WMG - Earnings call transcript Q1 2021 | Warner Music Group Corp.

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Operator

Welcome to Warner Music Group’s First Quarter Earnings Call for the Period Ended December 31, 2020. 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’d like to turn today’s call over to your host, Mr. Kareem Chin, Head of Investor Relations.

You may begin.

Kareem Chin

everyone. afternoon, Good Music Warner first earnings quarter Welcome Group’s call. conference to fiscal on release, our this and available that note earnings afternoon website. earnings be filed Please we press snapshot XX-Q the will our Form Vice our we have your who Steve our Eric On today’s then President you we our CFO, through call, and take questions. and Cooper; CEO, and Executive results will take Levin, will

earnings this would second to Group slides I on financial comments, of like includes that slide remind this present to snapshot the Steve’s you views the We non-GAAP to performance. that Before to about posted statements results conference presentation of earnings you current website. new and reflect during our communication forward-looking and refer call plan certain future the events Music Warner the

release provided GAAP disclaim results discussed schedules earnings are of unless forward-looking statements revenue figures we these today, in and such to our made noted. as presented note statements. constant All all today posted be reconciling update our have that to any on comparisons results in and We our will website. otherwise duty please Also, currency, press

beliefs and we there expressed reasonable in projections good believe them. faith basis and for are is expectations, Our

can contained earnings release, Form other that, to those a can to will turn variety And the no beliefs they these SEC from of on I actual XX-Qs, rely concerning factors there uncertainties in our achieved. to XX-K cause over differ management’s actual Investors Steve. not results that press from subject and is our that materially statements risks, result other expectations, However, be assurance filings. projections should Information be to differ could because from Form that factors it and or with forward-looking results are expectations. materially cause and will our statements forward-looking -- in

Steve Cooper

everyone, to earnings welcome afternoon, our for joining Kareem. call. Thanks, and quarter first Good thanks us. And

and are horizon, we to and begin that are offer. the world broad the safely New the has happy that to return meantime, fortunate to music a usher and to Year growing With streaming as we XXXX will normalcy. business strong all hopeful that excited reopen on are has We in In and to we can some ever as about presence rollout remains are core vaccine our a diverse that start the new that in applications. rapidly very see

standalone QX fact, a highest revenue in history In quarter the company. our was XX-year as

we especially our in an record disruption Our given of revenue that revenue of during offset performance than grew the revenue growth pandemic. strong QX Music The proud and year-over-year in rights X% accomplished high we that services artist continued previous and Publishing’s digital expanded from the this are revenue. XXXX, achievement Music’s more in Recorded double-digit

management. contribution as in cost Adjusted revenue those such the improving XX%. to QX revenue, our growth margin highlights decline year-over-year from was year-over-year, leverage artist by revenue growth XX% this approximately our revenue driven services, lower in EBITDA over be overall Even on focus as by increasing the digital’s our X%. approximately areas, up Excluding well as would streams to with margins operating operating with

artist Our double-digit X%, revenue declines year-over-year approximately digital was more Recording revenue in physical than in and Music to growth growth up and offset returned services.

Our dynamic of and primary diverse always ever-growing goal and will flow create constant, to a deliver be music. new

of November. our Jamaica the well the of and as every very when w six the Grammy did nods. the Artists Excuse also display of artists year two in of each U.S. Album four Andress, in and one very, recognized, Year, the had Ingrid well Grammy and were categories with triple-nominee, previous Roddy with Nigeria, the in Year and and Best the and We Dua full Year, and of Dua most two Chika Song on nominations in was Roddy the Record each, of in late talent Ricch, nominated Coldplay New by in fourth U.K., U.S. Artist. year winners, on-demand big landmark Lipa XXXX me, in year a Nielsen. Germany. the audio Dua number getting from labels, spot consecutive reported groups as one were the for was in as our label with nominations announced streams taking for from the Atlantic success Our

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we As value said before, philosophy all a closely and rights. Recorded have to and one-company maximize we Warner the Chappell work of have together Music

recordings an musical million Chappell’s compositions in music us to our and digital negotiations. our ownership X sound well comprehensive gives songs are Warner any service expanded critical Our reach of over all full of fractional operator or and

and vast we opportunities As are revenue our diverse. look ahead,

consumer of These of new opportunities. We around with video continue digital at rely and ad-supported media. adoption time, and areas globe. gaming, commercial to and social music them plenty live At both streaming fitness, on the in-home robust the see in runway in subscription and has streaming we the same the forefront like growth are invent platforms accelerated pandemic helping heavily evolve

quarter. a just this examples from few are Here

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We have to events a future. excited number we of that the near upcoming announce in are

