a percentage of total revenue, Adjusted OIBDA margin increased to 23% for the three months ended March 31, 2026 from 20% for the three months ended March 31, 2025.

Non-cash stock-based compensation and other related costs

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.

Our non-cash stock-based compensation and other related costs decreased by $2 million to $12 million for the three months ended March 31, 2026 from $14 million for the three months ended March 31, 2025.

Transformation initiative costs

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.

Our transformation initiative costs, which include costs associated with our finance transformation, decreased by $6 million to $12 million for the three months ended March 31, 2026 from $18 million for the three months ended March 31, 2025.

Restructuring and Impairments

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.

Our restructuring and impairment charges decreased to $6 million for the three months ended March 31, 2026 from $13 million for the three months ended March 31, 2025.

The three months ended March 31, 2026 includes an impairment charge of $2 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 $2 million to $31 million for the three months ended December 31, 2025 from $29 million for the three months ended December 31, 2024.

Our depreciation expense increased by $3 million to $31 million for the three months ended March 31, 2026 from $28 million for the three months ended March 31, 2025.

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 $11 million, to $68 million for the three months ended December 31, 2025 from $57 million for the three months ended December 31, 2024.

Our amortization expense increased by $10 million, to $72 million for the three months ended March 31, 2026 from $62 million for the three months ended March 31, 2025.

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 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.

Our operating income increased by $96 million to $264 million for the three months ended March 31, 2026 from $168 million for the three months ended March 31, 2025, primarily due to the factors impacting Adjusted OIBDA described above and a decrease in restructuring and impairment charges of $7 million.

The increase in operating income was partially offset by higher amortization expenses of $10 million for the three months ended March 31, 2026.

Loss on extinguishment of debt

We recorded a loss on extinguishment of debt in the amount of $7 million for the three months ended March 31, 2026, which represents the unamortized balances of original issuance discounts and deferred financing costs in connection with the refinancing of our Tranche B Term Loans.

There was no loss on extinguishment of debt for the three months ended March 31, 2025.

Interest expense, net

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.

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

Other (income) expense

Other income for the three months ended March 31, 2026 primarily includes foreign currency gains on our Euro-denominated debt of $22 million and a currency exchange gain on intercompany loans of $12 million.

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

Income tax expense

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.

Our income tax expense increased by $44 million to $73 million for the three months ended March 31, 2026 from $29 million for the three months ended March 31, 2025.

The increase of $44 million in income tax expense is primarily due to an increase in pre-tax income in the quarter and a taxable gain on the Company’s sale of certain recorded music catalog rights to Beethoven JV, partially offset by the tax benefit associated with partial release of valuation allowance on EMP.

Net income increased by $145 million to $181 million for the three months ended March 31, 2026 from $36 million for the three months ended March 31, 2025 as a result of the factors described above.

Noncontrolling interest

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.

There was income attributable to noncontrolling interest of $2 million during the three months ended March 31, 2026.

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

Business Segment Results

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

Results by business segment were as follows (in millions):

For the Three Months Ended

December 31, 2025 vs.

March 31, 2026 vs.

2026 2025 $ Change % Change

2 unchanged sentences

Operating income 288 203 85 42 %

Depreciation and amortization expense 47 46 1 2 %

Restructuring and impairments 6 13 (7) -54 %

Non-cash stock-based compensation and other related costs 5 8 (3) -38 %

Adjusted OIBDA 346 270 76 28 %

403 323 80 25 %

Music Publishing

Revenues 353 310 43 14 %

Operating income 65 55 10 18 %

Operating income (loss) 61 52 9 17 %

Depreciation and amortization expense 35 31 4 13 %

Non-cash stock-based compensation and other related costs 1 2 (1) -50 %

Adjusted OIBDA 97 85 12 14 %

102 83 19 23 %

Corporate expenses and eliminations

1 unchanged sentence

Operating loss (85) (87) 2 -2 %

Depreciation and amortization expense 21 13 8 62 %

Transformation initiatives and other related costs 12 18 (6) -33 %

Non-cash stock-based compensation and other related costs 6 4 2 50 %

Adjusted OIBDA loss (46) (52) 6 -12 %

(42) (43) 1 -2 %

Revenues 1,732 1,484 248 17 %

3 unchanged sentences

Recorded Music

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.

Recorded Music revenue increased by $205 million, or 17%, to $1,380 million for the three months ended March 31, 2026 from $1,175 million for the three months ended March 31, 2025.

Recorded Music revenues were $565 million and $497 million, or 41% and 42% of consolidated Recorded Music revenues, for the three months ended March 31, 2026 and March 31, 2025, respectively.

International Recorded Music revenues were $815 million and $678 million, or 59% and 58% of consolidated Recorded Music revenues, for the three months ended March 31, 2026 and March 31, 2025, respectively.

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

Cost of revenues

1 unchanged sentence

For the Three Months Ended

December 31, 2025 vs.

March 31, 2026 vs.

2026 2025 $ Change % Change

2 unchanged sentences

Total cost of revenues $ 707 $ 599 $ 108 18 %

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.

Recorded Music cost of revenues increased by $108 million, to $707 million for the three months ended March 31, 2026 from $599 million for the three months ended March 31, 2025.

Expressed as a percentage of Recorded Music revenue, Recorded Music artist and repertoire costs remained constant at 29% for each of the three months ended March 31, 2026 and March 31, 2025.

Expressed as a percentage of Recorded Music revenue, Recorded Music product costs increased to 23% for the three months ended March 31, 2026 from 22% for the three months ended March 31, 2025, driven by revenue and deal mix.

Selling, general and administrative expense

1 unchanged sentence

For the Three Months Ended

December 31, 2025 vs.

March 31, 2026 vs.

2026 2025 $ Change % Change

4 unchanged sentences

______________________________________

(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.

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

Recorded Music selling, general and administrative expense increased by $15 million, to $342 million for the three months ended March 31, 2026 from $327 million for the three months ended March 31, 2025, primarily driven by unfavorable movements in foreign currency exchange rates of $12 million.

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 23% for the three months ended December 31, 2025 from 27% for the three months ended December 31, 2024.

The increase in selling and marketing expense was driven by higher variable marketing spend for key releases.

The increase in distribution expense was primarily driven by revenue mix from higher merchandising and physical revenues.

Expressed as a percentage of Recorded Music revenue, Recorded Music selling, general and administrative expense decreased to 25% for the three months ended March 31, 2026 from 28% for the three months ended March 31, 2025.

Operating Income and Adjusted OIBDA

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.

Recorded Music operating income increased by $85 million to $288 million for the three months ended March 31, 2026 from $203 million for the three months ended March 31, 2025.

In addition to the factors impacting Adjusted OIBDA described below, the increase in operating income was driven by decreases in restructuring and impairment charges of $7 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.

Recorded Music Adjusted OIBDA increased by $76 million to $346 million for the three months ended March 31, 2026 from $270 million for the three months ended March 31, 2025, largely driven by savings from the Company’s restructuring plans, of which a portion has been reinvested in the Company’s business, partially offset by the impact of the DSP True-Up and Settlement Payments of $7 million and the BMG Termination of $1 million in the prior-year quarter, as well as unfavorable movements in foreign currency exchange rates of approximately $9 million.

Expressed as a percentage of Recorded Music revenue, Recorded Music Adjusted OIBDA margin increased to 25% for the three months ended March 31, 2026 from 23% for the three months ended March 31, 2025 due to the factors noted above.

Music Publishing

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.

Music Publishing revenues increased by $43 million, or 14%, to $353 million for the three months ended March 31, 2026 from $310 million for the three months ended March 31, 2025.

Music Publishing revenues were $178 million and $161 million, or 50% and 52% of consolidated Music Publishing revenues, for the three months ended March 31, 2026 and March 31, 2025, respectively.

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.

Cost of revenues

1 unchanged sentence

For the Three Months Ended

December 31, 2025 vs.

March 31, 2026 vs.

2026 2025 $ Change % Change

1 unchanged sentence

Total cost of revenues $ 224 $ 194 $ 30 15 %

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.

Music Publishing cost of revenues increased by $30 million, or 16%, to $224 million for the three months ended March 31, 2026 from $194 million for the three months ended March 31, 2025.

Expressed as a percentage of Music Publishing revenue, Music Publishing cost of revenues remained constant at 63% for each of the three months ended March 31, 2026 and March 31, 2025.

Selling, general and administrative expense

1 unchanged sentence

For the Three Months Ended

December 31, 2025 vs.

March 31, 2026 vs.

2026 2025 $ Change % Change

3 unchanged sentences

______________________________________

(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.

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

There was no depreciation expense for the three months ended March 31, 2026.

Music Publishing selling, general and administrative expense decreased by $2 million, or 6%, to $33 million for the three months ended March 31, 2026 from $35 million for the three months ended March 31, 2025, primarily due to cost savings from the Company’s restructuring plans, a portion of which has been reinvested into the Company’s business.

Expressed as a percentage of Music Publishing revenue, Music Publishing selling, general and administrative expense decreased to 9% for the three months ended March 31, 2026 from 11% for the three months ended March 31, 2025.

Operating Income and Adjusted OIBDA

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.

Music Publishing operating income increased by $9 million to $61 million for the three months ended March 31, 2026 from $52 million for the three months ended March 31, 2025.

The increase is driven by the same factors affecting Adjusted OIBDA discussed below, as well as lower depreciation expenses of $2 million, partially offset by an increase in amortization expense of $6 million related to the impact of acquisitions.

Music Publishing Adjusted OIBDA increased by $12 million, or 14%, to $97 million for the three months ended March 31, 2026 from $85 million for the three months ended March 31, 2025, primarily driven by revenue growth and strong operating performance, as well as savings from the Company’s restructuring plans, a portion of which has been reinvested in the Company’s business, partially offset by unfavorable movements in foreign exchange rates of approximately $4 million.

Expressed as a percentage of Music Publishing revenue, Music Publishing Adjusted OIBDA margin remained constant at 27% for each of the three months ended March 31, 2026 and March 31, 2025.

Corporate Expenses and Eliminations

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.

Our operating loss from corporate expenses and eliminations decreased by $2 million for the three months ended March 31, 2026 to $85 million from $87 million for the three months ended March 31, 2025, driven by savings from the Company’s restructuring plans, of which a portion has been reinvested in the Company’s business, partially offset by higher depreciation expense of $8 million driven by the core financials and global revenue solution components of our new technology platform being placed into service, and higher non-cash stock-based compensation and other related expenses of $2 million.

Our Adjusted OIBDA loss from corporate expenses and eliminations decreased by $6 million to $46 million for the three months ended March 31, 2026 from $52 million for the three months ended March 31, 2025, primarily due to savings from the Company’s restructuring plans, of which a portion has been reinvested in the Company’s business.

RESULTS OF OPERATIONS

Six Months Ended March 31, 2026 Compared with Six Months Ended March 31, 2025

Consolidated Results

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

For the Six Months Ended

March 31, 2026 vs.

2026 2025 $ Change % Change

Revenue by Type

Digital $ 1,951 $ 1,714 $ 237 14 %

Physical 289 278 11 4 %

Total digital and physical

2,240 1,992 248 12 %

Artist services and expanded-rights 395 313 82 26 %

Licensing 225 215 10 5 %

Total Recorded Music 2,860 2,520 340 13 %

Performance 122 109 13 12 %

Digital 439 395 44 11 %

Mechanical 35 30 5 17 %

Synchronization 110 88 22 25 %

Other 9 11 (2) -18 %

Total Music Publishing 715 633 82 13 %

Intersegment eliminations (3) (3) — — %

Total revenues

$ 3,572 $ 3,150 $ 422 13 %

Revenue by Geographical Location

Recorded Music $ 1,142 $ 1,029 $ 113 11 %

Music Publishing 368 334 34 10 %

1,510 1,363 147 11 %

International Recorded Music 1,718 1,491 227 15 %

International Music Publishing 347 299 48 16 %

Total international

2,065 1,790 275 15 %

Intersegment eliminations (3) (3) — — %

Total revenues

$ 3,572 $ 3,150 $ 422 13 %

Total Revenues

Total revenues increased by $422 million, or 13%, to $3,572 million for the six months ended March 31, 2026 from $3,150 million for the six months ended March 31, 2025.

Revenue growth was impacted by $12 million of Recorded Music digital revenue from the DSP True-Up and Settlement Payments in the current year and $4 million in the prior year.

