Warner Music Group Corp. 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS You should read the following discussion of our results of operations and financial condition with the unaudited interim financial statements included elsewhere in this Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2026 (the “Quarterly Report”). “SAFE HARBOR” STATEMENT UNDER PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 This Quarterly Report includes forward-looking statements and cautionary statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Some of the forward-looking statements can be identified by the use of forward-looking terms such as “believes,” “expects,” “may,” “will,” “shall,” “should,” “would,” “could,” “seeks,” “aims,” “projects,” “is optimistic,” “intends,” “plans,” “estimates,” “anticipates” or other comparable terms or the negative thereof. Forward-looking statements include, without limitation, all matters that are not historical facts. They appear in a number of places throughout this Quarterly Report and include, without limitation, our ability to compete in the highly competitive markets in which we operate, statements regarding our ability to develop talent and attract future talent, our ability to reduce future capital expenditures, our ability to monetize our music, including through new distribution channels and formats to capitalize on the growth areas of the music entertainment industry, our ability to effectively deploy our capital, the development of digital music and the effect of digital distribution channels on our business, including whether we will be able to achieve higher margins from digital sales, the success of strategic actions we are taking to accelerate our transformation as we redefine our role in the music entertainment industry, the effectiveness of our ongoing efforts to reduce overhead expenditures and manage our variable and fixed cost structure and our ability to generate expected cost savings from such efforts, our success in limiting piracy, the growth of the music entertainment industry and the effect of our and the industry’s efforts to combat piracy on the industry, our intention and ability to pay dividends or repurchase or retire our outstanding debt or notes in open market purchases, privately or otherwise, the impact on us of potential strategic transactions, our ability to fund our future capital needs and the effect of litigation on us. Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control. We caution you that forward-looking statements are not guarantees of future performance or outcomes and that actual performance and outcomes, including, without limitation, our actual results of operations, financial condition and liquidity, and the development of the market in which we operate, may differ materially from those made in or suggested by the forward-looking statements contained in this Quarterly Report. In addition, even if our results of operations, financial condition and cash flows, and the development of the market in which we operate, are consistent with the forward-looking statements contained in this Quarterly Report, those results or developments may not be indicative of results or developments in subsequent periods. New factors emerge from time to time that may cause our business not to develop as we expect, and it is not possible for us to accurately predict all of them. Factors that could cause actual results and outcomes to differ from those reflected in forward-looking statements include, without limitation: • our inability to compete successfully in the highly competitive markets in which we operate; • our ability to identify, sign and retain recording artists and songwriters and the existence or absence of superstar releases; • slower growth in streaming adoption and revenue; • our dependence on a limited number of digital music services for the online distribution and marketing of our music and their ability to significantly influence the pricing structure for online music stores; • the popular demand for particular recording artists and/or songwriters and music and the timely delivery to us of music by major recording artists and/or songwriters; • risks related to the effects of climate change and natural or man-made disasters; • the diversity and quality of our recording artists, songwriters and releases; • trends, developments or other events in the United States and in some foreign countries in which we operate, including the impact of tariffs imposed or threatened by the U.S. or foreign governments; • risks associated with our non-U.S. operations, including limited legal protections of our intellectual property rights and restrictions on the repatriation of capital; • unfavorable currency exchange rate fluctuations; • the impact of heightened and intensive competition in the recorded music and music publishing industries and our inability to execute our business strategy; 25 • significant fluctuations in our operations, cash flows and the trading price of our common stock from period to period; • our failure to attract and retain our executive officers and other key personnel; • a significant portion of our revenues are subject to rate regulation either by government entities or by local third-party collecting societies throughout the world and rates on other income streams may be set by governmental proceedings, which may limit our profitability; • risks associated with obtaining, maintaining, protecting and enforcing our intellectual property rights; • our involvement in intellectual property litigation; • threats to our business associated with digital piracy, including organized industrial piracy; • risks associated with the development and use of artificial intelligence; • an impairment in the carrying value of goodwill or other intangible and long-lived assets; • the impact of, and risks inherent in, acquisitions or other business combinations; • risks inherent to our outsourcing certain finance and accounting functions; • the fact that we have engaged in substantial restructuring activities in the past, and may need to implement further restructurings in the future and our restructuring efforts may not be successful