China since classic X tracks ago, monthly has outside community songwriters. years relationship ever-expanding billion now with hits artists three of over little our social attracted has and reportedly from than creator app TikTok’s Second, more and latest TikTok, media users. a this the being broad launched our to access

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developers enables innovation, Adaptr. for will accelerate first incremental Third, service and and network the to in our whole while understand allows marketplace possibilities. of cultural straight through we a and With and Adaptr reduce go be them that behavior artists revealed kind of to WMG destinations. millions a experimenting generate songwriters. their license fans, new partner designed direct-to-consumer quickly week trends. helping a is us startups we last music. of music, frontier we global infringement music differentiating that of closer our is and Fourth, better many forge with easily This operated are to its so This Adaptr commercial launch to emerging value collection brings market and owned for to us

revenue as and in social our publisher, EMP growth all well Our double-digit QX. consumer brands, content UPROXX, showed as IMGN,

drove of Artists our Services adding through remaining generated clever recently continues WEA, with The new this from Chief XX%, pressure European for she over XX% operations Black Maria of President under Marketing brings our many sales revenue monetize all its wealth oversee Label those days Advertising, by and e-tailer. a business experiences. COVID, by results. Comcast to DXC Cyber marketing up of efforts. EMP, products was to brick-and-mortar restrictions, We year-over-year. As Officer ideas range increasing quarter quarter’s Monday, Weaver our force our our of Previously, to tested in brought EMP over expertise and these been Friday and and destinations four Global contributor With ever-widening the values seized be order as average strong to help healthy first stabilizing opportunity music have COVID Network, by biggest a merchandising plan a

we As Under achieved all and breaking our adapted even we circumstances, have have the track record to company’s record COVID ways results, our financial enhance finding our results. discipline. of while difficult resourceful to result, in test become continues maintaining more

amazing and new ways generation we our continue with grow We way, artist have memorable on I inventing and some new talent, it to and And Eric. impact a to to while global culture. investment in songwriters will turn that, bold over the fantastic music from of

Eric Levin

Thank Steve, you, and afternoon, good everyone.

was navigating also of in with performance first Against record our Fiscal and pleased the comparison quarter. unaffected that the a history new only a last while financial for by company. we company we as the and period the also in have growth our still breaking was extremely the are quarter difficult COVID. we We year QX pandemic, by reporting to returned company are set challenges revenue our was standalone that high last but revenue quarterly a all-time not -- presented

robust aggressively as while our financial Our and into growth business to the we areas proved challenge opportunities business, our -- digital has continued to businesses, our growth flexible, whose have be our discipline. of were by by And leaned strong continues in well pandemic. and DXC COVID accelerated some model other of some underpinned prospects as

as will return us this things favorably position expect to We normal.

COVID X% total our the were on on and our cancellation the quarter. in Music up to Publishing quarter, basis, tour. Moving the of performance the and revenue a areas compared previous approximately to constant due as-reported and most was X% Recorded currency services Artist in Music an up to by basis postponement or affected performance

million prior a revenue, OIBDA increased transactions impact basis drove contributed adjusted contribution exclude EBITDA from those previously that with were pro our OIBDA This increase in increased In our with broader the the quarter. across a release over all reconciliations. significant prior of Music, performance, largely of streaming outpacing impact basis to those of service to revenue releases driven was and effects mix and items declined If our you improving EBITDA revenue. realize Those realize and partially and This declined and Physical well as as category. to transactions. in improving XX% through our both to quarter. emerging factors in forma tour we in settlements. expect EMP XX%, services and a by those revenue advertising increase from by these driven over COVID year margin on as revenue pro and announced restrictions the OIBDA growth margin the transition an Artist certain Adjusted higher and to on merchandising shopping over to concert the deal Recorded from streaming was X% subscription impact impact savings to to category XX% to significantly management revenue merchandising, COVID the adjusted promotion non-cash grew $X X% revenue contribution calculations includes year we margin digital. adjusted due restructuring constant an streaming compared announced previously increase XX% increased reflecting XX%. continuing the Adjusted pro or grew and EBITDA saw to certain $XXX the adjusted to the areas, that press quarters. forma revenue one-time Streaming of television revenue shift and Adjusted OIBDA quarter. $XXX XX% transactions and Adjusting double declined strong the activity lowered EBITDA impact year-over-year and -- from saw expenses increases XX% same related prior quarter. of streaming driven declined initiatives approximately initiatives, initiatives expect our cost as-reported merchandising by forma offset revenue both that while contribution, direct-to-consumer higher currency year-over-year. in Please OIBDA million in adjusted and driven quarter, EMP related X%, and the XX%. over our to approximately Digital by pro excludes a revenue, savings physical QX million tour-related as digits transformation forma Both physical to revenue the limited season and announced from the by strong closed X% EBITDA to Adjusted OIBDA from current brick-and-mortar with to far growth for XX% in film a in as addition $X by initiatives related from Europe. from to key platforms ad-supported that transmission costs XX% other adjusted previously of includes saw holiday refer X%, which that and to in streaming a and transactions. excluding million year adjusted expense one-time excludes the continued quarter. that in transformation XX% growth related respectively. stock-based the our components growing compensation the and XX%, COVID-related COVID Licensing grew offset and healthy improvement

