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Includes depreciation expense of $(31), $(28), for the three months ended March 31, 2026 and March 31, 2025, respectively, and $(62) and $(57) for the six months ended March 31, 2026 and March 31, 2025, respectively.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2026


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-32502


Warner Music Group Corp. (Exact name of registrant as specified in its charter)


Delaware (State or other jurisdiction of incorporation or organization)		13-4271875 (I.R.S. Employer Identification No.)
	1633 Broadway New York, NY 10019 (Address of principal executive offices) (212) 275-2000 (Registrant’s telephone number, including area code)

___________________________________________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A Common Stock, $0.001 par value per share

WMG

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes ☐ No ☒

As of May 4, 2026, there were 146,235,215 shares of Class A Common Stock and 375,380,313 shares of Class B Common Stock of the registrant outstanding.

WARNER MUSIC GROUP CORP.

QUARTERLY REPORT ON FORM 10-Q

FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2026

TABLE OF CONTENTS


		Page Number
Part I.	Financial Information
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets as of March 31, 202 6 and September 30, 2025	1
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended March 31, 2026 and March 31, 2025	2
	Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended March 31, 2026 and March 31, 2025	3
	Condensed Consolidated Statements of Cash Flows for the Three and Six Months Ended March 31, 2026 and March 31, 2025	4
	Condensed Consolidated Statements of Equity for the Three and Six Months Ended March 31, 2026 and March 31, 2025	5
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	57
Item 4.	Controls and Procedures	58
Part II.	Other Information
Item 1.	Legal Proceedings	60
Item 1A.	Risk Factors	60
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	60
Item 3.	Defaults Upon Senior Securities	60
Item 4.	Mine Safety Disclosures	60
Item 5.	Other Information	61
Item 6.	Exhibits	62
Signatures		63

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Warner Music Group Corp.

Condensed Consolidated Balance Sheets

(In millions, except share amounts which are reflected in thousands)

(Unaudited)


	March 31, 2026		September 30, 2025
Assets
Current assets:
Cash and equivalents	$	741	$	532
Accounts receivable, net of allowances of $28 million and $27 million	1,505		1,340
Inventories	65		62
Royalty advances expected to be recouped within one year	649		581
Assets held for sale	68		89
Prepaid and other current assets	192		166
Total current assets	3,220		2,770
Royalty advances expected to be recouped after one year	1,082		1,079
Property, plant and equipment, net of accumulated depreciation of $749 million and $701 million	414		441
Operating lease right-of-use assets, net	168		189
Goodwill	2,054		2,061
Intangible assets subject to amortization, net	3,101		2,725
Intangible assets not subject to amortization	153		154
Deferred tax assets, net	90		111
Other assets	330		299
Total assets	$	10,612	$	9,829
Liabilities, Redeemable Noncontrolling Interest and Equity
Current liabilities:
Accounts payable	$	452	$	257
Accrued royalties	2,834		2,740
Accrued liabilities	468		666
Accrued interest	27		31
Operating lease liabilities, current	48		43
Deferred revenue	451		286
Liabilities held for sale	38		49
Other current liabilities	103		129
Total current liabilities	4,421		4,201
Acquisition Corp. long-term debt	4,046		4,063
Other long-term debt	673		302
Operating lease liabilities, noncurrent	174		200
Deferred tax liabilities, net	180		164
Other noncurrent liabilities	146		142
Total liabilities	$	9,640	$	9,072
Redeemable noncontrolling interest	133		—
Equity:
Class A common stock, $0.001 par value; 1,000,000 shares authorized, 146,235 and 146,906 shares issued and outstanding as of March 31, 2026 and September 30, 2025, respectively	$	—	$	—
Class B common stock, $0.001 par value; 1,000,000 shares authorized, 375,380 issued and outstanding as of March 31, 2026 and September 30, 2025, respectively	1		1
Additional paid-in capital	2,134		2,166
Accumulated deficit	(1,172)		(1,331)
Accumulated other comprehensive loss, net	(225)		(189)
Total Warner Music Group Corp. equity	738		647
Noncontrolling interest	101		110
Total equity	839		757
Total liabilities, redeemable noncontrolling interest and equity	$	10,612	$	9,829

See accompanying notes

Warner Music Group Corp.

Condensed Consolidated Statements of Operations

(In millions, except share amounts which are reflected in thousands, and per share data)

(Unaudited)


	Three Months Ended March 31,				Six Months Ended March 31,
	2026		2025		2026		2025
Revenue	$	1,732	$	1,484	$	3,572	$	3,150
Costs and expenses:
Cost of revenue	(930)		(791)		(1,917)		(1,685)
Selling, general and administrative expenses (a)	(460)		(450)		(918)		(924)
Restructuring and impairments	(6)		(13)		(40)		(40)
Amortization expense	(72)		(62)		(140)		(119)
Total costs and expenses	(1,468)		(1,316)		(3,015)		(2,768)
Net loss on divestitures	—		—		(5)		—
Operating income	264		168		552		382
Loss on extinguishment of debt	(7)		—		(7)		—
Interest expense, net	(41)		(39)		(86)		(76)
Other income (expense)	38		(64)		41		89
Income before income taxes	254		65		500		395
Income tax expense	(73)		(29)		(144)		(118)
Net income	181		36		356		277
Less: (Income) loss attributable to noncontrolling interest	2		—		3		(5)
Net income attributable to Warner Music Group Corp.	$	183	$	36	$	359	$	272

Net income per share attributable to common stockholders:
Class A – Basic	$	0.35	$	0.07	$	0.68	$	0.52
Class A – Diluted	$	0.34	$	0.07	$	0.67	$	0.52
Class B – Basic	$	0.35	$	0.07	$	0.68	$	0.52
Class B – Diluted	$	0.34	$	0.07	$	0.67	$	0.52
Weighted average common shares:
Class A – Basic	146,573		144,938		146,664		143,995
Class A – Diluted	149,323		144,938		149,414		143,995
Class B – Basic and Diluted	375,380		375,380		375,380		375,380

(a) Includes depreciation expense:	$	(31)	$	(28)	$	(62)	$	(57)

See accompanying notes

Warner Music Group Corp.

Condensed Consolidated Statements of Comprehensive Income

(In millions)

(Unaudited)


	Three Months Ended March 31,				Six Months Ended March 31,
	2026		2025		2026		2025
Net income	$	181	$	36	$	356	$	277
Other comprehensive (loss) income, net of tax:
Foreign currency adjustment	(45)		84		(36)		(45)


Other comprehensive (loss) income, net of tax	(45)		84		(36)		(45)
Total comprehensive income	136		120		320		232
Less: (Income) loss attributable to noncontrolling interest	2		—		3		(5)
Comprehensive income attributable to Warner Music Group Corp.	$	138	$	120	$	323	$	227

See accompanying notes

Warner Music Group Corp.