or generate expected cost savings; • our and our service providers’ ability to maintain the security of information relating to our customers, employees and vendors and our music; • risks related to evolving laws and regulations concerning data privacy which might result in increased regulation and different industry standards; • new legislation that affects the terms of our contracts with recording artists and songwriters; • a potential loss of catalog if it is determined that recording artists have a right to recapture U.S. rights in their recordings under the U.S. Copyright Act; • the impact of our substantial leverage on our ability to raise additional capital to fund our operations, on our ability to react to changes in the economy or our industry and on our ability to meet our obligations under our indebtedness; • the ability to generate sufficient cash to service all of our indebtedness, and the risk that we may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful; • the fact that our debt agreements contain restrictions that may limit our flexibility in operating our business; • the significant amount of cash required to service our indebtedness and the ability to generate cash or refinance indebtedness as it becomes due depends on many factors, some of which are beyond our control; • our indebtedness levels, and the fact that we may be able to incur substantially more indebtedness, which may increase the risks created by our substantial indebtedness; • risks of downgrade, suspension or withdrawal of the rating assigned by a rating agency to us could impact our cost of capital; • the dual class structure of our common stock and Access’s existing ownership of our Class B Common Stock have the effect of concentrating control over our management and affairs and over matters requiring stockholder approval with Access; • the fact that we maintain certain cash deposits in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limits, which could have an adverse effect on liquidity and financial performance in the event of a bank failure or receivership; and • risks related to other factors discussed under “Risk Factors” of this Quarterly Report and in our Annual Report on Form 10-K for the fiscal year ended September 30, 2025. You should read this Quarterly Report completely and with the understanding that actual future results may be materially different from expectations. All forward-looking statements made in this Quarterly Report are qualified by these cautionary statements. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation, other than as may be required by law, to update or revise any forward-looking or cautionary statements to reflect changes in assumptions, the occurrence of events, unanticipated or otherwise, and changes in future operating results over time or otherwise. 26 Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data. Other risks, uncertainties and factors, including those discussed in the “Risk Factors” of our Quarterly Reports and our Annual Report on Form 10-K, could cause our actual results to differ materially from those projected in any forward-looking statements we make. You should read carefully the factors described in the “Risk Factors” section of our Quarterly Reports and our Annual Report on Form 10-K to better understand the risks and uncertainties inherent in our business and underlying any forward-looking statements. INTRODUCTION Warner Music Group Corp. (the “Company”) was formed on November 21, 2003. The Company is the direct parent of WMG Holdings Corp. (“Holdings”), which is the direct parent of WMG Acquisition Corp. (“Acquisition Corp.”). Acquisition Corp. is one of the world’s major music entertainment companies. The Company and Holdings are holding companies that conduct substantially all of their business operations through their subsidiaries. The terms “we,” “us,” “our,” “ours” and the “Company” refer collectively to Warner Music Group Corp. and its consolidated subsidiaries, except where otherwise indicated. Management’s discussion and analysis of financial condition and results of operations (“MD&A”) is provided as a supplement to the unaudited financial statements and related notes thereto included elsewhere herein to help provide an understanding of our financial condition, changes in financial condition and results of our operations. MD&A is organized as follows: • Business overview. This section provides a general description of our business, as well as a discussion of factors that we believe are important in understanding our results of operations and comparability and in anticipating future trends. • Results of operations. 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 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. Use of Adjusted OIBDA We evaluate our operating performance based on several factors, including Adjusted OIBDA. We define Adjusted OIBDA as operating income (loss) adjusted to exclude the following items: (i) non-cash depreciation of tangible assets, (ii) non-cash amortization of intangible assets, (iii) non-cash stock-based compensation and other related expenses, (iv) gains or losses on divestitures, (v) expenses related to restructuring and transformation initiatives, which includes costs associated with the Company’s financial transformation initiative to design and implement new information technology and upgrade our finance infrastructure, and (vi) executive transition costs. Items excluded are not viewed to contribute directly to management’s evaluation of operating results. We consider Adjusted OIBDA to be an important indicator of the operational strengths and performance of our businesses. However, a limitation of the use of Adjusted OIBDA as a performance measure is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in our businesses. Accordingly, Adjusted OIBDA should be considered in addition to, not as a substitute for, operating income (loss), net income (loss) attributable to Warner Music Group Corp. and other measures of financial performance reported in accordance with United States generally accepted accounting principles (“U.S. GAAP”). In addition, our definition of Adjusted OIBDA may differ from similarly titled measures used by other companies. A reconciliation of consolidated Adjusted OIBDA to operating income (loss) and net income (loss) attributable to Warner Music Group Corp. is provided in our “Results of Operations.” Use of Constant Currency As exchange rates are an important factor in understanding period to period comparisons, we believe the presentation of revenue and Adjusted OIBDA on a constant-currency basis in addition to reported results helps improve the ability to understand our operating results and evaluate our performance in comparison to prior periods. Constant-currency information compares revenue and Adjusted OIBDA between periods as if exchange rates had remained constant period over period. We use revenue and Adjusted OIBDA on a constant-currency basis as one measure to evaluate our performance. We calculate constant-currency by calculating prior-year revenue and Adjusted OIBDA using current-year foreign currency exchange rates. We generally refer to such amounts calculated on a constant-currency basis as “excluding the impact of foreign currency exchange rates.” Revenue and Adjusted OIBDA 27 on a constant-currency basis should be considered in addition to, not as a substitute for, revenue and Adjusted OIBDA reported in accordance with U.S. GAAP. Revenue and Adjusted OIBDA on a constant-currency basis, as we present it, may not be comparable to similarly titled measures used by other companies and are not a measure of performance presented in accordance with U.S. GAAP. BUSINESS OVERVIEW We are one of the world’s leading music entertainment companies. Our renowned family of iconic record labels, including Atlantic Records, Warner Records, Elektra Records and Parlophone Records, is home to many of the world’s most popular and influential recording artists. In addition, Warner Chappell Music, our global music publishing business, boasts an extraordinary catalog that includes timeless standards and contemporary hits, representing works by over 190,000 songwriters and composers, with a global collection of more than one and a half million musical compositions. We classify our business interests into two fundamental operations: Recorded Music and Music Publishing. A brief description of each of those operations is presented below. Components of Our Operating Results Recorded Music Operations Our Recorded Music business primarily consists of the discovery and development of recording artists and the related marketing, promotion, distribution, sale and licensing of music created by such recording artists. We play an integral role in virtually all aspects of the recorded music value chain from discovering and developing talent to producing, distributing and selling music to marketing and promoting recording artists and their music. In the United States, our Recorded Music business is conducted principally through our major record labels—Atlantic Records and Warner Records. Our Recorded Music business also includes Rhino Entertainment, a division that specializes in marketing our recorded music catalog through compilations, reissuances of previously released music and video titles and releasing previously unreleased material from our vault. We also conduct our Recorded Music business through a collection of additional record labels including Asylum, Big Beat, Canvasback, East West, Erato, FFRR, Nonesuch, Parlophone, Reprise, Sire, Spinnin’ Records, TenThousand Projects, Warner Classics and Warner Records Nashville. Outside the United States, our Recorded Music business is conducted through various subsidiaries, affiliates and non-affiliated licensees. Internationally, we engage in the same activities as in the United States: discovering and signing artists and distributing, selling, marketing and promoting their music. In most cases, we also market, promote, distribute and sell the music of those recording artists for whom our domestic record labels have international rights. In certain smaller markets, we license the right to distribute and sell our music to non-affiliated third-party record labels. Our Recorded Music business’s operations include WMX, a next generation services division that connects artists with fans and amplifies brands in creative, immersive, and engaging ways. This division includes a rebranded WEA commercial services and marketing network (formerly Warner-Elektra-Atlantic Corporation, or WEA Corp.), which markets, distributes and sells music and video products to retailers and wholesale distributors, and enhances relationships with fans by creating artist merchandise, which we operate, market and sell across various channels, including e-commerce and retail and through touring. Our business’s distribution operations also include Alternative Distribution Alliance (“ADA”), which markets, distributes and sells the products of independent labels to retail and wholesale distributors; and various distribution centers and ventures operated internationally. In addition to our music being sold in physical retail outlets, our music is also sold in physical form to online physical retailers, such as amazon.com, barnesandnoble.com and bestbuy.com, and distributed in digital form to an expanded universe of digital partners, including streaming services such as those of Amazon, Apple, Deezer, SoundCloud, Spotify, Tencent Music and YouTube, radio services such as iHeart Radio and SiriusXM and other download services. We have integrated the marketing of digital content into all aspects of our business, including artists and repertoire (“A&R”) and distribution. Our business development executives work closely with A&R departments to ensure that while music is being produced, digital assets are also created with all distribution channels in mind, including streaming services, social networking sites, online portals and music-centered destinations. We also work side-by-side with our online and mobile partners to test new concepts. We believe existing and new digital businesses will be a significant source of growth and will provide new opportunities to successfully monetize our assets and create new revenue streams. The proportion of digital revenues attributable to