mechanical and to flow. compared The up percentage well $XX in as annualized cash For our was million including million, an due $XXX This from due sync, total run flow growth increased year the CapEx revenue savings with the million IT XX% and a performance to $XX in overall OIBDA $XX strong performance transactions, QX $XX of the million XX%. adjusted million increased as about once to timing revenue $XX $XX The shift increased from to offset compared in In to previously OIBDA increase in over activity quarter $XX million, increased quarter million, Music year and XX%, was expected negative mix. and to our margins those driven prior-year revenue. digital to first increase rate upgrade declines due increased Adjusted revenue announced implemented. by cost mix partially is quarter. fully Publishing XX% streaming to related towards quarter, was XX% improving XX% to approximately ‘XX, with $XX savings. capital, prior decline quarter, to $XXX in services. investment fiscal Recorded almost operating by in flow a previously program prior-year by to from the to $XX Music million by to is adjusted in million Free revenue operating payments Music in OIBDA offset with decrease an the the X% margin operating this in of to investment million. to plans to revenue X points cash QX, declined digital as and driven infrastructure. from be quarter first working in $XXX million announced associated million increase decreased cash prior digital related certain Publishing finance

$XX million million taxes fiscal the to to $XXX were of our quarter. aggregate range XXXX, CapEx of in dividend the we For for Cash quarterly $X.XX of the we $XX $XX an expect in per On quarter. paid regular December million dividend Xst, share total million. for be

As of due Senior on Notes used debt $XX $XXX have in Xnd, million consideration $X.X announced to approximately Secured approximately we conjunction $XXX cash three cash balance for proceeds The fund financing X% of our million. a of XXXX. completed we cash $XXX-million this with and November a to of hand transactions On XX, tag-on of those aggregate December of net million previously billion. were

XXth, January amendment start number us negative a term a our agreement. to In on maturity November from we amendment encouraged XXXX quarter first to an are Additionally, the the gives The loan which covenants. to strong by we removes credit performance, January of X, our year. XX, extends and closing, XXXX completed

conviction today solidly you strong Although, releases business DXC growth, ‘XX. will in line with growth questions. in only open call and now ability fiscal our in achieve our challenges have at related our the the call quarter to our thank we our physical COVID for joining strong and remain, in to streaming outperformance our combined increased We for

Operator

with Morris Guggenheim. Michael first [Operator question from Instructions] Our comes

is line open. Your

Michael Morris

questions side, I versus the quarter. is maybe the streaming like am have side ad sounds revenue those the push maybe from on Thank any sources second fiscal and couple a some is how performance second during you. strong. performance of on additional detail the bit are it cited pacing partnerships detail strong specifically the those and also hoping a there of But in that me, more us for that first of subscription new And contribution Eric, in and were things the relative to on all benefiting one you COVID. couple of the you streaming you Good could little were afternoon, guys. give my relative question, the A are quarter?

concerts, virtual about your see had see expect have event a perhaps regression and starting as do time guys. think You or you is, strong and you look recovery? open base some forward hopefully we things Thanks, My do talking question you some EMP. Steve, areas spent in live to to you can a have continue those up,

Eric Levin

Okay. Great.

So let first me one. your tackle

advertising as similar of revenue. of both a line Subscription double ad-supported forms break categories and has double-digits. subscription, are, progress both emerging and can that into the and of COVID amounts great. say So ad-supported kind digits and would been a streaming been we it’s had we growing say this showing digits quarter-by-quarter digital quarter from I growing in been first dip took broad is whole the and double throughout is that Subscription initially now, then three time, in but

would be. So it streaming line really is the and really in to growth where recovered we ad-supported has its feels like expect it with

emerge have with, fitness, there’s ad-supported. to than forward. our add array as going accelerated schedule that’s these deals to forms a streaming, continue have in and continue continue won’t all continue on growing no really strong categories grow a those see of high three plus the platforms because forward, both gaming because the confidence also that have coming we all past category online also we partners significantly release On these why broader there. degree so as of trends performance We streaming both live see are going at and faster in across an categories rate do rate. we we continue And of to and reason a strong that the new they emerging But of that we subscription at and and they to social

we COVID, see gaming, growth going think and consumer platforms them continue Look were the especially the we continued even and as we coming you of explosion expect COVID. this area innovation forward a we even forward, real COVID-affected these I you category, our emerging. going there We we far out Michael, around online As that as growth is behavior and see would growth think -- of after see to strong forward come era new metaverses, to we come areas both to in, referring the social, see as during from going that a thereafter.