Revenue growth was also unfavorably impacted by the BMG Termination, which resulted in $12 million lower Recorded Music streaming revenue compared to the six months ended March 31, 2025.

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

Prior to intersegment eliminations, Recorded Music and Music Publishing revenues represented 80% and 20% of total revenues for each of the six months ended March 31, 2026 and March 31, 2025.

Prior to intersegment eliminations, U.S.

and international revenues represented 42% and 58% for the six months ended March 31, 2026, respectively, and 43% and 57% for the six months ended March 31, 2025, respectively.

Total digital revenues after intersegment eliminations increased by $280 million, or 13%, to $2,389 million for the six months ended March 31, 2026 from $2,109 million for the six months ended March 31, 2025.

Total streaming revenue increased 14% primarily driven by an increase in streaming revenue at Recorded Music.

Total digital revenues remained constant at 67% of consolidated revenues for each of the six months ended March 31, 2026 and March 31, 2025.

Prior to intersegment eliminations, total digital revenues for the six months ended March 31, 2026 were composed of U.S.

revenues of $1,071 million and international revenues of $1,319 million, or 45% and 55% of total digital revenues, respectively.

Prior to intersegment eliminations, total digital

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

revenues of $998 million and international revenues of $1,111 million, or 47% and 53% of total digital revenues, respectively.

Recorded Music revenues increased by $340 million to $2,860 million for the six months ended March 31, 2026 compared to $2,520 million for the six months ended March 31, 2025, which includes $93 million of favorable currency exchange fluctuations.

Recorded Music revenues were $1,142 million and $1,029 million, or 40% and 41% of consolidated Recorded Music revenues, for the six months ended March 31, 2026 and March 31, 2025, respectively.

International Recorded Music revenues were $1,718 million and $1,491 million, or 60% and 59% of consolidated Recorded Music revenues for the six months ended March 31, 2026 and March 31, 2025, respectively.

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

Digital revenue increased by $237 million for the six months ended March 31, 2026 compared to the six months ended March 31, 2025, which includes a favorable impact of currency exchange fluctuations of $60 million, and reflects the impacts of the DSP True-Up and Settlement Payments of $12 million in the current year and $4 million in the prior year, as well as the BMG Termination of $12 million in the prior year.

Revenue from streaming services increased $242 million to $1,921 million for the six months ended March 31, 2026 compared to $1,679 million for the six months ended March 31, 2025, which includes the favorable impact of foreign currency exchange rates of $58 million, and reflects the impacts of the DSP True-Up and Settlement Payments of $12 million in the current year and $4 million in the prior year, as well as the BMG Termination of $12 million in the prior year.

Download and other digital revenues decreased by $5 million, or 14%, to $30 million for the six months ended March 31, 2026 from $35 million for the six months ended March 31, 2025, primarily due to the continued shift to streaming services.

Artist services and expanded-rights revenue increased by $82 million, or 26%, attributable to higher concert promotion revenue primarily in France, higher merchandising revenue and the favorable impact of foreign currency exchange rates of $15 million.

Physical revenue increased by $11 million, or 4%, driven by strong U.S.

releases in the current year as well as catalog and carryover success and a favorable impact of foreign currency exchange rates of $9 million, partially offset by strong releases in Japan and Korea the prior year.

Licensing revenue increased by $10 million, or 5%, primarily driven by the favorable impact of foreign currency exchange rates of $9 million.

Top sellers for the six months ended March 31, 2026 included Alex Warren, sombr, Bruno Mars, Ed Sheeran and Melanie Martinez.

Music Publishing revenues increased by $82 million, or 13%, to $715 million for the six months ended March 31, 2026 from $633 million for the six months ended March 31, 2025.

Music Publishing revenues were $368 million and $334 million, or 51% and 53% of consolidated Music Publishing revenues, for the six months ended March 31, 2026 and March 31, 2025, respectively.

International Music Publishing revenues were $347 million and $299 million, or 49% and 47% of Music Publishing revenues, for the six months ended March 31, 2026 and March 31, 2025, respectively.

The overall increase in Music Publishing revenue was attributable to increases in digital revenue of $44 million, or 11%, performance revenue of $13 million, or 12%, synchronization revenue of $22 million, or 12%, and mechanical revenue of $5 million, or 17%.

The increase in digital revenue was primarily driven by continued growth in streaming revenue, partially offset by the impact of the MLC Historical Matched Royalties of $17 million in the prior year.

Revenue from streaming services grew by $44 million, or 11%, to $434 million for the six months ended March 31, 2026 from $390 million for the six months ended March 31, 2025, reflecting the impact of new deals and renewals, continued market growth and a favorable impact of foreign currency exchange rates of $10 million.

The growth in performance revenue is attributable to growth from touring, radio and live events primarily 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 $4 million impact of our acquisition of Tempo.

The growth in mechanical revenue is primarily driven by the impact of new deals and the timing of distributions.

Revenue by Geographical Location

revenue increased by $147 million, or 11%, to $1,510 million for the six months ended March 31, 2026 from $1,363 million for the six months ended March 31, 2025.

Recorded Music revenue increased by $113 million, or 11%, primarily driven by an increase in digital revenue of $65 million, or 9%, which reflects higher streaming revenue of $67 million, or 9%, partially offset by lower download and other digital revenue of $2 million, or 11%.

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

The decrease in download and other digital revenue is due to the continued shift to streaming.

Recorded Music physical revenue increased by $25 million, or 20%, driven by strong releases in the current year as well as catalog and carryover success.

Recorded Music artist services and expanded-rights revenue increased by $14 million, or 19%, driven by higher merchandising revenue, and licensing revenue increased by $9 million, or 13%, primarily driven by higher copyright infringement settlements compared to the prior year.

Music Publishing revenue increased by $34 million, or 10%, to $368 million for the six months ended March 31, 2026 from $334 million for the six months ended March 31, 2025.

Music Publishing digital revenue increased by $8 million, attributable to higher streaming revenue of $9 million, or 4%, partially offset by a decrease in download and other digital revenue of $1 million.

Music Publishing synchronization revenue increased by $24 million, or 47%, driven by timing of other

Music Publishing mechanical revenue increased by $1 million, or 14%, and U.S.