Condensed Consolidated Statements of Cash Flows

(In millions)

(Unaudited)


	Six Months Ended March 31,
	2026		2025
Cash flows from operating activities
Net income	$	356	$	277
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	202		176
Unrealized losses and remeasurement of foreign-denominated loans and foreign currency forward exchange contracts	(41)		(40)
Deferred income taxes	39		24
Loss on extinguishment of debt	7		—
Net gain on investments	1		(27)
Net loss on divestitures	5		—
Non-cash interest expense	4		3
Non-cash stock-based compensation expense	31		27
Non-cash impairments	11		32
Remeasurement of share-settled liability	4		—
Changes in operating assets and liabilities:
Accounts receivable, net	(175)		34
Inventories	5		9
Royalty advances	(72)		(127)
Other noncurrent assets	8		2
Accounts payable and accrued liabilities	(35)		(119)
Royalty payables	112		83
Accrued interest	(4)		13
Operating lease liabilities	(1)		(5)
Deferred revenue	166		69
Income taxes payable	(23)		(7)
Other balance sheet changes, net	(34)		(23)
Net cash provided by operating activities	566		401
Cash flows from investing activities
Acquisition of music publishing rights and music catalogs	(457)		(120)
Capital expenditures	(47)		(72)
Investments and acquisitions of businesses, net of cash received	(29)		(46)
Proceeds from the sale of investments	—		36
Proceeds from divestitures	10		—
Net cash used in investing activities	(523)		(202)
Cash flows from financing activities

Proceeds from Senior Term Loan A Facility	1,295		—
Repayment of Senior Term Loan B Facility	(1,295)		—
Proceeds from Beethoven Credit Agreement	370		—
Deferred financing costs paid	(12)		—

Distribution to noncontrolling interest holders	(7)		(8)
Contributions from redeemable noncontrolling interest holder	134		—
Dividends paid	(200)		(189)
Payment of deferred consideration	(42)		(23)
Taxes paid related to net share settlement of restricted stock units and common stock	(26)		(19)
Common stock repurchased and retired	(48)		(2)

Other financing activity	—		(7)
Net cash provided by (used in) financing activities	169		(248)
Effect of exchange rate changes on cash and equivalents	(2)		(8)
Effect of change in cash balances classified as assets held for sale	(1)		—
Net increase (decrease) in cash and equivalents	209		(57)
Cash and equivalents at beginning of period	532		694
Cash and equivalents at end of period	$	741	$	637

See accompanying notes

Warner Music Group Corp.

Condensed Consolidated Statements of Equity

(In millions, except share amounts which are reflected in thousands, and per share data)

(Unaudited)


Six Months Ended March 31, 2026
	Class A Common Stock			Class B Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Warner Music Group Corp. Equity		Non-controlling Interest		Total Equity		Redeemable Non-controlling Interest

	Shares	Value		Shares	Value
Balance at September 30, 2025	146,906	$	—	375,380	$	1	$	2,166	$	(1,331)	$	(189)	$	647	$	110	$	757	$	—
Net income	—	—		—	—		—		359		—		359		(2)		357		(1)
Other comprehensive loss, net of tax	—	—		—	—		—		—		(36)		(36)		—		(36)		—
Dividends ($0.38 per share)	—	—		—	—		—		(200)		—		(200)		—		(200)		—
Stock-based compensation expense	—	—		—	—		31		—		—		31		—		31		—
Distribution to noncontrolling interest holders	—	—		—	—		—		—		—		—		(7)		(7)		—

Vesting of restricted stock units, net of shares withheld for employee taxes	999	—		—	—		(26)		—		—		(26)		—		(26)		—

Common shares repurchased and retired	(1,671)	—		—	—		(48)		—		—		(48)		—		(48)		—
Redemption of noncontrolling interests	—	—		—	—		11		—		—		11		—		11		—
Contributions from redeemable non-controlling interest holders	—	—		—	—		—		—		—		—		—		—		134
Balance at March 31, 2026	146,235	$	—	375,380	$	1	$	2,134	$	(1,172)	$	(225)	$	738	$	101	$	839	$	133


Three Months Ended March 31, 2026
	Class A Common Stock			Class B Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Warner Music Group Corp. Equity		Non-controlling Interest		Total Equity		Redeemable Non-controlling Interest

	Shares	Value		Shares	Value
Balance at December 31, 2025	146,146	$	—	375,380	$	1	$	2,154	$	(1,255)	$	(180)	$	720	$	104	$	824	$	5
Net income	—	—		—	—		—		183		—		183		(1)		182		(1)
Other comprehensive loss, net of tax	—	—		—	—		—		—		(45)		(45)		—		(45)		—
Dividends ($0.19 per share)	—	—		—	—		—		(100)		—		(100)		—		(100)		—
Stock-based compensation expense	—	—		—	—		12		—		—		12		—		12		—
Distribution to noncontrolling interest holders	—	—		—	—		—		—		—		—		(2)		(2)		—

Vesting of restricted stock units, net of shares withheld for employee taxes	840	—		—	—		(21)		—		—		(21)		—		(21)		—

Common shares repurchased and retired	(751)	—		—	—		(22)		—		—		(22)		—		(22)		—

Redemption of noncontrolling interests	—	—		—	—		11		—		—		11		—		11		—
Contributions from redeemable non-controlling interest holders	—	—		—	—		—		—		—		—		—		—		129
Balance at March 31, 2026	146,235	$	—	375,380	$	1	$	2,134	$	(1,172)	$	(225)	$	738	$	101	$	839	$	133


Six Months Ended March 31, 2025
	Class A Common Stock			Class B Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Warner Music Group Corp. Equity		Non-controlling Interest		Total Equity		Redeemable Non-controlling Interest

	Shares	Value		Shares	Value
Balance at September 30, 2024	142,559	$	—	375,380	$	1	$	2,077	$	(1,313)	$	(247)	$	518	$	157	$	675	$	—
Net income	—	—		—	—		—		272		—		272		5		277		—
Other comprehensive loss, net of tax	—	—		—	—		—		—		(45)		(45)		—		(45)		—
Dividends ($0.36 per share)	—	—		—	—		—		(189)		—		(189)		—		(189)		—
Stock-based compensation expense	—	—		—	—		34		—		—		34		—		34		—
Distribution to noncontrolling interest holders	—	—		—	—		—		—		—		—		(8)		(8)		—
Acquisition of noncontrolling interests	—	—		—	—		—		—		—		—		74		74		—
Vesting of restricted stock units, net of shares withheld for employee taxes	795	—		—	—		(19)		—		—		(19)		—		(19)		—
Shares issued under the Plan	1,738	—		—	—		—		—		—		—		—		—		—


Common shares repurchased and retired	(60)	—		—	—		(2)		—		—		(2)		—		(2)		—
Other	—	—		—	—		(2)		—		—		(2)		(5)		(7)		—
Balance at March 31, 2025	145,032	$	—	375,380	$	1	$	2,088	$	(1,230)	$	(292)	$	567	$	223	$	790	$	—


Three Months Ended March 31, 2025
	Class A Common Stock			Class B Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Warner Music Group Corp. Equity		Non-controlling Interest		Total Equity		Redeemable Non-controlling Interest

	Shares	Value		Shares	Value
Balance at December 31, 2024	144,301	$	—	375,380	$	1	$	2,091	$	(1,171)	$	(376)	$	545	$	152	$	697	$	—
Net income	—	—		—	—		—		36		—		36		—		36		—
Other comprehensive income, net of tax	—	—		—	—		—		—		84		84		—		84		—
Dividends ($0.18 per share)	—	—		—	—		—		(95)		—		(95)		—		(95)		—
Stock-based compensation expense	—	—		—	—		14		—		—		14		—		14		—
Acquisition of noncontrolling interests	—	—		—	—		—		—		—		—		74		74		—
Vesting of restricted stock units, net of shares withheld for employee taxes	731	—		—	—		(17)		—		—		(17)		—		(17)		—


Other	—	—		—	—		—		—		—		—		(3)		(3)		—
Balance at March 31, 2025	145,032	$	—	375,380	$	1	$	2,088	$	(1,230)	$	(292)	$	567	$	223	$	790	$	—

See accompanying notes

Warner Music Group Corp.