Michael Morris

on physical that to that. you second well. part, in clarify for that on direct-to-consumer Thank just particular And as EMP,

strong, a perhaps base or perhaps You of growing feel sort and will that that’s there there even that? post bit merchandising the be of, reopening live you this like anything is trade-off is think event or a a do little with

Eric Levin

not continued that, a when base their it’s to customers, think their true acquired driven that both across we ability has that consumers a have management their broadened in the of belief sharpen to business innovated has caused and ago benefit I a have Nothing EMP and question. also but skills of customer expanding have business us They real the EMP. great That’s and been EMP has brick-and-mortar that they increased you. their has have product also in closure seen but reaching is passive. more the marketing to It’s but in platforms, their grow running Europe. tactics to ecommerce thank certainly -- their their EMP we been anything, confidence business long-term. had team we business three years line, about

we that norm and growth era both solid be XX% be platform COVID-affected the as during in see the not growth the in thereafter. may although, future, towards we managing will growth that and something So,

Michael Morris

Okay. Thank you.

Eric Levin

you. Thank

Operator

comes next Our Morgan. Quadrani Alexia JP from question with

open. is line Your

Alexia Quadrani

your my impact you your impact sort And talk was you and the this of I on follow-up it believe acquisitions follow-up about did that impact question. is your last your very then call, on quarter Thank then a of sort you results highlighted to from Can what commentary to $XXX you Michael’s how do million, the question much. be going forward? answer expect and and

a he think if fitness that on growth we I gaming a do in for so is fitness these engagement, a pullback bit pullback penetration regardless to and and the I the in when there you kind do maybe in that guess economies platform? in asked a can do is follow-up emerging see in you of of about stuff because you terms different how your little see existing in level early and the is, reopen. still more gaming population, see kind days of and platforms broader within pullback of my engagement we much will on so platforms, robust grow the sense the have growth

Eric Levin

kind are rate those numbers expectations, So, an incremental on with M&A million basis million. the we line on in OIBDA annualized you our performed a kind Note, In for consistent and see about in look basis it impact -- as million had that run $XX M&A $XXX EBITDA. with that’s numbers how it that an the one, and and a with talking OIBDA these of QX, expectations. about annualized these we are we line impact acquired $X million at right and of that to businesses $X on can the adjusted was incremental

streaming integrated is of many it say thereafter. of -- would different be forms, would being emerging we COVID during both so and existing what we the line various music see integrated and early expect we social where for as that really be ubiquity finding across far live days and both becoming I that we the managing growth fully see music to and just see platforms, we kind new, across gaming, very more more and places As as metaverses, is,

Alexia Quadrani

Thank you.

Eric Levin

Alexia. Thanks,

Operator

next question comes from Ben with Morgan Stanley. Our Swinburne

is line open. Your

Ben Swinburne

competition? -- I artists just hear renew artists I these you majors recent and to I most specifics. platforms are this in your digital second want you by were relatively TikTok then to signed that January ahead to XX do think, in I find you one a are and first accomplish? kind broke one revenues on guys and by to Good and reported these evolve can’t of TikTok over a and how business than the and Thanks. was that share artists evolve XX specific over time? you streaming, relatively want rev know emerging short strategy year. signed, am time, How Steve afternoon. press so and able TikTok, hear agreements that these them, eyes the other eventually is do look there like models are predictable your are last the you talk on think hopefully, behind wondering think, love April be I just in of you these different? guys or to I’d to what from they it’s reported But I ensuring they of a period Do And the deal mean comment, your trying things. what thoughts you sign you agreements them were maximize as about and to going feel the trying for you that in also and your can on quite those

Steve Cooper

Ben. Thanks,

So the we see let of kind how the world. me first shape of with start

falls Our four would call, revenue into, what buckets. I

touring going put am to I physical aside and is, the for First related really about moment and talk digital. revenue

four got runway has more of streaming. well the see, in the with a emerging mature the as in And Eric markets. lot services buckets, said, So, as markets, both traditional we as we the have established