Music Publishing performance revenue increased $1 million, or 3%, for the six months ended March 31, 2026 compared to the six months ended March 31, 2025.

International revenue increased by $275 million, or 15%, to $2,065 million for the six months ended March 31, 2026 from $1,790 million for the six months ended March 31, 2025.

Excluding the favorable impact of foreign currency exchange rates of $113 million, International revenue increased by $162 million, or 9%.

International Recorded Music revenue increased by $227 million, driven by increases in digital revenue of $172 million, artist services and expanded-rights revenue of $68 million, licensing revenue of $1 million, partially offset by a decrease in physical revenue of $14 million.

International Recorded Music digital revenue increased by $172 million, attributable to higher streaming revenue of $175 million which includes the impact of certain DSP True-Up and Settlement Payments in the current and prior years, as well as the BMG Termination in the prior year, and a favorable impact of foreign currency exchange rates of $58 million, partially offset by lower download and other digital revenue of $3 million.

International Recorded Music artist services and expanded-rights revenue increased by $68 million, primarily due to higher concert promotion revenue in France, and international Recorded Music licensing revenue slightly increased by $1 million.

International Recorded Music physical revenue decreased by $14 million, driven by strong releases primarily in Japan and Korea in the prior year, partially offset by a favorable impact of foreign currency exchange rates of $9 million.

International Music Publishing revenue increased by $48 million, or 16%, to $347 million for the six months ended March 31, 2026 from $299 million for the six months ended March 31, 2025.

This was driven by increases in digital revenue of $36 million, performance revenue of $12 million due to higher concert, touring and live events revenue, and mechanical revenue of $4 million, partially offset by a decrease in synchronization revenue of $2 million.

International Music Publishing digital growth is primarily driven by streaming revenue growth of $35 million, or 22%.

Cost of revenues

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

For the Six Months Ended

March 31, 2026 vs.

2026 2025 $ Change % Change

Artist and repertoire costs $ 1,261 $ 1,105 $ 156 14 %

Product costs 656 580 76 13 %

Total cost of revenues $ 1,917 $ 1,685 $ 232 14 %

Artist and repertoire costs increased by $156 million, to $1,261 million for the six months ended March 31, 2026 from $1,105 million for the six months ended March 31, 2025.

Artist and repertoire costs as a percentage of revenue remained constant at 35% for each of the six months ended March 31, 2026 and March 31, 2025.

Product costs increased by $76 million, to $656 million for the six months ended March 31, 2026 from $580 million for the six months ended March 31, 2025.

Product costs as a percentage of revenue remained constant at 18% for each of the six months ended March 31, 2026 and March 31, 2025.

Selling, general and administrative expenses

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

For the Six Months Ended

March 31, 2026 vs.

2026 2025 $ Change % Change

General and administrative expense (1) $ 535 $ 560 $ (25) -4 %

Selling and marketing expense 322 315 7 2 %

Distribution expense 61 49 12 24 %

Total selling, general and administrative expense $ 918 $ 924 $ (6) -1 %

______________________________________

(1) Includes depreciation expense of $62 million and $57 million for the six months ended March 31, 2026 and March 31, 2025, respectively.

Total selling, general and administrative expense decreased by $6 million, to $918 million for the six months ended March 31, 2026 from $924 million for the six months ended March 31, 2025, driven by savings from the Company’s restructuring plans, of which a portion has been reinvested into the Company’s business, partially offset by unfavorable movements in foreign currency exchange rates of approximately $22 million.

Expressed as a percentage of revenue, total selling, general and administrative

expense decreased to 26% for the six months ended March 31, 2026, from 29% for the six months ended March 31, 2025 due to the factors noted below.

General and administrative expense decreased by $25 million to $535 million for the six months ended March 31, 2026 from $560 million for the six months ended March 31, 2025.

The decrease in general and administrative expense was driven by savings from the Company’s restructuring plans, of which a portion has been reinvested into the Company’s business and lower non-cash stock-based compensation expense of $1 million, partially offset by higher depreciation expense of $5 million related to technology assets being placed into service, including the core financials component of our new technology platform.

Expressed as a percentage of revenue, general and administrative expense decreased to 15% for the six months ended March 31, 2026 from 18% for the six months ended March 31, 2025 due to the factors noted above.

Selling and marketing expense increased by $7 million, or 2%, to $322 million for the six months ended March 31, 2026 from $315 million for the six months ended March 31, 2025.

Expressed as a percentage of revenue, selling and marketing expense decreased to 9% for the six months ended March 31, 2026, from 10% for the six months ended March 31, 2025, due to lower variable marketing spend and savings from the Company’s restructuring plans, of which a portion has been reinvested in the Company’s business, partially offset by higher marketing and advertising spend for key releases.

Distribution expense increased by $12 million to $61 million for the six months ended March 31, 2026 from $49 million for the six months ended March 31, 2025.

Expressed as a percentage of revenue, distribution expense remained constant at 2% for each of the six months ended March 31, 2026 and March 31, 2025.

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 Six Months Ended

March 31, 2026 vs.

2026 2025 $ Change % Change

Net income attributable to Warner Music Group Corp.

$ 359 $ 272 $ 87 32 %

Income attributable to noncontrolling interest (3) 5 (8) — %

Net income 356 277 79 29 %

Income tax expense 144 118 26 22 %

Income before income taxes 500 395 105 27 %

Other income (41) (89) 48 -54 %

Interest expense, net 86 76 10 13 %

Loss on extinguishment of debt 7 — 7 — %

Operating income 552 382 170 45 %

Amortization expense 140 119 21 18 %

Depreciation expense 62 57 5 9 %

Restructuring and impairments 40 40 — — %

Transformation initiatives and other related costs 29 35 (6) -17 %

Net loss on divestitures 5 — 5 — %

Non-cash stock-based compensation and other related costs 32 33 (1) -3 %

Adjusted OIBDA $ 860 $ 666 $ 194 29 %

Adjusted OIBDA

Adjusted OIBDA increased by $194 million to $860 million for the six months ended March 31, 2026 as compared to $666 million for the six months ended March 31, 2025, driven by the impacts of the DSP True-Up and Settlement Payments of $7 million in the current year and $3 million in the prior year, and the $4 million impact of the MLC Historical Matched Royalties and the $1 million impact of the BMG Termination in the prior year, as well as revenue mix, savings from the Company’s strategic restructuring plans, a portion of which has been reinvested in the Company’s business, and favorable movements in currency exchange rates of approximately $13 million.