each distribution channel varies by region and proportions may change as the introduction of new technologies continues. As one of the world’s largest music entertainment companies, we believe we are well positioned to take advantage of growth in digital distribution and emerging technologies to maximize the value of our assets. We have diversified our revenues beyond our traditional businesses by entering into expanded-rights deals with recording artists in order to partner with such artists in other aspects of their careers. Under these agreements, we provide services to and 28 participate in recording artists’ activities outside the traditional recorded music business such as touring, merchandising and sponsorships. We have built and acquired artist services capabilities and platforms for marketing and distributing this broader set of music-related rights and participating more widely in the monetization of the artist brands we help create. We believe that entering into expanded-rights deals and enhancing our artist services capabilities in areas such as merchandising, VIP ticketing, fan clubs, concert promotion and management has permitted us to diversify revenue streams and capitalize on other revenue opportunities. This provides for improved long-term relationships with our recording artists and allows us to more effectively connect recording artists and fans. Recorded Music revenues are derived from four main sources: • Digital : the rightsholder receives revenues with respect to streaming and download services; • Physical : the rightsholder receives revenues with respect to sales of physical products such as vinyl, CDs and DVDs; • Artist services and expanded-rights : the rightsholder receives revenues with respect to our artist services businesses and our participation in expanded rights, including advertising, merchandising such as direct-to-consumer sales, touring, concert promotion, ticketing, sponsorship, fan clubs, artist websites, social publishing, and artist and brand management; and • Licensing : the rightsholder receives royalties or fees for the right to use sound recordings in combination with visual images such as in films or television programs, television commercials and video games; the rightsholder also receives royalties if sound recordings are performed publicly through broadcast of music on television, radio and cable, and in public spaces such as shops, workplaces, restaurants, bars and clubs. The principal costs associated with our Recorded Music business are as follows: • A&R costs : the costs associated with (i) paying royalties to recording artists, producers, songwriters, other copyright holders and trade unions; (ii) signing and developing recording artists; and (iii) creating master recordings in the studio; • Product costs : the costs to manufacture, package and distribute products to wholesale and retail distribution outlets, the royalty costs associated with distributing products of independent labels to wholesale and retail distribution outlets, as well as the costs related to our artist services business; • Selling and marketing expenses : the costs associated with the promotion and marketing of recording artists and music, including costs to produce music videos for promotional purposes and artist tour support; and • General and administrative expenses : the costs associated with general overhead and other administrative expenses. Music Publishing Operations While Recorded Music is focused on marketing, promoting, distributing and licensing a particular recording of a musical composition, Music Publishing is an intellectual property business focused on generating revenue from uses of the musical composition itself. In return for promoting, placing, marketing and administering the creative output of a songwriter, or engaging in those activities for other rightsholders, our Music Publishing business shares the revenues generated from use of the musical compositions with the songwriter or other rightsholders. The operations of our Music Publishing business are conducted principally through Warner Chappell Music, our global music publishing company headquartered in Los Angeles, through various subsidiaries, affiliates, and non-affiliated licensees and sub-publishers. We own or control rights to more than two million musical compositions, including numerous pop hits, American standards, folk songs and motion picture and theatrical compositions. Assembled over decades, our award-winning catalog includes over 190,000 songwriters and composers and a diverse range of genres including pop, rock, jazz, classical, country, R&B, hip-hop, rap, reggae, Latin, folk, blues, symphonic, soul, Broadway, electronic, alternative and gospel. Warner Chappell Music also administers the music and soundtracks of several third-party television and film producers and studios. We have an extensive production music catalog collectively branded as Warner Chappell Production Music. Music Publishing revenues are derived from five main sources: • Digital : the rightsholder receives revenues with respect to musical compositions embodied in recordings distributed in streaming services, download services, digital performance and other digital music services; • Performance : the rightsholder receives revenues if the musical composition is performed publicly through broadcast of music on television, radio and cable and in retail locations (e.g., bars and restaurants), live performance at a concert or other venue ( e.g. , arena concerts and nightclubs), and performance of music in staged theatrical productions; 29 • Mechanical : the rightsholder receives revenues with respect to musical compositions embodied in recordings sold in any physical format or configuration such as vinyl, CDs and DVDs; • Synchronization : the rightsholder receives revenues for the right to use the musical composition in combination with visual images such as in films or television programs, television commercials and video games as well as from other uses such as in toys or novelty items and merchandise; and • Other : the rightsholder receives revenues for use in sheet music and other uses. The principal costs associated with