Instagram, they more users but not they because more because are and, are platforms are The are second and using Facebook, their social really music, bucket it, the pushing Twitter, pulling it.

what average And typically think substantial IPO, mentioned for futures their continue reshape our we to that very during deals we shape so, are relative from give far the based to into so growth platforms, social to with exchange they and/or startups mature blossom and us. in need of to the I upon believe has they to we approach sources very And people support breaks us we as respect for curve revenue. worked our how and well

models. what The I interactive third bucket would are, these business call,

or we close the yet, a handle of got where those to those part have With Roblox, stream certain transaction a fitness The fourth integral respects interesting being you opportunities ourselves help Roblox, day-in part universes you ourselves we Fortnite, you their to have got them but universes. and in work have we of exactly plan or our not an got models see metaverses, models. but establish both of future other as partner can’t And and to basis, new we as some the business all able, can is inside TikTok, of and frankly models. relationship. with You sharing where literally very those model and your opportunities to that. continuing specifically, intent entertainment our a within and has that for case, know Warner foreseeable in day-out. are strong optimize build a of very bucket in how have And particular, create constant new to own are whether risk your you is for we a emerging worlds interactive I own music business, Group, work them presence our create are world to continue see do that invest we where do to are the digital their is Music these them, metaverse. tell going on And own we in world, it to to revenue be a our on able we our only and

that one TikTok recently IMGN, collective good the on influencers we and of One with people music. our top-five their of very was creators as our named known as relationships utilize have recent and acquisitions, with

that used top-XX don’t into Dreams, fact, song may the know, back on on and the TikTok and came In or two services. month radio XX-year-old have and seen, a streaming you was a top-XX ago, it on I it’s

globe utilize local through and we creators service our developers only we So wish music our strong affiliates relationship on the services the labels that utilize affiliates, ensure those have our through our and that their to we to work wish and but around the with a to itself, not talent.

your question. So, hopefully, answers that

Ben Swinburne

of I you That’s Yeah. was. the Thank Thanks. how it Even TikTok. heard on Dreams for thing big color. the

Steve Cooper

Yeah. Yeah.

Operator

Thank you.

comes Our with next Terry Sachs. question Heath from Goldman

open. is line Your

Heath Terry

I that -- you positioning of thinking position are return events as live playing a light you the is How like? I am much. for Warner as opportunity Is the you being out this as to am planning second come end now as for are your you look best sort there how of at Steve, the we done kind kind do of we wondering the Thank of faster music. here. work XXXX Warner’s done kind hopefully live could tunnel of closer of Great. preparing be get can possible, very of for are artists to start? in see wondering how now, half what around the about

Steve Cooper

several see Well, I things. actually

I clarification First that half of hope I all, the that we hope can distributed. broadly being new and that strains the calendar to its think hope the, relative rates that get semblance open the begin be businesses of get back and we to I path of normalcy. is second to some to can is going a what I longer vaccine XXXX, efficacy on

emerging live are couple we successfully what we our is the that advantage worlds. we a streaming in digital are our and and and So operating things. of are in Number doing promote the artists in continue live with to are the reality doing virtual of to streaming any number that world one, established partners taking streaming interim

peoples relies grow So on way activities, emerging live the and later, talent, plans our to is the that’s has while be return don’t in right jam. this so open, live worlds, these that obviously I the looking in are interactive frankly, we changing on for a continuing believe that foundation what traffic to that do ways sound working regular, we get and looking this by as establishing that basis, to a promotional bases for well our live do lost schedule to forward know emerging our operators venues we of touring. lane for gates established in establishing on the to we What so label a we But and to also artists. to is this opening But roll regular are as streaming the foundations on they we know, are at in fan work that continue have touched We habits Heath. and speak. our also to and think live because Eric happen in our you and smaller know to on are to, crafted be that as opposed carefully the way that we a of sooner artists we are when going capitalize much of hopeful variety

of are aware it. we So

frankly, the capitalize horrendous broadly a what’s we looking on at -- a speaking, to plans. continue for in We situation. been our other planet, to are roll-forward But which, ways

Heath Terry

appreciate Great. I you, Thanks. that. Thank Steve.

Operator

you. Thank

Bazinet question comes with Citi. Our next Jason from

Your open. line is

Jason Bazinet

starting to question IMGN am and a about maybe I think, a you show in, This a asset you side way Hi. it a that that is seeing almost and we flow? your have by anyway. sort about thought I a But about thinking When strategy your traditional not I going in are are guys bit cash it this early as media to stake with sort talked think of but I bought anything of in a to think right of is integrate EMP, like you Roblox. of using you a dumb the ask to the stake new buying vertically that. am excess outlines about or how way, streamer

Steve Cooper

look should right, in think I am… got Well, hope Jason. I ways, at you it I couple name I a the it. that

Jason Bazinet

Yeah.