Expressed as a percentage of total revenue, Adjusted OIBDA margin increased to 24% for the six months ended March 31, 2026 from 21% for the six months ended March 31, 2025.

Non-cash stock-based compensation and other related costs

Our non-cash stock-based compensation and other related costs decreased by $1 million to $32 million for the six months ended March 31, 2026 from $33 million for the six months ended March 31, 2025.

Net loss on divestitures

Net loss on divestitures during the six months ended March 31, 2026 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 six months ended March 31, 2025.

Transformation initiatives and other related costs

Our transformation initiatives and other related costs decreased by $6 million to $29 million for the six months ended March 31, 2026 from $35 million for the six months ended March 31, 2025.

Restructuring and Impairments

Our restructuring and impairment charges remained constant at $40 million for each of the six months ended March 31, 2026 and March 31, 2025.

The current year includes an impairment charge of $11 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 $5 million to $62 million for the six months ended March 31, 2026 from $57 million for the six months ended March 31, 2025.

This 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 $21 million, or 18%, to $140 million for the six months ended March 31, 2026 from $119 million for the six months ended March 31, 2025.

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 increased by $170 million to $552 million for the six months ended March 31, 2026 from $382 million for the six months ended March 31, 2025.

The increase in operating income was due to the same factors affecting Adjusted OIBDA discussed above, partially offset by higher amortization expenses of $21 million and higher depreciation expenses of $5 million, as noted above.

Interest expense, net

Our interest expense, net, increased to $86 million for the six months ended March 31, 2026 from $76 million for the six months ended March 31, 2025, primarily due to incremental debt related to the Tempo Asset-Based Notes acquired in connection with the acquisition of Tempo Music in the prior year, as well as incremental debt related to the Beethoven Credit Agreement, partially offset by lower interest rates on variable rate debt in the quarter.

Other income for the six months ended March 31, 2026 primarily includes foreign currency gains on our Euro-denominated debt of $21 million, currency exchange gains on our intercompany loans of $13 million, and realized and unrealized losses on hedging activity of $1 million.

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

Loss on extinguishment of debt

We recorded a loss on extinguishment of debt in the amount of $7 million for the six months ended March 31, 2026, which represents the unamortized balances of original issuance discounts and deferred financing costs in connection with the refinancing of our Tranche B Term Loans.

There was no loss on extinguishment of debt for the six months ended March 31, 2025.

Income tax expense

Our income tax expense increased by $26 million to $144 million for the six months ended March 31, 2026 from $118 million for the six months ended March 31, 2025.

The increase of $26 million in income tax expense is primarily due to an increase in pretax income in the current year and a taxable gain on the Company’s sale of certain recorded music catalog rights to Beethoven JV, partially offset by the tax benefit associated with partial release of valuation allowance on EMP.

Net income increased by $79 million to $356 million for the six months ended March 31, 2026 from $277 million for the six months ended March 31, 2025 as a result of the factors described above.

Noncontrolling interest

There was income attributable to noncontrolling interest of $3 million for the six months ended March 31, 2026 compared to a loss of $5 million for the six months ended March 31, 2025.

Business Segment Results

Results by business segment were as follows (in millions):

For the Six Months Ended

March 31, 2026 vs.

2026 2025 $ Change % Change

Recorded Music

Revenues $ 2,860 $ 2,520 $ 340 13 %

Operating income 617 441 176 40 %

Depreciation and amortization expense 93 91 2 2 %

Restructuring and impairments 28 41 (13) -32 %

Non-cash stock-based compensation and other related costs 11 20 (9) -45 %

Adjusted OIBDA 749 593 156 26 %

Music Publishing

Revenues $ 715 $ 633 $ 82 13 %

Operating income 126 107 19 18 %

Depreciation and amortization expense 70 58 12 21 %

Non-cash stock-based compensation and other related costs 3 3 — — %

Adjusted OIBDA 199 168 31 18 %

Corporate expenses and eliminations

Revenue eliminations $ (3) $ (3) $ — — %

Operating loss (191) (166) (25) 15 %

Depreciation and amortization expense 39 27 12 44 %

Restructuring and impairments 12 (1) 13 — %

Transformation initiatives and other related costs 29 35 (6) -17 %

Net gain on divestitures 5 — 5 — %

Non-cash stock-based compensation and other related costs 18 10 8 80 %

Adjusted OIBDA loss (88) (95) 7 -7 %

Revenues $ 3,572 $ 3,150 $ 422 13 %

Operating income 552 382 170 45 %

Adjusted OIBDA

860 666 194 29 %

Recorded Music

Recorded Music revenues increased by $340 million to $2,860 million for the six months ended March 31, 2026 compared to $2,520 million for the six months ended March 31, 2025, U.S.

Recorded Music revenues were $1,142 million and $1,029 million, or 40% and 41% of consolidated Recorded Music revenues, for the six months ended March 31, 2026 and March 31, 2025, respectively.

International Recorded Music revenues were $1,718 million and $1,491 million, or 60% and 59% of consolidated Recorded Music revenues, for the six months ended March 31, 2026 and March 31, 2025, respectively.

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

Cost of revenues

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

For the Six Months Ended

March 31, 2026 vs.

2026 2025 $ Change % Change

Artist and repertoire costs $ 811 $ 705 $ 106 15 %

Product costs 656 580 76 13 %

Total cost of revenues $ 1,467 $ 1,285 $ 182 14 %

Recorded Music cost of revenues increased by $182 million, to $1,467 million for the six months ended March 31, 2026 from $1,285 million for the six months ended March 31, 2025.

Expressed as a percentage of Recorded Music revenue, Recorded Music artist and repertoire costs remained constant at 28% for each of the six months ended March 31, 2026 and March 31, 2025.

Expressed as a percentage of Recorded Music revenue, Recorded Music product costs remained constant at 23% for each of the six months ended March 31, 2026 and March 31, 2025.

Selling, general and administrative expense

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

For the Six Months Ended

March 31, 2026 vs.