our Music Publishing business are as follows: • A&R costs : the costs associated with (i) paying royalties to songwriters, co-publishers and other copyright holders in connection with income generated from the uses of their works and (ii) signing and developing songwriters; and • Selling and marketing, general overhead and other administrative expenses : the costs associated with selling and marketing, general overhead and other administrative expenses. Recent Events and Factors Affecting Results of Operations and Comparability 2025 Restructuring Plan On July 1, 2025, the Company announced a strategic restructuring plan (the “2025 Restructuring Plan”) designed to free up funds to invest in music and to accelerate the Company’s long-term growth. The Company expects the 2025 Restructuring Plan to generate pre-tax cost savings of approximately $300 million on an annualized run-rate basis by the end of the fiscal year 2027 and expects the majority of the cost savings under the 2025 Restructuring Plan to be accretive to Adjusted OIBDA. The 2025 Restructuring Plan is expected to be fully implemented by the end of calendar year 2026. The Company expects to incur total charges of approximately $200 million on a pre-tax basis or approximately $150 million on an after-tax basis. Approximately $170 million of the charges will be for severance payments and other related termination costs and approximately $30 million of certain other charges. The Company anticipates that the Plan will result in cash expenditures of approximately $200 million of which $170 million is expected to be paid by the end of fiscal year 2026. For the three months ended 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. 2024 Strategic Restructuring Plan In 2024, the Company announced a strategic restructuring plan (the “2024 Strategic Restructuring Plan”) designed to free up additional funds to invest in music and accelerate the Company’s growth for the next decade. The 2024 Strategic Restructuring Plan is 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 transformation 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 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 was a $1 million benefit recognized for the three and six months ended March 31, 2026 related to the 2024 Strategic Restructuring Plan. 30 Other Impairments 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 In September 2023, the Company terminated its distribution agreement with BMG as BMG began to bring digital distribution in-house and license directly with digital service partners in fiscal 2024 while also licensing its physical distribution with a different provider (the “BMG Termination”). Alternative Distribution Alliance (“ADA”), which is part of our Recorded Music business, had previously been distributing BMG’s recorded music catalog and revenues are reported within our Recorded Music segment. The shift to digital direct deals by BMG was a phased in-sourcing of distribution during the prior fiscal year with BMG rolled off at the end of the prior fiscal year. 31 RESULTS OF OPERATIONS Three Months Ended March 31, 2026 Compared with Three Months Ended March 31, 2025 Consolidated Results Revenues Our revenues were composed of the following amounts (in millions): For the Three Months Ended March 31, 2026 vs. 2025 2026 2025 $ Change % Change Revenue by Type Digital $ 975 $ 841 $ 134 16 % Physical 137 112 25 22 % Total digital and physical 1,112 953 159 17 % Artist services and expanded-rights 164 117 47 40 % Licensing 104 105 (1) -1 % Total Recorded Music 1,380 1,175 205 17 % Performance 58 53 5 9 % Digital 224 188 36 19 % Mechanical 17 16 1 6 % Synchronization 50 49 1 2 % Other 4 4 — — % Total Music Publishing 353 310 43 14 % Intersegment eliminations (1) (1) — — % Total revenues $ 1,732 $ 1,484 $ 248 17 % Revenue by Geographical Location U.S. Recorded Music $ 565 $ 497 $ 68 14 % U.S. Music Publishing 178 161 17 11 % Total U.S. 743 658 85 13 % International Recorded Music 815 678 137 20 % International Music Publishing 175 149 26 17 % Total international 990 827 163 20 % Intersegment eliminations (1) (1) — — % Total revenues $ 1,732 $ 1,484 $ 248 17 % Total Revenues 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. 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 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 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. 32 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 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 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 $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. U.S. 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 $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. U.S. 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 $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 U.S. 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. U.S. Recorded Music revenue increased by $68 million, or 14%. U.S. 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. U.S. Recorded Music licensing revenue increased by $2 million, or 5%, driven by higher copyright infringement settlements. U.S. Recorded Music physical revenue increased $23 million, or 43%, driven by strong releases in the quarter as well as catalog and carryover success. U.S. Recorded Music artist services and expanded-rights revenues increased by $14 million, or 61%, driven by higher merchandising revenue. U.S. 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. U.S. Music Publishing digital revenue increased by $18 million, or 17%, attributable to higher streaming revenue of $19 million, or 18%. U.S. Music Publishing synchronization revenue increased by $3 million, or 10%, driven by timing of certain copyright infringement settlements and the impact of acquisitions. U.S. Music Publishing performance decreased by $3 million, or 16%, and mechanical revenue decreased by $1 million driven by the timing of distributions. 