Steve Cooper

I am so an sometimes a it’s doing this scratchy. on iPhone, little

strategies you We ways. in could a our at I strategies, are couple doing, growth guess, look our

to that with core and ensure are right thoughtfully Publishing, the continue we Music to our is, first going businesses, financial those we discipline build The Recorded Music businesses. that

the related of our budgets we over and A&R continuing and marketing budgets to promotion. So intend increase time on

acquisitions, important offices. Music goals last going footprint are catalog to nine Music on and that new ever continue But the of on going global is years on through opening we in enhancing to of be our or or primarily Recorded is plan years and the side, also one us not those of than streaming and that’s core We primarily over the the concerns eight side, businesses Anglo-centric shown our it been Publishing through more the acquisition to has businesses what pursue that.

Jason Bazinet

Yeah.

Steve Cooper

to one. revenue have XX entertainment the years do only moves two, world where with that’s of of that musical in or diversification, made see number not next some we have five the years, So the Jason. we Number

Jason Bazinet

Yeah.

Steve Cooper

everything people the of reason a worlds. are see and far music God we else to intersection come of want in to gaming, compelling make knows, of to these And them where metaverses, social, these where of come to reasons more we alternative for number any

Jason Bazinet

Yeah.

Steve Cooper

in of on we a and figuratively that almost that we and much is future the the where future believe we intend So around is investing see corner. literally

So your accurate. is observation

Jason Bazinet

Okay. you Thank very much.

Operator

Our from Suisse. Brian next Credit Russo comes question with

line Your is open.

Brian Russo

the had encourage impact world of When live new you like you. and to piece and a Hi. shutdown This streaming hopefully, It impacted. year, a do coming lot Thanks events, the all, with at you returns couple subscription either new might the see notion calendar have look the Eric. sort think subscribe? a ‘XX. should for taking consumers more maybe Thank concerts we of the later earlier in this for the to to you Steve that When subscription streaming concerts music subscription to or benefit follow-up the expect the didn’t questions question. really the is on negatively was look at

Eric Levin

to Well, help that. I am happy answer

for continue What streaming, relatively There hope growth. room markets gain is to with the now. there’s a the opportunities In growth. it could we we to post-COVID potentially. think opportunity think early that are there’s some for experimentation that still as starting subscriber and strong for see there’s price we and ample with and and are the DSP we solidly traction. increases we to emerging developed innings for markets. We subscription markets, are to break think return We think is grow So we that environment subscriber developed see growing into

increased plan, resolution and we selected can tier family Spotify, or of other pricing. hope has that whether price it’s as looking which at a Amazon markets So increased support platforms the high in

in that So brands hasn’t up. XX on ARPU which positive be a their And we developed impact has go we years emerging think markets markets early that to opportunity the very, increased be really has accelerate to to the their think past really potential as It think that just the they growth ARPU. and days there starting is really will potential very are has the to really find stride. lower the we

in past revenue those and their has an really be were subscription into incremental growth and streaming as to rates. high overall However, markets ad find markets, opportunity emerging very streaming way relatively the contributors light at

to forward strongly do your question, that we answers think grow Hopefully, going factors. opportunity and that those streaming combination subscription streaming ad-supported an So using continue have Brian. really to of

Brian Russo

Well, follow-up. just Eric, a

Eric Levin

Yeah.

Brian Russo

release about? of I in back of a half your you I this have kind are about, releases of sort about think a on in you and overall was streaming push a the Is the opportunities artists some more needle support of the something will number schedule, talked prior what just like subscription if subscribers all of based were the you asking that’s year call, or and talking artists ARPU more of sort for crossed. is of by this weighted moves sort that and other fingers touring, it the lot new that of for terms lots releasing

Eric Levin

things. huge market combination mean, of ARPU a also It’s Obviously, of but schedule strong certainly, new continuing audiences part market equation, be and a that our make is through and a share to can formula I to having releases discovering subscribers are release part No. share and our combination, is new sure mine catalog driven a Brian. the the continuing of are catalog. and

keep to continuing are that We robust.

So, would to we streaming opportunities. work expect year, towards we the drives out, we that schedule, obviously releases and continue that a as to release half second the and which yes, come expect strong have hope hopefully, to continue

striving is that for. yeah, certainly we are something think do So, we

Brian Russo

Thank you. Terrific.