2026 2025 $ Change % Change

General and administrative expense (1) $ 307 $ 341 $ (34) -10 %

Selling and marketing expense 309 300 9 3 %

Distribution expense 61 49 12 24 %

Total selling, general and administrative expense $ 677 $ 690 $ (13) -2 %

______________________________________

(1) Includes depreciation expense of $22 million and $28 million for the six months ended March 31, 2026 and March 31, 2025, respectively.

Recorded Music selling, general and administrative expense decreased by $13 million, to $677 million for the six months ended March 31, 2026 from $690 million for the six months ended March 31, 2025, which includes unfavorable movements in foreign currency exchange rates of $21 million.

The decrease in general and administrative expense was primarily due to savings from the Company’s restructuring plans, a portion of which has been reinvested into the Company’s business, and lower non-cash stock-based compensation and other related expenses of $9 million.

The increase in selling and marketing expense was primarily due to higher variable marketing spend for key releases.

The increase in distribution expense was primarily due to revenue mix from higher merchandising and physical revenues.

Expressed as a percentage of Recorded Music revenue, Recorded Music selling, general and administrative expense decreased to 24% for the six months ended March 31, 2026 from 27% for the six months ended March 31, 2025.

Operating Income and Adjusted OIBDA

Recorded Music operating income increased by $176 million to $617 million for the six months ended March 31, 2026 from $441 million for the six months ended March 31, 2025.

In addition to the factors impacting Recorded Music Adjusted OIBDA noted below, the increase in operating income was driven by a decrease in restructuring and non-cash impairment charges of $13 million, lower non-cash stock-based compensation expense and other related costs of $9 million, and lower depreciation expense of $6 million compared to the prior year, partially offset by higher amortization expenses of $8 million related to acquisitions of music-related assets.

Recorded Music Adjusted OIBDA increased by $156 million, to $749 million for the six months ended March 31, 2026 from $593 million for the six months ended March 31, 2025, largely attributable to savings from the Company’s strategic restructuring plans, of which a portion has been reinvested in the Company’s business, the impact of the DSP True-Up and Settlement Payments of $7 million in the current year and favorable movements in foreign currency exchange rates of approximately $9 million, partially offset by the prior year $3 million impact of the DSP True-Up and Settlement Payments and $1 million impact of the BMG Termination.

Expressed as a percentage of Recorded Music revenue, Recorded Music Adjusted OIBDA margin increased to 26% for the six months ended March 31, 2026 from 24% for the six months ended March 31, 2025, due to the factors noted above.

Music Publishing

Music Publishing revenues increased by $82 million, or 13%, to $715 million for the six months ended March 31, 2026 from $633 million for the six months ended March 31, 2025.

Music Publishing revenues were $368 million and $334 million, or 51% and 53% of consolidated Music Publishing revenues, for the six months ended March 31, 2026 and March 31, 2025, respectively.

International Music Publishing revenues were $347 million and $299 million, or 49% and 47% of consolidated Music Publishing revenues, for the six months ended March 31, 2026 and March 31, 2025, respectively.

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

Cost of revenues

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

For the Six Months Ended

March 31, 2026 vs.

2026 2025 $ Change % Change

Artist and repertoire costs $ 452 $ 404 $ 48 12 %

Total cost of revenues $ 452 $ 404 $ 48 12 %

Music Publishing cost of revenues increased by $48 million, or 12%, to $452 million for the six months ended March 31, 2026 from $404 million for the six months ended March 31, 2025.

Expressed as a percentage of Music Publishing revenue, Music Publishing cost of revenues decreased to 63% for the six months ended March 31, 2026 from 64% for the six months ended March 31, 2025.

Selling, general and administrative expense

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

For the Six Months Ended

March 31, 2026 vs.

2026 2025 $ Change % Change

General and administrative expense (1) $ 66 $ 65 $ 1 2 %

Selling and marketing expense 2 2 — — %

Total selling, general and administrative expense $ 68 $ 67 $ 1 1 %

______________________________________

(1) Includes depreciation expense of $1 million and $3 million for the six months ended March 31, 2026 and March 31, 2025, respectively.

Music Publishing selling, general and administrative expense slightly increased to $68 million for the six months ended March 31, 2026 from $67 million for the six months ended March 31, 2025.

Expressed as a percentage of Music Publishing revenue, Music Publishing selling, general and administrative expense decreased to 10% for the six months ended March 31, 2026 from 11% for the six months ended March 31, 2025.

Operating Income and Adjusted OIBDA

Music Publishing operating income increased by $19 million to $126 million for the six months ended March 31, 2026 from $107 million operating income for the six months ended March 31, 2025 largely due to the factors that impacted Music Publishing Adjusted OIBDA noted below, coupled with lower depreciation expenses of $2 million, partially offset by higher amortization expenses of $14 million related to acquisitions.

Music Publishing Adjusted OIBDA increased by $31 million to $199 million for the six months ended March 31, 2026 from $168 million for the six months ended March 31, 2025, primarily driven by strong operating performance and revenue growth, savings from the Company’s restructuring plans, and favorable movements in foreign exchange rates of approximately $4 million, partially offset by the $4 million impact of the MLC Historical Matched Royalties in the prior year.

Expressed as a percentage of Music Publishing revenue, Music Publishing Adjusted OIBDA margin increased to 28% for the six months ended March 31, 2026 from 27% for the six months ended March 31, 2025.

Corporate Expenses and Eliminations

Our operating loss from corporate expenses and eliminations increased by $25 million to $191 million for the six months ended March 31, 2026 from $166 million for the six months ended March 31, 2025, primarily due to an increase in restructuring and impairment costs of $13 million, higher depreciation expense of $13 million, higher non-cash stock-based compensation and other related expenses of $8 million and a net loss on divestitures of $5 million, partially offset by lower expenses related to transformation initiatives and related costs of $6 million.

Our Adjusted OIBDA loss from corporate expenses and eliminations decreased by $7 million to $88 million for the six months ended March 31, 2026 from $95 million for the six months ended March 31, 2025, largely due to savings from the Company’s restructuring plans, of which a portion has been reinvested in the Company’s business.

FINANCIAL CONDITION AND LIQUIDITY

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.