33 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 $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 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 decreased by $2 million, or 10%. Cost of revenues Our cost of revenues was composed of the following amounts (in millions): For the Three Months Ended March 31, 2026 vs. 2025 2026 2025 $ Change % Change Artist and repertoire costs $ 617 $ 531 $ 86 16 % Product costs 313 260 53 20 % Total cost of revenues $ 930 $ 791 $ 139 18 % 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 Our selling, general and administrative expenses were composed of the following amounts (in millions): For the Three Months Ended March 31, 2026 vs. 2025 2026 2025 $ Change % Change General and administrative expense (1) $ 263 $ 276 $ (13) -5 % Selling and marketing expense 167 157 10 6 % Distribution expense 30 17 13 76 % Total selling, general and administrative expense $ 460 $ 450 $ 10 2 % ______________________________________ (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. 34 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. 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 Three Months Ended March 31, 2026 vs. 2025 2026 2025 $ Change % Change Net income attributable to Warner Music Group Corp. $ 183 $ 36 $ 147 — % Income attributable to noncontrolling interest (2) — (2) — % Net income 181 36 145 — % Income tax expense 73 29 44 — % Net income before income taxes 254 65 189 — % 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 % Amortization expense 72 62 10 16 % Depreciation expense 31 28 3 11 % Restructuring and impairments 6 13 (7) (54) % Transformation initiative costs 12 18 (6) (33) % Non-cash stock-based compensation and other related costs 12 14 (2) (14) % Adjusted OIBDA $ 397 $ 303 $ 94 31 % Adjusted OIBDA 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 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. 35 Transformation initiative costs 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 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 $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 $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 $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 $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 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. 36 Net income 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 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 Results by business segment were as follows (in millions): For the Three Months Ended March 31, 2026 vs. 2025 2026 2025 $ Change % Change Recorded Music Revenues $ 1,380 $ 1,175 $ 205 17 % 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 % Music Publishing Revenues 353 310 43 14 % 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 % Corporate expenses and eliminations Revenue eliminations (1) (1) — — % 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 % Total Revenues 1,732 1,484 248 17 % Operating income 264 168 96 57 % Adjusted OIBDA 397 303 94 31 % Recorded Music Revenues 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. U.S. 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. 37 Cost of revenues Recorded Music cost of revenues was composed of the following amounts (in millions): For the Three Months Ended March 31, 2026 vs. 2025 2026 2025 $ Change % Change Artist and repertoire costs $ 394 $ 339 $ 55 16 % Product costs 313 260 53 20 % Total cost of revenues $ 707 $ 599 $ 108 18 % 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 Recorded Music selling, general and administrative expenses were composed of the following amounts (in millions): For the Three Months Ended March 31, 2026 vs. 2025 2026 2025 $ Change % Change General and administrative expense (1) $ 153 $ 161 $ (8) -5 % Selling and marketing expense 159 149 10 7 % Distribution expense 30 17 13 76 % Total selling, general and administrative expense $ 342 $ 327 $ 15 5 % ______________________________________ (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 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 $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 $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. 38 Music Publishing Revenues 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. U.S. 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 growth in digital, performance, synchronization, 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 Three Months Ended March 31, 2026 vs. 2025 2026 2025 $ Change % Change Artist and repertoire costs $ 224 $ 194 $ 30 15 % Total cost of revenues $ 224 $ 194 $ 30 15 % 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 Music Publishing selling, general and administrative expenses were composed of the following amounts (in millions): For the Three Months Ended March 31, 2026 vs. 2025 2026 2025 $ Change % Change General and administrative expense (1) $ 32 $ 34 $ (2) -6 % Selling and marketing expense 1 1 — — % Total selling, general and administrative expense $ 33 $ 35 $ (2) -6 % ______________________________________ (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 $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. 39 Corporate Expenses and Eliminations 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. 40 RESULTS OF OPERATIONS Six Months Ended March 31, 2026 Compared with Six Months Ended March 31, 2025 Consolidated Results Revenues Our revenues were composed of the following amounts (in millions): For the Six Months Ended March 31, 2026 vs. 2025 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 U.S. Recorded Music $ 1,142 $ 1,029 $ 113 11 % U.S. Music Publishing 368 334 34 10 % Total U.S. 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 41 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. 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. 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. U.S. 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 U.S. 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. U.S. 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. U.S. 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. U.S. 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. U.S. 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. U.S. 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. U.S. Music Publishing synchronization revenue increased by $24 million, or 47%, driven by timing of other 42 copyright infringement settlements, higher television and commercial licensing activity and the impact of acquisitions. U.S. 