Notes to Condensed Consolidated Financial Statements (Unaudited)

1. Description of Business

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. We classify our business interests into two fundamental operations: Recorded Music and Music Publishing.

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.

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.

2. Summary of Significant Accounting Policies

Interim Financial Statements

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended March 31, 2026 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2026.

The consolidated balance sheet at September 30, 2025 has been derived from the audited consolidated financial statements at that date but does not include all the information and notes required by U.S. GAAP for complete financial statements.

For further information, refer to the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2025 (File No. 001-32502).

Basis of Consolidation

The accompanying financial statements present the consolidated accounts of all entities in which the Company has a controlling financial interest required to be consolidated in accordance with U.S. GAAP. All intercompany balances and transactions have been eliminated.

As of March 31, 2026 and September 30, 2025, there were approximately $59 million and $65 million of assets, respectively, related to variable interest entities (“VIEs”) included in our condensed consolidated balance sheets. As of both March 31, 2026 and September 30, 2025, there was approximately $2 million of liabilities related to VIEs included in our condensed consolidated balance sheets.

The Company has performed a review of all subsequent events through the date the financial statements were issued and has determined that no additional disclosures are necessary.

Noncontrolling Interests

Interests held by third parties in consolidated subsidiaries are presented as noncontrolling interests, which represent the noncontrolling shareholders’ interests in the underlying net assets of the Company’s consolidated subsidiaries. Noncontrolling interests that are not redeemable are reported in the equity section of the Consolidated Balance Sheets.

Noncontrolling interests, where the Company may be required to redeem the noncontrolling interest under contractual redemption requirements that are not solely within the control of the Company, are reported in the Consolidated Balance Sheets between liabilities and equity, as redeemable noncontrolling interests. The Company adjusts the redeemable noncontrolling interests to the higher of the current redemption value or the carrying value of the interests, the capital contributed by the third party adjusted for the noncontrolling interest’s share of net income (loss) and distributions, on each balance sheet date with changes in redemption value recognized as an adjustment to retained earnings attributable to common shareholders.

Income Taxes

The Company uses the estimated annual effective tax rate method in computing its interim tax provision. Certain items, including those deemed to be unusual and infrequent, are excluded from the estimated annual effective tax rate. In such cases, the actual tax expense or benefit is reported in the same period as the related item. Certain tax effects are also not reflected in the estimated annual effective tax rate, primarily certain changes in the realizability of deferred tax assets and uncertain tax positions, and are recorded in the period in which the change occurs.

Global Intangible Low-Taxed Income (“GILTI”) imposes U.S. taxes on the excess of a deemed return on tangible assets of certain foreign subsidiaries. The Company made an election to recognize GILTI tax in the specific period in which it occurs.

New Accounting Pronouncements

Accounting Pronouncements Not Yet Adopted

In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendment enhances income tax disclosure requirements by requiring enhanced disclosures on the income tax rate reconciliation and income taxes paid. The amendments in this ASU are effective for fiscal years beginning after December 15, 2024. The Company will include the required disclosures in its Annual Report on Form 10-K for the fiscal year ending September 30, 2026.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The amendment requires new financial statement disclosures to provide disaggregated information for certain types of expenses, including purchases of inventory, employee compensation, depreciation, and amortization in commonly presented expense captions such as cost of revenue and selling, general and administrative expenses. The amendments in this ASU are effective for our fiscal year ending September 30, 2028, and interim periods within our fiscal year ending September 30, 2029. The Company is in the process of evaluating the effect that the adoption of these standards will have on its consolidated financial statements.

In September 2025, the FASB issued ASU 2025-06, Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The amendment aligns internal use software capitalization practices with agile development methodologies and an external use software model by introducing updated capitalization criteria and removing existing project staging guidance. The amendments in this ASU are effective for our fiscal year ending September 30, 2029. The Company is in the process of evaluating the effect that the adoption of these standards will have on its consolidated financial statements.

3. Earnings per Share

The Company utilizes the two-class method to report earnings per share. Basic earnings per share is computed by dividing net income available to each class of stock, less earnings available to participating securities, divided by the weighted average number of outstanding common shares for each class of stock. Diluted earnings per share is computed by dividing net income available to each class of stock, less earnings available to participating securities, divided by the weighted average number of outstanding common shares, plus potentially dilutive common shares, which is calculated using the treasury-stock method. The potentially dilutive common shares had a dilutive effect on the Company’s EPS calculation for the three and six months ended March 31, 2026 and 2025.

The following table sets forth the calculation of basic and diluted net income per common share under the two-class method for the three and six months ended March 31, 2026 and 2025 (in millions, except share amounts, which are reflected in thousands, and per share data):


	Three Months Ended March 31,
	2026				2025
	Class A		Class B		Class A		Class B
Numerator
Net income (loss) attributable to Warner Music Group Corp.	$	53	$	130	$	10	$	26
Less: Net loss (income) attributable to participating securities (a)	(2)		—		—		—
Net income (loss) attributable to common stockholders - Basic	$	51	$	130	$	10	$	26
Less: Net loss (income) attributable to shares to be issued on redemption of noncontrolling interests	(1)		(1)		—		—
Net income (loss) attributable to common stockholders - Diluted	$	50	$	129	$	10	$	26
Denominator
Weighted average shares outstanding - Basic	146,573		375,380		144,938		375,380

Shares to be issued on redemption of noncontrolling interests	2,750		—		—		—
Weighted average shares outstanding - Diluted	149,323		375,380		144,938		375,380

Earnings Per Share - Basic	$	0.35	$	0.35	$	0.07	$	0.07
Earnings Per Share - Diluted	$	0.34	$	0.34	$	0.07	$	0.07

	Six Months Ended March 31,
	2026				2025
	Class A		Class B		Class A		Class B
Numerator
Net income (loss) attributable to Warner Music Group Corp.	$	103	$	256	$	78	$	194
Less: Net loss (income) attributable to participating securities (a)	(4)		—		(3)		—
Net income (loss) attributable to common stockholders - Basic	$	99	$	256	$	75	$	194
Less: Net loss (income) attributable to shares to be issued on redemption of noncontrolling interests	(1)		(3)		—		—
Net income (loss) attributable to common stockholders - Diluted	$	98	$	253	$	75	$	194
Denominator
Weighted average shares outstanding - Basic	146,664		375,380		143,995		375,380

Shares to be issued on redemption of noncontrolling interests	2,750		—		—		—
Weighted average shares outstanding - Diluted	149,414		375,380		143,995		375,380

Earnings Per Share - Basic	$	0.68	$	0.68	$	0.52	$	0.52
Earnings Per Share - Diluted	$	0.67	$	0.67	$	0.52	$	0.52

______________________________________

(a)Participating securities include unvested restricted stock units, which include the right to receive non-forfeitable dividend equivalents. Participating securities are not contractually obligated to share in losses.