Eric Levin

Thanks, Brian.

Operator

next Our with Greenfield LightShed. comes Rich question from

is open. line Your

Rich Greenfield

they streaming haven’t Hi. and of so harder lot. in and does are where is that you talking copyright into metaverse licensing guess how been have gotten Twitch two gaming this, number industry, just podcasters you start larger the -- a of of matter, I done? second, ad-supported it’s integrate they goal to terms the the Music, it, more sure has sort gotten as up are And And into streaming then major podcasting. of music certainly focused get seeing all platforms know that subscription I Thanks think but I much and lot about seen more Where something all, even total for is on topic, counted platforms the have a broader at a been we bigger, to get takedowns respected. it’s you an and have where for a to opportunity from the that on you Like spent? team, but guess, Steve multi-layered eat audio risk -- sort do come is question equation, played guess, as it. Warner fall I making content of questions. premium I One, taking I a XXXX part is that that as that Is lot into lies, you the gaming. music two? into start have look music podcasts. time a the times content podcast -- overall how podcasts more it about extensively has Like,

Steve Cooper

are utilization about there Twitch the believe this world beat a in music you the is the is industry gaming confident and of I first. forth. Twitch with has the deal me am to because back let provides in been gaming. It speak. XXXX. And does conversations in Well, relatively deep I with aggravated resolved in show what game of the right, licensing, so will kind it element to that critical be is

dozens Spotify. resolved and listen confident aired So They and streaming torn operating services. with listen They podcasting, will dozens to come are services to everybody’s I at and to music to are But a aired of are it believe level dozens on, satisfaction. aired that upon Apple. got am We get on I a that the that people about radio. podcasting. deal think, upon to are do on primarily They get I podcasts will they number aired On resolved get of podcasts. I on the we

will seen it upon that believe times, there in times, upon What I that at with niches. times, people times, know, to and also XX the dozens favorite their of XX for music come music. podcast podcasts people least listen tracks the and I have listen dozens same -- XX do which followings of So be to have don’t X dozens beneficial will both XX smaller And are is times, I directions. those will who they podcasts

niches, to So use ultimately, music narrow on as see streaming, least and a content gateway these while has that, in and general ongoing, be smaller crowds my services people the we podcasting, to levels serviced gateway, is to more ongoing at Rich. in to of just are again these providing listening view, a them way content music more with and I podcasts more a in as particularly as just to doing

Rich Greenfield

to help that way audiences ultimately listening be So a actually can podcasting than point? to music just just traditionally music a think you as introduce to starting different

Steve Cooper

Absolutely. will to of all source curated TV and the be that American people of it’s discovery broad -- lead the contests, will these or world, whether them about discovered be music Look, what because similar, music services. to the of Glee, on they that they that’s listen and introduce podcast new Yeah. The hear, to now you they to gets the a these all some like to podcasts Yeah. it extent the or it’s Idol if that to music for think regular broadcast programs Voice used

So yeah, I is, that benefit will podcasting think the answer music.

Rich Greenfield

the thoughtful for Thanks answers. it. appreciate I really

Operator

Thank you.

Ehrlich question last from Bank Reif America. Our comes Jessica of with

line open. is Your

Jessica Reif Ehrlich

seen and as where of streaming, going which you a then it’s Spotify -- also launched to On you price past? follow incentivize forward going Russia South markets And new touched a a Two, of mentioned your see established is way months artists Africa, Spotify you be release I in terms was biggest their well kind any way topics, will talk within release, just is guys for and there’s imagine offer. there one think do of anything going is as if price well mean a call in the this terms changes incentive to into now. -- markets, market other terms launches on, testing you. DSPs upcoming monetized color meaningful increases mean, Korea, talent. is you there a Is growth for the just visibility in is can but Thank successful, it’s And of I the times, you. of you in been in given on on of DSPs that guess, switching dynamics and in Well, you few you you the gears, Thanks. Have to think then changes for seven has thank new of there in to the I earlier, give several one press new of artists. for Amazon different streaming, I you will and coming? other can us streaming in -- is schedule what and on or kind you

Steve Cooper

of make Well, to a couple want comments, Eric, let me chime you in. and may

and new that new broadly our Jessica, the res. the the there’s high enormous still functionality, you of and between streaming of monetization they monetization monetization, think So is all just their Amazon by that gap example, the of view eyeballs an of ears. we And way cited about ultimately, streamers, with as add features,

pricing. services right functionality month, to broaden to this when with the encourage We and a think are dollars experimenting few a day raise grow experimenting. we increases. price they for the prices our tens features that that Spotify do them increase about millions and experiment of get of is over tracks prices. people expectations relative that Ultimately, is of all will services for You We the every Spotify time we will and to that hope begin think

there’s when runway as that with but not lot And the think markets. a they music. free people in in launch in and markets we said, of more still, only more new more exposes they mature offerings, begin emerging to markets, have we As even it

even the before advent is same market. in others partnered Well, we a and have South mentioned of You with, a in there Korea. Russia. growing nicely that are Russia Russia, is streamers The and number of Spotify, true