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. 2025 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. 2025 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 43 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. 2025 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. 44 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 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. 45 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 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. 46 Business Segment Results Results by business segment were as follows (in millions): For the Six Months Ended March 31, 2026 vs. 2025 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 % Total Revenues $ 3,572 $ 3,150 $ 422 13 % Operating income 552 382 170 45 % Adjusted OIBDA 860 666 194 29 % Recorded Music Revenues 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. 47 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. 2025 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. 2025 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. 48 Music Publishing Revenues 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. U.S. 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. 2025 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. 2025 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. 49 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. 50 FINANCIAL CONDITION AND LIQUIDITY 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. equity. 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. equity at September 30, 2025. Cash Flows The following table summarizes our historical cash flows (in millions). 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 March 31, 2026 2025 Cash provided by (used in): Operating activities $ 566 $ 401 Investing activities (523) (202) Financing activities 169 (248) Operating Activities 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 $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 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. Liquidity 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. These sources of liquidity are needed to fund our debt service requirements, working capital requirements, capital expenditure requirements, strategic acquisitions and investments, and dividends, prepayments of debt, repurchases or retirement of our outstanding debt or notes or repurchases of our outstanding equity securities in open market purchases, privately negotiated purchases or otherwise, we may elect to pay or make in the future. We maintain our cash in various banks and other financial institutions around the world, and in some cases those cash deposits are in 51 excess of FDIC or other deposit insurance. 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 from the date of this filing. Debt Capital Structure Since Access acquired us in 2011, we have sought to extend the maturity dates on our outstanding indebtedness, reduce interest expense and improve our debt ratings. For example, our S&P corporate credit rating improved from B in 2017 to BBB- in August 2024 with a stable outlook, and our Moody’s corporate family rating improved from B1 in 2016 to Ba1 in March 2025. 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 March 31, 2026. Our nearest-term maturity date is in 2028. Subject to market conditions, we continue to take opportunistic steps to extend our maturity dates, reduce related interest expense and make other changes. From time to time, we may incur additional indebtedness for, among other things, working capital, repurchasing, redeeming or tendering for existing indebtedness and acquisitions or other strategic transactions. Repurchase Program On November 14, 2024, the Company’s board of directors authorized a new $100 million share repurchase program (the “Share Repurchase Program”), which is intended to offset dilution from the Omnibus Incentive Plan. 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 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 A Facility due 2031 1,295 2.750% Senior Secured Notes due 2028 372 3.750% Senior Secured Notes due 2029 540 3.875% Senior Secured Notes due 2030 535 2.250% Senior Secured Notes due 2031 509 3.000% Senior Secured Notes due 2031 800 Mortgage Term Loan due 2033 17 Total debt, including the current portion 4,068 Premium less unamortized discount and unamortized deferred financing costs (22) Total Acquisition Corp. long-term debt, including the current portion, net $ 4,046 Beethoven Credit Agreement (b) 370 Tempo Asset-Based Notes due 2050 (c) 311 Unamortized discount (8) Total other long-term debt, including the current portion, net $ 673 Total long-term debt, including the current portion, net $ 4,719 ______________________________________ (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. 52 Pursuant to the Amendment, WMGCo and BainCo have committed to increase their respective initial equity commitment amounts by $100 million each. For further discussion of our debt agreements, see “Liquidity” in the “Financial Condition and Liquidity” section of our Annual Report on Form 10-K for the fiscal year ended September 30, 2025. Dividends The Company’s ability to pay dividends may be restricted by covenants in the credit agreement for the Revolving Credit Facility which are currently suspended but which will be reinstated if Acquisition Corp.’s Total Indebtedness to EBITDA Ratio increases above 3.50:1.00 and the term loans do not achieve an investment grade rating. The Company intends to pay quarterly cash dividends to holders of its Class A Common Stock and Class B Common Stock. The declaration of each dividend will continue to be at the discretion of the Company’s board of directors and will depend on the Company’s financial condition, earnings, liquidity and capital requirements, level of indebtedness, contractual restrictions with respect to payment of dividends, restrictions imposed by Delaware law, general business conditions and any other factors that the Company’s board of directors deems relevant in making such a determination. Therefore, there can be no assurance that the Company will pay any dividends to holders of the Company’s common stock, or as to the amount of any such dividends. On 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, which was paid to stockholders on March 3, 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 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); (3) any net loss resulting from hedging currency exchange risks; (4) the amount of management, monitoring, consulting and advisory fees paid to Access; (5) business optimization expenses (including consolidation initiatives, severance costs and other costs relating to initiatives aimed at profitability improvement); (6) transaction expenses; (7) equity-based compensation expense; and (8) certain extraordinary, unusual or non-recurring items. 