4. Revenue Recognition

Disaggregation of Revenue

The Company’s revenue consists of the following categories, which aggregate into the segments – Recorded Music and Music Publishing:


	Three Months Ended March 31,				Six Months Ended March 31,
	2026		2025		2026		2025
	(in millions)
Revenue by Type
Digital	$	975	$	841	$	1,951	$	1,714
Physical	137		112		289		278
Total digital and physical	1,112		953		2,240		1,992
Artist services and expanded-rights	164		117		395		313
Licensing	104		105		225		215
Total Recorded Music	1,380		1,175		2,860		2,520
Performance	58		53		122		109
Digital	224		188		439		395
Mechanical	17		16		35		30
Synchronization	50		49		110		88
Other	4		4		9		11
Total Music Publishing	353		310		715		633
Intersegment eliminations	(1)		(1)		(3)		(3)
Total revenues	$	1,732	$	1,484	$	3,572	$	3,150
Revenue by geographical location
U.S. Recorded Music	$	565	$	497	$	1,142	$	1,029
U.S. Music Publishing	178		161		368		334
Total U.S.	743		658		1,510		1,363
International Recorded Music	815		678		1,718		1,491
International Music Publishing	175		149		347		299
Total international	990		827		2,065		1,790
Intersegment eliminations	(1)		(1)		(3)		(3)
Total revenues	$	1,732	$	1,484	$	3,572	$	3,150

Sales Returns and Uncollectible Accounts

Based on management’s analysis of sales returns, refund liabilities of $16 million and $17 million were established at March 31, 2026 and September 30, 2025, respectively.

Based on management’s analysis of estimated credit losses, reserves of $28 million and $27 million were established at March 31, 2026 and September 30, 2025, respectively.

Deferred Revenue

Deferred revenue increased by $540 million during the six months ended March 31, 2026 related to cash received from customers for fixed fees and minimum guarantees in advance of performance, including amounts recognized in the period. Revenues of $186 million were recognized during the six months ended March 31, 2026 related to the balance of deferred revenue at September 30, 2025. There were no other significant changes to deferred revenue during the reporting period.

Performance Obligations

For the three months ended March 31, 2026 and March 31, 2025, the Company recognized revenue of $20 million and $17 million, respectively, from performance obligations satisfied in previous periods. For the six months ended March 31, 2026 and March 31, 2025, the Company recognized revenue of $38 million and $57 million, respectively, from performance obligations satisfied in previous periods.

Revenues expected to be recognized in the future related to performance obligations that are unsatisfied at March 31, 2026 are as follows:


	Rest of FY26		FY27		FY28		Thereafter		Total
	(in millions)
Remaining performance obligations	$	270	$	399	$	171	$	43	$	883
Total	$	270	$	399	$	171	$	43	$	883

5. Comprehensive Income

Comprehensive income, which is reported in the accompanying condensed consolidated statements of equity, consists of net income and other gains and losses affecting equity that, under U.S. GAAP, are excluded from net income. For the Company, the components of other comprehensive income primarily consist of foreign currency translation gains and losses, minimum pension liabilities, and deferred gains and losses on financial instruments designated as hedges under ASC 815, Derivatives and Hedging. The following summary sets forth the changes in the components of accumulated other comprehensive loss.


	Foreign Currency Translation Loss (a)		Minimum Pension Liability Adjustment		Accumulated Other Comprehensive Loss, net
	(in millions)
Balances at September 30, 2024	$	(244)	$	(3)	$	(247)
Other comprehensive loss	(45)		—		(45)
Balances at March 31, 2025	$	(289)	$	(3)	$	(292)

Balances at September 30, 2025	$	(188)	$	(1)	$	(189)
Other comprehensive loss	(36)		—		(36)
Balances at March 31, 2026	$	(224)	$	(1)	$	(225)

______________________________________

(a)Includes historical foreign currency translation related to certain intra-entity transactions.

6. Goodwill and Intangible Assets

Goodwill

The following analysis details the changes in goodwill for each reportable segment:


	Recorded Music		Music Publishing		Total
	(in millions)
Balances at September 30, 2025	$	1,597	$	464	$	2,061
Acquisitions	4		—		4

Other adjustments (a)	(11)		—		(11)
Balances at March 31, 2026	$	1,590	$	464	$	2,054

______________________________________

(a)Other adjustments during the six months ended March 31, 2026 represent foreign currency movements.

The Company performs its annual goodwill impairment test in accordance with ASC 350, Intangibles—Goodwill and Other, during the fourth quarter of each fiscal year as of July 1. The Company may conduct an earlier review if events or circumstances occur that would suggest the carrying value of the Company’s goodwill may not be recoverable. No indicators of impairment were identified during the current period that required the Company to perform an interim assessment or recoverability test.

Intangible Assets

Intangible assets consist of the following:


	Weighted-Average Useful Life	March 31, 2026		September 30, 2025
		(in millions)
Intangible assets subject to amortization:
Recorded music catalog	14 years	$	2,216	$	1,799
Music publishing copyrights	23 years	2,769		2,692
Artist and songwriter contracts	13 years	1,127		1,137
Trademarks	16 years	30		29
Other intangible assets	6 years	55		58
Total gross intangible assets subject to amortization		6,197		5,715
Accumulated amortization		(3,096)		(2,990)
Total net intangible assets subject to amortization		3,101		2,725
Intangible assets not subject to amortization:
Trademarks and tradenames	Indefinite	153		154
Total net intangible assets		$	3,254	$	2,879

The increase in net intangible assets during the six months ended March 31, 2026 is primarily related to the acquisitions of recorded music catalogs and music publishing copyrights for approximately $401 million through the Beethoven joint venture. See Note 7 and Note 11 for additional information regarding the structure and activities of the joint venture.

