Warner Music Group Corp.

Welcome to Warner Music Group's first quarter earnings call for the period ended December 31, 2025. At the request of Warner Music Group, today's call is being recorded for replay purposes, and if you object, you may disconnect at any time. Now, I would like to turn today's call over to your host, Mr. Kareem Chin, Head of Investor Relations. You may begin.

Good afternoon, and welcome to Warner Music Group's fiscal first quarter earnings call. Please note that our earnings press release and snapshot are available on our website and we plan to file our Form 10-Q on February 9th. On today's call, we have our CEO, Robert Kinsel, and our CFO, Armen Zurza, who will take you through our results and then answer your questions. Before our prepared remarks, I would like to remind you that this communication involves forward-looking statements that reflect the current views of Warner Music Group about future events and financial performance. We plan to present certain non-GAAP results, including metrics that are adjusted for notable items during this conference call and in our earnings materials, and have provided schedules reconciling these results to our GAAP results in our earnings press release. All of these materials are posted on our website. Also, please note that all revenue figures and comparisons discussed today will be presented in constant currency unless otherwise noted. All forward-looking statements are made as of today, and we disclaim any duty to update such statements. Our expectations, beliefs, and projections are expressed in good faith, and we believe that there is a reasonable basis for them. However, there can be no assurance that management's expectations, beliefs, and projections will result or be achieved. Investors should not rely on forward-looking statements as they are subject to a variety of risks, uncertainties, and other factors that can cause actual results that materially differ from our expectations. information concerning these risk factors is contained in our filings with the SEC. And with that, I'll turn it over to Robert.