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. 53 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. GAAP and does not necessarily indicate whether cash flows will be sufficient to fund cash needs. While Adjusted EBITDA and similar measures are frequently used as measures of operations and the ability to meet debt service requirements, these terms are not necessarily comparable to other similarly titled captions of other companies due to the potential inconsistencies in the method of calculation. 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 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. Adjusted EBITDA as presented below should not be used by investors as an indicator of performance for any future period. Further, our debt instruments require that it be calculated for the most recent four fiscal quarters. As a result, the measure can be disproportionately affected by a particularly strong or weak quarter. Further, it may not be comparable to the measure for any subsequent four-quarter period or any complete fiscal year. In addition, our debt instruments require that the leverage ratio be calculated on a pro forma basis for certain transactions including acquisitions as if such transactions had occurred on the first date of the measurement period and may include expected cost savings and synergies resulting from or related to any such transaction. There can be no assurances that any such cost savings or synergies will be achieved in full. In addition, Adjusted EBITDA is a key measure used by our management to understand and evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. Some of those limitations include: (1) it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenue for our business; (2) it does not reflect the significant interest expense or cash requirements necessary to service interest or principal payments on our indebtedness; and (3) it does not reflect every cash expenditure, future requirements for capital expenditures or contractual commitments. In particular, this measure adds 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. In addition, Adjusted EBITDA is not the same as net income or cash flow provided by operating activities as those terms are defined by U.S. GAAP and does not necessarily indicate whether cash flows will be sufficient to fund cash needs. Accordingly, Adjusted EBITDA should be considered in addition to, not as a substitute for, net income (loss) and other measures of financial performance reported in accordance with U.S. GAAP. 54 The following is a reconciliation of net income (loss), which is a U.S. GAAP measure of our operating results, to Adjusted EBITDA as defined, for the most recently ended four fiscal quarters, or the twelve months ended March 31, 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. (in millions, except ratios): Twelve Months Ended March 31, Three Months Ended March 31, 2026 2025 2026 2025 Net Income $ 449 $ 466 $ 181 $ 36 Income tax expense 146 151 73 29 Interest expense, net 172 156 41 39 Depreciation and amortization 402 339 103 90 Loss on extinguishment of debt 7 — 7 — Net losses (gains) on divestitures and sale of securities 3 (30) (1) — Restructuring costs (a) 125 95 5 9 Net foreign exchange losses (gains) (b) 103 (4) (34) 67 Transaction costs 3 5 — 1 Business optimization expenses (c) 77 100 13 20 Non-cash stock-based compensation expense (d) 58 61 11 14 Other non-cash charges (e) 121 31 2 7 Bona fide joint venture income (f) (26) (4) (7) (4) Pro forma impact of cost savings initiatives and specified transactions (g) 214 101 34 9 Adjusted EBITDA $ 1,854 $ 1,467 $ 428 $ 317 Senior Secured Indebtedness (f, h) $ 3,447 Leverage Ratio (i) 1.86x ______________________________________ (a) Reflects severance costs and other restructuring related expenses, including those related to the Company’s restructuring plans. (b) Reflects unrealized losses (gains) due to foreign exchange on our Euro-denominated debt, losses (gains) from foreign currency forward exchange contracts and intercompany transactions. (c) Reflects costs associated with our transformation initiatives and technology system updates, which includes costs of $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) 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. (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 March 31, 2026. (h) Reflects the balance of senior secured debt at Acquisition Corp. 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 55 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. Summary 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 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. It could also be affected by the severity and duration of geopolitical conflicts or natural or man-made disasters, including pandemics. We and our affiliates continue to evaluate opportunities to, from time to time, depending on market conditions and prices, contractual restrictions, our financial liquidity and other factors, seek to pay dividends or prepay outstanding debt or repurchase or retire Acquisition Corp.’s outstanding debt or debt securities or repurchase our outstanding equity securities in open market purchases, privately negotiated purchases or otherwise. 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 Credit Agreement or our outstanding debt or debt securities with existing cash and/or with funds provided from additional borrowings. 56