7. Debt

Debt Capitalization

As of March 31, 2026, our long-term debt consists of the following:


	March 31, 2026		September 30, 2025
	(in millions)
Revolving Credit Facility (a)	$	—	$	—
Senior Term Loan A Facility due 2031 (b)	1,295		—
Senior Term Loan B Facility due 2031 (b)	—		1,295
2.750% Senior Secured Notes due 2028	372		381
3.750% Senior Secured Notes due 2029	540		540
3.875% Senior Secured Notes due 2030	535		535
2.250% Senior Secured Notes due 2031	509		522
3.000% Senior Secured Notes due 2031	800		800
Mortgage Term Loan due 2033	17		17
Total debt, including the current portion	4,068		4,090
Premium less unamortized discount and unamortized DFCs	(22)		(27)
Total Acquisition Corp. long-term debt, including the current portion, net	$	4,046	$	4,063
Beethoven Credit Agreement (c)	370		—
Tempo Asset-Based Notes due 2050 (d)	311		311
Unamortized discount	(8)		(9)
Total other long-term debt, including the current portion, net	$	673	$	302
Total long-term debt, including the current portion, net	$	4,719	$	4,365

______________________________________

(a)Reflects $350 million of commitments under the Revolving Credit Facility with no letters of credit outstanding at March 31, 2026 and September 30, 2025. There were no loans outstanding under the Revolving Credit Facility as of March 31, 2026 and September 30, 2025.

(b)On March 11, 2026, Acquisition Corp. borrowed all of the Term Loan A Facility to repay all of the outstanding loans under the Term Loan B Facility.

(c)Reflects $500 million of commitments under the Beethoven Credit Agreement with the ability, subject to the consent of the Lenders (as defined below), 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.

(d)The Tempo Asset-Based Notes due 2050 are secured only by certain music rights owned by Tempo Music Holdings, LLC (“Tempo Music”) and are nonrecourse to the Company and its subsidiaries, other than Tempo Music.

Acquisition Corp. Long-Term Debt

The Company is the direct parent of Holdings, which is the direct parent of Acquisition Corp. Acquisition Corp. is party to and the borrower under a $1,295 million term loan A facility and a $350 million revolving facility, pursuant to an amended and restated credit agreement dated March 11, 2026 (the “Credit Agreement”), with JPMorgan Chase Bank NA, as administrative agent, and the other financial institutions and lenders from time to time party thereto. Additionally, as of March 31, 2026, Acquisition Corp. had issued and outstanding the 2.750% Senior Secured Notes due 2028, the 3.750% Senior Secured Notes due 2029, the 3.875% Senior Secured Notes due 2030, the 2.250% Senior Secured Notes due 2031 and the 3.000% Senior Secured Notes due 2031 (together, the “Acquisition Corp. Notes”).

All of the Acquisition Corp. Notes are guaranteed by all of Acquisition Corp.’s domestic wholly-owned subsidiaries. The guarantee of the Acquisition Corp. Notes by Acquisition Corp.’s domestic wholly-owned subsidiaries is full, unconditional and joint and several. The secured notes are guaranteed on a senior secured basis.

The Company and Holdings are holding companies that conduct substantially all of their business operations through Acquisition Corp. Acquisition Corp. and its subsidiaries are not currently restricted from distributing funds to the Company and Holdings under the indentures for the Acquisition Corp. Notes or the Credit Agreement for the Acquisition Corp. credit facilities, including the Revolving Credit Facility (as defined below) and the Tranche A Term Loans (as defined below).

The Company was in compliance with its covenants under its outstanding notes, the Revolving Credit Facility and the Tranche A Term Loans as of March 31, 2026.

Other Long-Term Debt

The Company holds approximately $311 million of asset-based securities due November 2050 (“Asset-Based Notes”) issued by a subsidiary of Tempo Music secured only by certain music rights owned by Tempo Music and is nonrecourse to the Company and its subsidiaries, other than Tempo Music. These notes, which consist of multiple fixed rate tranches, will accrue at a fixed weighted average rate of 4.62% until November 30, 2027, with higher interest rates thereafter. Principal and interest are payable in equal semi-annual installments. As of March 31, 2026, Tempo Music is in compliance with the covenants under the Asset-Based Notes.

Additionally, WMG BC Holdco LLC (“WMGCo”), a wholly-owned indirect subsidiary of the Company, and BCSS W JV Investments (B), L.P. (“BainCo”), a wholly-owned indirect subsidiary of Bain Capital Special Situations, LP, operate Beethoven, which is party to a Credit and Security Agreement (the “Beethoven Credit Agreement”), dated as of June 29, 2025, with the Bank of New York Mellon, as administrative agent for the Lenders and as collateral agent for the Secured Parties (in each case, as defined in the Beethoven Credit Agreement) pursuant to which the Lenders have agreed to extend up to $500 million in commitment amounts to Beethoven Financing 1, LLC, a Delaware limited liability company and wholly-owned indirect subsidiary of Beethoven, as the initial borrower (the “Initial Borrower” and, together with each additional borrower from time to time party thereto, the “Borrowers”) (the “Beethoven Credit Facility”). The obligations of the Borrowers under the Beethoven Credit Agreement are (a) secured by the Borrowers with a first priority security interest in all of their respective assets and (b) guaranteed by Beethoven Holdings 1 LLC, a Delaware limited liability company and a wholly-owned direct subsidiary of Beethoven and the direct parent of the Initial Borrower, as the initial guarantor (together with the additional guarantors from time to time party thereto, the “Guarantors”) with a first priority security interest in all of the Guarantors’ respective assets. The advances under the Beethoven Credit Agreement shall bear interest at the rates described below under “—Interest Rates.” The Beethoven Credit Agreement contains customary affirmative and negative covenants for this type of facility, and the ability, subject to the consent of the Lenders, to increase the size of the facility to $700 million. There were $370 million of loans outstanding under the Beethoven Credit Agreement at March 31, 2026. As of March 31, 2026, the Initial Borrower is in compliance with the covenants under the Beethoven Credit Agreement. On May 5, 2026, the Lenders, pursuant to an amendment to the Beethoven Credit Agreement (the “Credit Agreement Amendment”) agreed to increase the aggregate commitments under the Beethoven Credit Agreement from $500 million to $750 million. The Credit Agreement Amendment also provides that, subject to the consent of the Lenders, the Borrowers may further increase the size of the facility up to an aggregate commitment of $950 million.

On February 4, 2026, WMGCo entered into an amendment (the “Amendment”) to a Master Operations and Economics Agreement, dated as of June 29, 2025 (as amended from time to time, the “Master Operations and Economics Agreement”), by and among WMGCo, BainCo, and certain affiliates of the foregoing parties. Pursuant to the Amendment, WMGCo and BainCo have committed to increase their respective initial equity commitment amounts by $100 million each.

Fiscal 2026 Transactions

March 2026 Credit Agreement Amendment

On March 11, 2026, Acquisition Corp. entered into the Credit Agreement among Acquisition Corp.., as borrower, the guarantors party thereto, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and the other financial institutions and lenders from time to time party thereto. The Credit Agreement amends and restates in its entirety the Credit Agreement, dated as of November 1, 2012, among Acquisition Corp., JPMorgan Chase Bank, N.A., as administrative agent and the lenders party thereto, and incorporates, as amended and restated, the revolving credit facility provided under the Credit Agreement, dated as of January 31, 2018, among Acquisition Corp., JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto.

The Credit Agreement provides for a $350 million revolving credit facility (the “Revolving Credit Facility”) and a $1,295 million term loan A facility (the “Tranche A Term Loans”). Subject to certain conditions, Acquisition Corp. may obtain increases in the commitments under the Revolving Credit Facility and incur incremental term loans. As of March 31, 2026, Acquisition Corp. had borrowed all of the Tranche A Term Loans to repay Acquisition Corp.’s term loan B facility. No amounts were drawn under the Revolving Credit Facility as of March 31, 2026.