Thanks, Karim. And hello, everyone. Greetings from Los Angeles, where we celebrated the successes of our artists and songwriters at the Grammys this past weekend. In fact, you just heard songs from our winners, Kehlani, FKA Twigs, Turnstile, as well as Bruno Mars, who gave two incredible performances at the show. our momentum continues as we delivered a third consecutive quarter of strong profitable growth total revenue increased seven percent led by nine percent growth in recorded music subscription streaming on an adjusted basis total adjusted oibda increased 22 percent and margin increased 310 basis points it's clear that our strategy is working as we continue to deliver on the three key components of our plan growing our share, growing the value of music, and driving efficiency. I'll talk about our progress on each front, and then I'll explain how we plan to leverage AI to further accelerate progress towards each of these three goals. Our strong Q1 results reflect the steady market share improvements we've been delivering. We saw approximately one percentage point of US streaming market share growth over the prior quarter, with strength across new releases and catalog and our market share on spotify's top 200 chart is up three percentage points fiscal year to date we started the year with a bang as we released zach bryan's new album with heaven on top sending it to number one on billboard 200. meanwhile just after his collaboration with rosé on apt finished at number one on the billboard year-end global chart Bruno Mars releases new single, I Just Might. It quickly jumped to number one on the Billboard Hot 100 and on both the Spotify US and global charts. Bruno's long awaited first new solo album in a decade, The Romantic, drops on February 27th. Both Zach and Bruno are signed to us for recorded music and music publishing, which is a true testament to our one Warner approach. Outside the US, our focused approach is also paying off, with talent resonating across markets, languages, and cultures. We scored number ones in France, Italy, Spain, the Netherlands, Finland, Korea, and China, and also on the Billboard Latin Airplay chart. Turning to our global catalog division, we've taken a new strategic approach that's also driving our share, including an always-on marketing philosophy that ensures we keep artists, brands alive and fresh with new generations across all forms of media. And we continue to find powerful sync placements to fuel consumption of our catalog and introduce our iconic catalog to new fans. An example is this season's Stranger Things on Netflix, where syncs resulted in major streaming upticks and chart movement for classic songs from legends like Prince, David Bowie, and Fleetwood Mac. Momentum from a placement in the show's finale drove a more than 600% year-over-year increase in weekly streams following the premiere of the finale on Prince's 1984 hit Purple Rain, which led to it reentering the Billboard Hot 100 for the first time in over a decade. importantly we've seen baseline weekly streams of purple rain settle to a new baseline that's six times higher than before the sync and for david bowie's anthemic heroes we saw more than 300 year-over-year increase in weekly streams and a new baseline that's two and a half times higher than before the sync amazing results as you can see in publishing we focused on accelerating our proven anr strategy by building and acquiring high margin ip executing admin and sub-publishing deals and growing revenue through ai partnerships warner chapel songwriters contributed to half of the top 10 most streamed songs of 2025 in the us and a huge congrats to amy allen who won songwriter of the year at the grammys for the second year in a row Turning to growing the value of music, we're now seeing the impact of the deals we've reshaped with the DSPs last year. These agreements are finally shifting the industry toward price-driven growth that better reflects the ever-increasing value of music to users and providing us with greater economic certainty. I'm also pleased to announce we've renewed our deal with TikTok, resulting in an improved deal economics. Moving to our third priority of improving efficiency. Through our investments in technology over the past few years, such as overhauling our supply chain, building new tools for artists, songwriters, and employees, and rolling out our financial transformation program, combined with our reorganization, we have impressively been able to accelerate growth while cutting costs. This strategic overhaul of our foundational technology infrastructure has not only enabled us to increase efficiency, but has positioned us favorably to leverage AI across our three strategic priorities, growing share, growing the value of music, and efficiency. That, combined with our management team's deep tech and transformation experience, uniquely positions us to capitalize on this tremendous opportunity. Starting with growing share, we're quickly deploying AI to accelerate new artist discovery and enhance and automate our marketing. This enables us to scale our marketing efforts beyond what's humanly possible, a transformational step for a large rights holder like us. We have an attractive opportunity to better monetize one of our most cherished assets, our extensive music catalog of over a million recordings that includes some of the most iconic songs ever recorded. With the use of AI, we can quickly and inexpensively generate assets like motion art and music videos and others that stimulate greater exposure and engagement with our catalog at scale. At the same time, we're developing tools to amplify the creativity of our artists, and we've been hosting workshops and songwriting camps to help our creators leverage the latest technologies to hone their work, cut through the noise and build fandom in today's fast moving world. We also see a clear and tangible opportunity to leverage AI against our second priority, which is to increase the value of music by leaning into partnerships with new entrants such as Suno and Urio, as well as our digital service providers that provides fans with the opportunity for deeper engagement at higher price tiers. And we're already in discussions with some of them. By taking an early and aggressive approach to embracing new technologies, we are authoring ethical guidelines that will enable us to protect and super serve artists and songwriters while creating incremental opportunities for the entire ecosystem. To reiterate on my blog post from November, WMG is harnessing AI as fuel for music industry growth, guided by several non-negotiable principles. One, our partners must commit to license models. Two, the economic terms must properly reflect the value of music. And three, artists and songwriters must have a choice to opt in to any use of their name, image, likeness, and voice in new AI-generated recordings. The latest example of these principles in action is our recently signed deal with Suno, the leader in AI music. And when it comes to our third pillar, efficiency, As I mentioned earlier, over the last three years, we laid the infrastructure foundation for us to effectively deploy AI across many different departments across the company. This includes departments such as legal, finance, and HR to further increase our efficiency and effectiveness. AI is leading to an explosion in creative and commercial possibilities that will create even greater demand for original talent. Shifts in culture and tastes have and will always be defined by real artistry, identity and vision that define the strongest creative brands. In adhering to our principles, we are protecting and supporting our artists and songwriters original creativity, increasing fan engagement and unlocking even greater value for the entire industry. We are well positioned to capitalize on a healthy and growing industry. Momentum is strong and we're seeing creative success that is translating to steady market share improvement, progress in economic terms with major DSPs, and deals with existing and new innovative platforms that will leverage the use of AI to drive a step change in the value creation for the industry. And finally, we have a steady stream of releases from new and established stars dropping every week for the rest of Q2. Be sure to look out for new music from Bruno Mars, Charlie XCX, Kehlani, Hilary Duff, Sombor, Alex Warren, Fred again, Charlie Puth, Tiesto, and many more. And now I'll pass it over to Armen.