Africori, Africa. You distributors is we of partnered one in the mentioned have largest music which Africa, and where with streamers

being the these curated exposed music. at are artists, world’s growing. by global to both People are to you to are greatest look markets, overly as artists, of when So People exposed Japan being the as or of meaningful well U.S. while or moment way some don’t the they them local economics U.K., the artists. compare

And miles only more. while of globe with so it’s of circumference our circumference lot the view respect a the is is XX,XXX to the that music,

markets. question? streaming third What in was your that So new was

Jessica Reif Ehrlich

I more schedule. Sorry, important Is as your -- on Well, for price if the artists? you there us the rest will seen or talent more your as visibility you And want my up such artists so to question mute. be And established you said, my you and in goes said, behavior interesting. color all, markets? consumer could to on drive it’s on Spotify, time then you the true of How the as question the talked any mean, any Anglo new just the was for you addition of global international in that of the is What something local very of can have second is and that I alluded you or artists just market about the and because developing press then about follow give on, Anglo. in on guys have first bringing local to I in Steve, artists. that call part change year increases? was, well you Well, about release, artist, those release last less

Steve Cooper

that. And so behavior. talk about any then, can I change Well, in will do Eric, right, all

Chinese directions. we this we are not our his have both the of We So example, in more but we very and in we artists and see more we And wherever and we also anywhere the potential and of in from seeing most that artists we and every can albums for that we we way and west day our is come latest crossover By Lin, our local. things the resonate China, in I global from before, the examples one Recorded where we do because look only versa. that. are we artists, We observed. of Music JJ global think do it can can way vice one we of cross featured prominent opportunities a whenever business run have and mentioned one of hits everywhere are

a will the don’t have a homegrown You in Burna with global artist kid, Grammy to nominated with successfully we first put for because see albums speak. and to four to He’s nominations, who I or such think Boy, three Nigerian out, talented he’s so him, him the I Grammy Atlantic. maybe now know, be has worked take

do on see do we actively So that, work we that. and

the her typically a up don’t we have give schedule Mexico, Eric and respect characterized from Brazil all look world. the over South say releases, when strong forward schedule, blown artists, was our -- that to he our and Anitta taken We of will Iberian other from as just I emerging on. Central Peninsula and our superstars it and very release we America, both spot With America schedule that. a of parts of on

you to want changes… Eric, comment on So,

Eric Levin

Yeah.

Steve Cooper

relative or behavioral … toward changes?

Eric Levin

responded then I are it’s think is, plan to One say, how getting I we yeah, progression this increases. well, consumers how continue Yeah. There experimentation would determine family would we is increases. be on rate that data cautious that to that things data if, when be can respond of would progression Spotify’s some customers and to natural how a say. Well, rate us -- and characterizing using and in there their a

in continued very of plan to France, We been think and growing some Canada additional there’s both increases Spotify that plan prices has think of reports family markets. family and that’s encouraging momentum I raised additional a markets. today the indicative

incentivizing. we So both of be is you increases continue are are also we purely to sides up -- that think our is asked think momentum pick supportive Look, we increases, they deals on would are price starting we that to and there to accretive. incentivize rate how

just could as larger think are control when are we increase see be But increases and think opportunities, are and we some directionally. one as we are movement influential, that in positive what feedback that we And the conversations what obviously, seeing their be to encourage encouraging it And don’t the on do others what certainly of of having are talking we of movement see having positive vector certainly early DSPs signs and in constant DSPs some not happening. are we they price would seeing direction. discussions We with we you. and Thank negotiations DSPs and across rate to that have we we follow start suit. that will about

Jessica Reif Ehrlich

Thank both. Great. you

Eric Levin

Thanks, Jessica.

Operator

closing over Cooper like remarks. turn the call you. to I’d to for Thank Steve now back

Steve Cooper

us for stay you the time sane. I and again thank to taking safe today want I everybody all just to hope Well, stay join and

and So thanks to talk again will in months. few now. we you Bye a

Operator

this call. concludes Ladies gentlemen, you for today’s participating. Thank and conference

may You now disconnect.

Warner Music (WMG) 2 Feb 212021 Q1 Earnings call transcript