In connection with the Credit Agreement, the Company recorded a loss on extinguishment of debt of approximately $7 million for the three months ended March 31, 2026, which represents the unamortized balances of original issuance discounts and deferred financing costs. The use of proceeds from the $1,295 million Tranche A Term Loans has been presented in the accompanying consolidated statement of cash flows. The Company recognized deferred financing costs of $4 million associated with the amendment.

Interest Rates

The loans under the Credit Agreement bear interest at Acquisition Corp.’s election at a rate equal to (i) a forward-looking term rate based on the secured overnight financing rate as administered by the Federal Reserve Bank of New York for the applicable interest period (“SOFR”), subject to a zero floor, plus the applicable margin, or (ii) an alternative base rate (“ABR”), which is the highest of (x) the corporate base rate established by the administrative agent from time to time, (y) 0.50% in excess of the overnight federal funds rate and (z) one-month Term SOFR (as defined in the Credit Agreement) plus 1.0% per annum, in each case, subject to a 1.00% floor plus the applicable margin. The applicable margin for the Tranche A Term Loans range from 1.250% to 1.625% per annum for SOFR loans and from 0.250% to 0.625% per annum for ABR loans, in each case based upon Acquisition Corp.’s issuer credit ratings. The applicable margin for borrowings under the Revolving Credit Facility ranges from 1.125% to 1.750% per annum for SOFR loans and 0.125% to 0.750% per annum for ABR loans, in each case based upon Acquisition Corp.’s issuer credit ratings.

Based on the Applicable Debt Rating of BBB- at March 31, 2026, the applicable margin for SOFR loans and risk-free rate loans would be 1.250% instead of 1.750% and the applicable margin for ABR loans would be 0.250% instead of 0.750% in the case of Initial Revolving Loans, and the applicable margin for SOFR loans and risk-free rate loans would be 1.375% instead of 1.625% and the applicable margin for ABR loans would be 0.375% instead of 0.625% in the case of the Tranche A Term Loan. If there is a payment default at any time, then the interest rate applicable to overdue principal will be the rate otherwise applicable to such loan plus 2.0% per annum. Default interest will also be payable on other overdue amounts at a rate of 2.0% per annum above the amount that would apply to an alternative base rate loan.

The term loan entered into on January 27, 2023 (the “Term Loan Mortgage”) bears interest at a rate of 30-day SOFR plus the applicable margin of 1.40%, subject to a zero floor.

Interest on the Asset-Based Notes, which consist of multiple fixed rate tranches, will accrue at a fixed weighted average rate of 4.62% until November 30, 2027. Following November 30, 2027, if the Asset-Based Notes remain outstanding, the interest rate on the outstanding Asset-Based Notes will increase by a per annum rate equal to the greater of: (i) 5.0% and (ii) the amount, if any, by which the sum of the following exceeds the interest rate otherwise payable with respect to such Asset-Based Notes: (A) the yield to maturity (adjusted to a quarterly bond-equivalent basis) on November 30, 2027 of the U.S. treasury security having a term closest to seven years plus (B) 5.0%, plus (C) with respect to class A notes, 3.53% and, with respect to class B notes, 4.28%.

The advances under the Beethoven Credit Agreement shall bear interest (a) in the case of a base rate advance, at a rate equal to the base rate, which means, for any day, the highest of (i) the prime rate in effect on such day; (ii) the federal funds rate in effect on such day plus 0.50%; and (iii) Term SOFR for a one-month tenor in effect on such day plus 1.00% per annum, plus the applicable margin of 1.00% and (b) in the case of a Term SOFR advance, the Term SOFR for the interest accrual period plus the applicable margin of 2.00%.

The Company has entered into, and in the future may enter into, interest rate swaps to manage interest rate risk. As of March 31, 2026, there are no interest rate swaps outstanding.

Maturity of Tranche A Term Loans

The loans outstanding under the Tranche A Term Loans mature on March 11, 2031.

Maturity of Revolving Credit Facility

The maturity date of the Revolving Credit Facility is March 11, 2031.

Maturities of Senior Secured Notes

As of March 31, 2026, there are no scheduled maturities of notes until 2028, when $372 million is scheduled to mature. Thereafter, $2.384 billion is scheduled to mature.

Maturity of Term Loan Mortgage

The maturity date of the Term Loan Mortgage is January 27, 2033, subject to a call option exercisable by Truist Bank at any time after January 27, 2028 if certain criteria relating to the Company’s creditworthiness are met.

Maturity of Tempo Asset-Based Notes

The maturity date of the Asset-Based Notes is November 30, 2050.

Maturity of Beethoven Credit Agreement

The maturity date of the Beethoven Credit Facility is June 29, 2030.

Interest Expense, net

Total interest expense, net was $41 million and $39 million for the three months ended March 31, 2026 and 2025, respectively, and $86 million and $76 million for the six months ended March 31, 2026 and 2025, respectively. Interest expense, net includes interest expense related to our outstanding indebtedness of $44 million for both the three months ended March 31, 2026 and 2025, and $90 million and $87 million for the six months ended March 31, 2026 and 2025, respectively. The weighted-average interest rate of the Company’s total debt was 4.0% at March 31, 2026, 4.1% at September 30, 2025, and 4.1% at March 31, 2025.

8. Restructuring and Impairments

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 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.

The following table sets forth the activity for the six months ended March 31, 2026 in the restructuring accrual associated with the 2025 Restructuring Plan included within accrued liabilities in the accompanying consolidated balance sheets:


	Severance Costs
	(in millions)
Balance at September 30, 2025	$	85
Restructuring charges	30
Cash payments	(61)
Balance at March 31, 2026	$	54

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.

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.

The below table sets forth the activity for the six months ended March 31, 2026 in the restructuring accrual associated with the 2024 Strategic Restructuring Plan included within accrued liabilities in the accompanying condensed consolidated balance sheets.


	Severance Costs		Contract Termination Costs		Total
	(in millions)
Balance at September 30, 2025	$	23	$	7	$	30
Restructuring charges	(1)		—		(1)
Cash payments	(16)		(4)		(20)

Balance at March 31, 2026	$	6	$	3	$	9

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 Merchandising (“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. Please refer to Note 15 for further discussion.

9. Commitments and Contingencies

From time to time, the Company is involved in claims and legal proceedings that arise in the ordinary course of business. The Company is currently subject to several such claims and legal proceedings. Based on currently available information, the Company does not believe that resolution of pending matters will have a material adverse effect on its financial condition, cash flows or results of operations. However, litigation is subject to inherent uncertainties, and there can be no assurances that the Company’s defenses will be successful or that any such lawsuit or claim would not have a material adverse impact on the Company’s business, financial condition, cash flows and results of operations in a particular period. Any claims or proceedings against the Company, whether meritorious or not, can have an adverse impact because of defense costs, diversion of management and operational resources, negative publicity and other factors.