Financial Condition at March 31, 2026

At March 31, 2026, we had $4.719 billion of debt (which is net of $30 million of premiums, discounts and deferred financing costs), $741 million of cash and equivalents (net debt of $3.978 billion, defined as total debt, less cash and equivalents and premiums, discounts and deferred financing costs) and $738 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 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

The financial data for the six months ended March 31, 2026 and March 31, 2025 are unaudited and have been derived from our condensed consolidated interim financial statements included elsewhere herein.

Six Months Ended

Cash provided by (used in):

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Operating Activities

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.

Cash provided by operating activities was $566 million for the six months ended March 31, 2026 as compared with cash provided by operating activities of $401 million for the six months ended March 31, 2025.

The $165 million increase in cash provided by operating activities was largely a result of strong operating performance.

Investing Activities

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.

Cash used in investing activities was $523 million for the six months ended March 31, 2026 as compared with cash used in investing activities of $202 million for the six months ended March 31, 2025.

The $523 million of cash used in investing activities in the six months ended March 31, 2026 consisted of $29 million relating to investments and acquisitions of businesses, $457 million to acquire music-related assets and $47 million relating to capital expenditures, partially offset by $10 million of proceeds from net divestitures.

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

Financing Activities

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.

Cash provided by financing activities was $169 million for the six months ended March 31, 2026 as compared with cash used in financing activities of $248 million for the six months ended March 31, 2025.

The $169 million of cash provided by financing activities for the six months ended March 31, 2026 consisted of dividends paid of $200 million, payment of deferred consideration of $42 million, distributions to noncontrolling interest holders of $7 million, taxes paid related to net share settlement of restricted stock units and common stock of $26 million, common stock repurchased and retired of $48 million, deferred financing costs paid of $12 million, partially offset by proceeds from the Beethoven Credit Agreement of $370 million and contributions from redeemable noncontrolling interest holder of $134 million.

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

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

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In the event of a bank failure or receivership, we may not have access to those cash deposits in excess of the relevant deposit insurance, which could have an adverse effect on our liquidity and financial performance.

We believe that our primary sources of liquidity will be sufficient to support our existing operations over the next twelve months.

We believe that our primary sources of liquidity will be sufficient to support our existing operations over the next twelve months from the date of this filing.

Debt Capital Structure

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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 4.0% as of December 31, 2025.

In addition, our weighted-average interest rate on our outstanding indebtedness has decreased from 10.5% in 2011 to 4.0% as of March 31, 2026.

Our nearest-term maturity date is in 2028.

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

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):

The Company repurchased and retired 750,500 shares for $22 million during the three months ended March 31, 2026.

The Company repurchased and retired 1,670,500 shares for $48 million during the six months ended March 31, 2026.

As of March 31, 2026, approximately $37 million of the $100 million share repurchase authorization remained available.

Existing Debt as of March 31, 2026

As of March 31, 2026, our long-term debt was as follows (in millions):

Revolving Credit Facility (a) $ —

Senior Term Loan Facility due 2031 1,295

Senior Term Loan A Facility due 2031

2.750% Senior Secured Notes due 2028

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______________________________________

(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.

(a) Reflects $350 million of commitments under the Revolving Credit Facility with no letters of credit outstanding at March 31, 2026.

There were no loans outstanding under the Revolving Credit Facility at March 31, 2026.

(b) Reflects $500 million of commitments under the Beethoven Credit Agreement with the ability, subject to the consent of the Lenders, to increase the size of the facility to $700 million.

There were $370 million in loans outstanding under the Beethoven Credit Agreement at March 31, 2026.

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

(c) The 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.

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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 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.

The Company paid an aggregate of approximately $100 million and $200 million, or $0.19 and $0.38 per share, in cash dividends to stockholders and participating security holders for the three and six months ended March 31, 2026, respectively.

On May 7, 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 June 2, 2026, to stockholders of record as of the close of business on May 26, 2026.

Covenant Compliance

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.

Under the Senior Term Loan Facility, the Revolving Credit Facility and the Secured Notes Indenture, the Fixed GAAP Date is set for April 3, 2020, other than in respect of capital leases, which are frozen at November 1, 2012.

The Revolving Credit Facility contains a springing leverage ratio that is tied to a ratio based on EBITDA, which is defined under the Revolving Credit Agreement.

Our ability to borrow funds under the Revolving Credit Facility may depend upon our ability to meet the leverage ratio test at the end of a fiscal quarter to the extent we have drawn a certain amount of revolving loans.

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.

EBITDA as defined in the Revolving Credit Facility is based on Consolidated Net Income (as defined in the Revolving Credit Facility), both of which terms differ from the terms “EBITDA” and “net income” as they are commonly used.

For example, the calculation of EBITDA under the Revolving Credit Facility, in addition to adjusting net income to exclude interest expense, income taxes and depreciation and amortization, also adjusts net income by excluding items or expenses such as, among other items, (1) the amount of any restructuring charges or reserves;

The Company was in compliance with its covenants under its outstanding notes, the Credit Agreement and the Asset-Based Notes as of March 31, 2026.

The Credit Agreement contains a covenant that is tied to a leverage ratio based on EBITDA, which is defined under the Credit Agreement.

So long as Tranche A Term Loans remain outstanding and/or during a collateral suspension period, we are required to meet the leverage ratio test at the end of each fiscal quarter.

Other than during a collateral suspension period and so long as no Tranche A Term Loans remain outstanding, our ability to borrow funds under the Revolving Credit Facility may depend on our ability to meet the leverage ratio test at the end of a fiscal quarter to the extent we have drawn a certain amount of revolving loans.

EBITDA as defined in the Credit Agreement is based on Consolidated Net Income (as defined in the Credit Agreement), both of which terms differ from the terms “EBITDA” and “net income” as they are commonly used.

For example, the calculation of EBITDA under the Credit Agreement, in addition to adjusting net income to exclude interest expense, income taxes and depreciation and amortization, also adjusts net income by excluding items or expenses such as, among other items, (1) the amount of any restructuring charges or reserves;

(2) any non-cash charges (including any impairment charges);

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and (8) certain extraordinary, unusual or non-recurring items.

The definition of EBITDA under the Revolving Credit Facility also includes adjustments for the pro forma impact of certain projected cost savings, operating expense reductions and synergies and any quality of earnings analysis prepared by independent certified public accountants in connection with an acquisition, merger, consolidation or other investment.