10. Equity

Stock-Based Compensation

The Company’s stock-based compensation plans are described in Note 13, “Equity,” to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2025. Stock-based compensation consists primarily of common stock, restricted stock units (“RSUs”), deferred share units, stock options, and market-based performance share units (“PSUs”) granted to eligible employees and executives under the Omnibus Incentive Plan. The Company recognized $12 million and $14 million of non-cash stock-based compensation expense for the three months ended March 31, 2026 and 2025, respectively, all of which was recorded to additional paid-in capital. The Company recognized $31 million and $27 million of non-cash stock-based compensation expense for the six months ended March 31, 2026 and 2025, respectively, all of which was recorded to additional paid-in capital.

Common Stock

During the three and six months ended March 31, 2026, the Company satisfied the vesting of PSUs and RSUs by issuing 839,801 and 999,381 shares, respectively, of Class A Common Stock under the Omnibus Incentive Plan, which is net of shares used to settle employee income tax obligations.

Share 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. Under this authorization, the Company may, from time to time, purchase shares of its Class A Common Stock through open market transactions, privately negotiated transactions, forward, derivative, or accelerated repurchase transactions, tender offers or otherwise, in accordance with all applicable securities laws and regulations, including Rule 10b-18 of the Exchange Act. 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 may enter into a pre-arranged stock trading plan in accordance with the guidelines specified under Rule 10b5-1 to effectuate all or a portion of the Share Repurchase Program. The Company expects to finance any repurchases from a combination of cash on hand and cash provided by operating activities. The timing and method of any repurchases, which will depend on a variety of factors, including market conditions, are subject to our results of operations, financial condition, liquidity and other factors. The authorization for the Share Repurchase Program may be suspended, terminated, increased or decreased by the Company’s board of directors at any time.

The following table summarizes our total share repurchases and retirement under the Share Repurchase Program during the three and six months ended March 31, 2026 and 2025:


	Three Months Ended March 31,		Six Months Ended March 31,
Share Repurchase Type	2026		2025		2026		2025
Number of shares repurchased	750,500		—		1,670,500		60,383
Amount (in millions)	$	22	$	—	$	48	$	2

11. Redeemable Noncontrolling Interest

As of March 31, 2026, the redeemable noncontrolling interests (“RNCI”) consist of interests in Beethoven, a consolidated subsidiary. The Company consolidates Beethoven based on its controlling financial interest of the joint venture through the Company's majority representation on the board. The noncontrolling interest holder in Beethoven, which is BainCo as described in Note 7, has a 50% ownership share and is entitled to receive 50% of the required quarterly distributions made by the joint venture from available cash. For distributions resulting from a liquidity event, including the sale of the joint venture, an initial public offering, or other liquidity event as defined in the Master Operations and Economics Agreement, the noncontrolling interest holder is entitled to proceeds from such event until its contributed capital is returned with an annualized return of 8%, subject to certain adjustments, after which the Company will receive distributions for an equal amount, with any additional amounts distributed equally.

Beginning on the sixth anniversary of formation, the noncontrolling interest holder has an exit right, that upon providing notice, the Company has the option to acquire the noncontrolling interest holder’s interest for a price negotiated with the noncontrolling interest holder or otherwise determined by an independent fair market valuation, subject to certain adjustments, if elected. If not acquired by the Company, the noncontrolling interest holder can initiate and complete a sale of Beethoven or an initial public offering that include the interests held by the Company. Beginning on the eighth anniversary, the Company will also have a similar exit right, that provides similar rights to negotiate the sale of the Company’s interests to the noncontrolling interest holder.

Given the exit rights held by the noncontrolling interest holder may result in the interests being redeemed by the Company based on events that are not solely in its control, the noncontrolling interest is presented in the Consolidated Balance Sheets at the greater of the current estimated redemption value or carrying value of the interests including adjustments for the attribution of income to the noncontrolling interest holder. The Company adjusts the redeemable noncontrolling interest to the greater of the current estimated redemption value or carrying value at the end of each reporting period, with changes recognized as adjustments to retained earnings. The Company recognized $133 million as the redeemable noncontrolling interest balance as of March 31, 2026.

In the second quarter of fiscal year 2026, the Company sold recorded music catalog rights to Beethoven for consideration of $233 million, receiving $182 million of cash in return, net of the Company’s portion of contributions to the joint venture for the acquisition. Given the Company consolidates Beethoven, no gain was recognized, and the cash received is recognized as contributions from redeemable noncontrolling interest holder and issuance of debt under the Beethoven Credit Facility.

12. Income Taxes

For the three and six months ended March 31, 2026, the Company recorded an income tax expense of $73 million and $144 million, respectively. The income tax expense for the three and six months ended March 31, 2026 is higher than the expected tax expense at the statutory rate of 21% primarily due to foreign income taxed at rates higher than in the United States, including withholding taxes, U.S. state and local taxes, taxable gain on contribution to Beethoven JV, and non-deductible executive compensation under IRC Section 162(m). These charges were partially offset by tax benefit associated with partial release of valuation allowance on EMP.

For the three and six months ended March 31, 2025, the Company recorded an income tax expense of $29 million and $118 million, respectively. The income tax expense for the three and six months ended March 31, 2025 is higher than the expected tax expense at the statutory rate of 21% primarily due to foreign income taxed at rates higher than the United States, including withholding taxes, and U.S. state and local taxes, unrecognized tax benefit related to uncertain tax positions, and non-deductible executive compensation under IRC Section 162(m). These charges were partially offset by tax benefits associated with R&D credits, and the net impact of GILTI and FDII.

The Company has determined that it is reasonably possible that the gross unrecognized tax benefits as of March 31, 2026 could decrease by up to approximately $1 million related to various ongoing audits and settlement discussions in various jurisdictions during the next twelve months.

The Organization for Economic Co-operation and Development (“OECD”) introduced Base Erosion and Profit Shifting (“BEPS”) Pillar 2 rules that impose a global minimum tax rate of 15%. Numerous countries, including European Union member states, have enacted legislation as of January 1, 2025 and others are expected to enact legislation in the next few years. The Company has evaluated the potential impact of the rules based on the most recently available information. For the fiscal year ended September 30, 2026, the impact on the Company is expected to be immaterial. The Company will continue to monitor legislative developments to determine if there are significant changes to Pillar 2 rules that could lead to a material impact.

On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act, which introduces a wide-ranging set of tax reform provisions. In fiscal year 2026, the Company is benefitting from the changes to the business interest expense deduction limitation, allowing for an accelerated deduction, and restored expensing for domestic research and development costs.

13. Derivative Financial Instruments

The Company uses derivative financial instruments, primarily foreign currency forward exchange contracts, for the purposes of managing foreign currency exchange rate risk on expected future cash flows.

As of March 31, 2026, the Company had outstanding foreign currency forward exchange contracts for the sale of $591 million and the purchase of $327 million of foreign currencies at fixed rates. As of September 30, 2025, the Company had outstanding foreign currency forward exchange contracts for the sale of $460 million and the purchase of $170 million of foreign currencies at fixed rates.