The Senior Term Loan Facility and the Secured Notes Indenture use financial measures called “Consolidated EBITDA” or “EBITDA” and “Consolidated Net Income” that have substantially the same definitions to EBITDA and Consolidated Net Income, each as defined under the Revolving Credit Agreement.

EBITDA as defined in the Revolving Credit Facility (referred to in this section as “Adjusted EBITDA”) is presented herein because it is a material component of the leverage ratio contained in the Revolving Credit Agreement.

Non-compliance with the leverage ratio could result in the inability to use the Revolving Credit Facility, which could have a material adverse effect on our results of operations, financial position and cash flow.

The definition of EBITDA under the Credit Agreement also includes adjustments for the pro forma impact of certain projected cost savings, operating expense reductions and synergies and any quality of earnings analysis prepared by independent certified public accountants in connection with an acquisition, merger, consolidation or other investment.

The Secured Notes Indenture uses financial measures called “Consolidated EBITDA” or “EBITDA” and “Consolidated Net Income” that have substantially the same definitions to EBITDA and Consolidated Net Income, each as defined under the Credit Agreement.

EBITDA as defined in the Credit Agreement (referred to in this section as “Adjusted EBITDA”) is presented herein because it is a material component of the leverage ratio contained in the Credit Agreement.

Non-compliance with the leverage ratio could result in a default under the Credit Agreement (or, if during a collateral suspension period and so long as no Tranche A Term Loans remain outstanding, the inability to use the Revolving Credit Facility), which could have a material adverse effect on our results of operations, financial position and cash flow.

Adjusted EBITDA does not represent net income or cash from operating activities as those terms are defined by U.S.

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Adjusted EBITDA does not reflect the impact of earnings or charges resulting from matters that we may consider not to be indicative of our ongoing operations.

In particular, the definition of Adjusted EBITDA in the Revolving Credit Agreement allows us to add back certain non-cash, extraordinary, unusual or non-recurring charges that are deducted in calculating net income.

In particular, the definition of Adjusted EBITDA in the Credit Agreement allows us to add back certain non-cash, extraordinary, unusual or non-recurring charges that are deducted in calculating net income.

However, these are expenses that may recur, vary greatly and are difficult to predict.

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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 December 31, 2025, for the twelve months ended December 31, 2024 and for the three months ended December 31, 2025 and December 31, 2024.

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

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

GAAP measure of our operating results, to Adjusted EBITDA as defined, for the most recently ended four fiscal quarters, or the twelve months ended March 31, 2026, for the twelve months ended March 31, 2025 and for the three months ended March 31, 2026 and March 31, 2025.

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 Credit Agreement for the most recently ended four fiscal quarters, or the twelve months ended March 31, 2026.

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

All amounts in the reconciliation below reflect Acquisition Corp.

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Twelve Months Ended

December 31, Three Months Ended

March 31, Three Months Ended

2026 2025 2026 2025

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Depreciation and amortization 402 339 103 90

Loss on extinguishment of debt

Net losses (gains) on divestitures and sale of securities

4 (47) 5 (29)

Restructuring costs (a)

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Other non-cash charges (e)

Unrestricted subsidiary (losses) (f)

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

Bona fide joint venture income (f)

(26) (4) (7) (4)

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

Adjusted EBITDA $ 1,854 $ 1,467 $ 428 $ 317

Senior Secured Indebtedness (f, h) $ 3,447

Leverage Ratio (i)

Leverage Ratio (i) 1.86x

______________________________________

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(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 $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.

(c) Reflects costs associated with our transformation initiatives and technology system updates, which includes costs of $12 million and $60 million related to our finance transformation for the three and twelve months ended March 31, 2026, respectively, as well as $18 million and $73 million for the three and twelve months ended March 31, 2025, 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 Company’s restructuring plans as well as an additional impairment charge of $2 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 $65 million increase in the twelve months ended December 31, 2025 Adjusted EBITDA.

(f) Tempo Music and Beethoven are both bona fide joint ventures, and are therefore excluded from the calculation of net income and Adjusted EBITDA.

Similarly, the Asset-Based Notes issued by a subsidiary of Tempo Music and the Beethoven Credit Facility are not included in our indebtedness for purposes of calculating the Leverage Ratio.

(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 quarter.

of approximately $4.051 billion less cash of $600 million, which excludes cash and debt held at Tempo Music and Beethoven, which are both bona fide joint ventures.

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

This is calculated net of cash and equivalents of the Company as of March 31, 2026 not exceeding $600 million in accordance with the Credit Agreement.

During a collateral suspension period, whether or not there are any Tranche A Term Loans outstanding, Total Indebtedness to EBITDA Ratio may not exceed 4.00:1.00.

Other than during a collateral suspension period, so long as the Tranche A Term Loans are outstanding, Senior Secured Indebtedness to EBITDA Ratio may not exceed 5.00:1.00.

Other than during a collateral suspension period, and if no Tranche A Term Loans are outstanding, and only if the outstanding aggregate principal amount of borrowings under the Revolving Credit Facility and drawings under letters of credit which

have not been reimbursed under the Revolving Credit Facility is greater than $140 million at the end of a fiscal quarter, Senior Secured Indebtedness to EBITDA Ratio may not exceed 5.00:1.00.

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.

We also have additional borrowing capacity under our indentures and the Senior Term Loan Facility.

We also have additional borrowing capacity under our indentures and the Tranche A Term Loans.

However, our ability to continue to fund these items and to reduce debt may be affected by general economic, financial, competitive, legislative and regulatory factors, as well as other industry-specific factors such as the ability to control music piracy and the continued transition from physical to digital formats in the recorded music and music publishing industries.

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The amounts involved in any such transactions, individually or in the aggregate, may be material and may be funded from available cash or from additional borrowings.

In addition, from time to time, depending on market conditions and prices, contractual restrictions, our financial liquidity and other factors, we may seek to refinance the Senior Credit Facilities or our outstanding debt or debt securities with existing cash and/or with funds provided from additional borrowings.

In addition, from time to time, depending on market conditions and prices, contractual restrictions, our financial liquidity and other factors, we may seek to refinance the Credit Agreement or our outstanding debt or debt securities with existing cash and/or with funds provided from additional borrowings.

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