The Company recorded realized pre-tax losses of $2 million and unrealized pre-tax gains of $2 million related to its foreign currency forward exchange contracts in the condensed consolidated statement of operations as other expense for the six months ended March 31, 2026. The Company recorded realized pre-tax gains of $7 million and unrealized pre-tax gains of $3 million related to its foreign currency forward exchange contracts in the condensed consolidated statement of operations as other expense for the six months ended March 31, 2025.

The following is a summary of amounts recorded in the consolidated balance sheets pertaining to the Company’s derivative instruments at March 31, 2026 and September 30, 2025:


	March 31, 2026		September 30, 2025
	(in millions)
Other Current Assets:
Foreign currency forward exchange contracts (a)	$	3	$	—

Other Current Liabilities:
Foreign currency forward exchange contracts (a)	$	(2)	$	(3)

______________________________________

(a)For March 31, 2026 includes $13 million and $12 million of foreign exchange derivative contracts in asset and liability positions, respectively, which net to $3 million of current assets and $2 million of current liabilities, respectively. For September 30, 2025 includes $3 million and $6 million of foreign exchange derivative contracts in asset and liability positions, respectively, which net to $0 million of current assets and $3 million of current liabilities, respectively.

14. Segment Information

Based on the nature of its products and services, the Company classifies its business interests into two fundamental operations: Recorded Music and Music Publishing, which also represent the reportable segments of the Company. Information as to each of these operations and further description of these segments is set forth below and can be found in Note 1. The Company’s Chief Operating Decision Maker, which is our Chief Executive Officer, allocates resources and evaluates performance based on several factors, including operating income (loss) and other financial measures.

The accounting policies of the Company’s business segments are the same as those described in Note 2, “Summary of Significant Accounting Policies,” to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2025. The Company accounts for intersegment sales at fair value as if the sales were to third parties. While intercompany transactions are treated like third-party transactions to determine segment performance, the revenues (and corresponding expenses recognized by the segment that is counterparty to the transaction) are eliminated in consolidation, and therefore, do not themselves impact consolidated results.


	Recorded Music		Music Publishing		Corporate expenses and eliminations		Total
Three Months Ended	(in millions)
March 31, 2026
Revenues	$	1,380	$	353	$	(1)	$	1,732
Cost of revenue	707		224		(1)		930
Selling and marketing expense	159		1		7		167
Distribution expense	30		—		—		30
General and administrative expense	153		32		78		263
Restructuring & Impairment	6		—		—		6
Amortization expense	37		35		—		72
Net loss on divestitures	—		—		—		—
Operating income (loss)	$	288	$	61	$	(85)	$	264
Loss on extinguishment of debt							7
Interest expense, net							41
Other expense, net							(38)
Income before income taxes							254
Depreciation expense (a)	10		—		21		31

March 31, 2025
Revenues	$	1,175	$	310	$	(1)	$	1,484
Cost of revenue	599		194		(2)		791
Selling and marketing expense	149		1		7		157
Distribution expense	17		—		—		17


General and administrative expense	161		34		81		276
Restructuring & Impairment	13		—		—		13
Amortization expense	33		29		—		62
Operating income (loss)	$	203	$	52	$	(87)	$	168
Interest expense, net							39
Other expense, net							64
Income before income taxes							65
Depreciation expense (a)	13		2		13		28
	Recorded Music		Music Publishing		Corporate expenses and eliminations		Total
Six Months Ended	(in millions)
March 31, 2026
Revenues	$	2,860	$	715	$	(3)	$	3,572
Cost of revenue	1,467		452		(2)		1,917
Selling and marketing expense	309		2		11		322
Distribution expense	61		—		—		61
General and administrative expense	307		66		162		535
Restructuring & Impairment	28		—		12		40
Amortization expense	71		69		—		140
Net loss on divestitures	—		—		5		5
Operating income (loss)	$	617	$	126	$	(191)	$	552
Loss on extinguishment of debt							7
Interest expense, net							86
Other expense, net							(41)
Income before income taxes							500
Depreciation expense (a)	22		1		39		62

March 31, 2025
Revenues	$	2,520	$	633	$	(3)	$	3,150
Cost of revenue	1,285		404		(4)		1,685
Selling and marketing expense	300		2		13		315
Distribution expense	49		—		—		49
General and administrative expense	341		65		154		560
Restructuring & Impairment	41		—		(1)		40
Amortization expense	63		55		1		119
Operating income (loss)	$	441	$	107	$	(166)	$	382
Interest expense, net							76
Other expense, net							(89)
Income before income taxes							395
Depreciation expense (a)	28		3		26		57

(a) Depreciation expense is a component of general and administrative expense

15. Additional Financial Information

Supplemental Cash Flow Disclosures

The Company made interest payments of approximately $54 million and $53 million during the three months ended March 31, 2026 and 2025, respectively, and approximately $92 million and $71 million during the six months ended March 31, 2026 and 2025, respectively. The Company paid approximately $58 million of income and withholding taxes, net of refunds, for each of the three months ended March 31, 2026 and 2025, and approximately $126 million and $101 million of income and withholding taxes, net of refunds, for the six months ended March 31, 2026 and 2025, respectively. Non-cash investing activities were approximately $73 million and are primarily related to the acquisition of music publishing rights and music catalogs and the receipt of noncash consideration during the six months ended March 31, 2026 and $34 million related to business combinations and the acquisition of music catalogs during the six months ended March 31, 2025.

Assets and Liabilities Held for Sale

In the fourth quarter of fiscal year 2025, the Company signed a non-binding letter of intent to sell its EMP business within our Recorded Music segment and was classified as held for sale. The sale is expected to be completed by the end of the current fiscal year. Upon classification as held for sale, the business was measured at the lower of its carrying amount or its estimated fair value less costs to sell. 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. The recoverable fair value was determined based on current market indicators.

The major classes of assets and liabilities of the business held for sale as of March 31, 2026 are as follows:


	March 31, 2026		September 30, 2025
	(in millions)		(in millions)
Cash	$	4	$	3
Inventories	40		50
Property, plant and equipment, net	13		20
Intangible assets subject to amortization, net	7		10
Other assets	4		6
Assets of business held for sale	$	68	$	89

Accounts payable and accrued liabilities	$	26	$	34
Other liabilities	12		15
Liabilities of business held for sale	$	38	$	49

Net Gain (Loss) on Divestitures

The Company recognized a pre-tax loss of $5 million during the six months ended March 31, 2026 in connection with the divestiture of certain assets which have been reflected as a net loss (gain) on divestiture in the accompanying condensed consolidated statement of operations.

Net Gain on Sale of Investments

The Company recognized a pre-tax realized net gain of $29 million during the six months ended March 31, 2025 in connection with the sale of an investment that has been presented within the Other income (expense) line of the accompanying condensed consolidated statement of operations.

Dividends

The Company has been paying 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.

16. Fair Value Measurements

The following tables show the fair value of the Company’s financial instruments that are required to be measured at fair value as of March 31, 2026 and September 30, 2025.


	Fair Value Measurements as of March 31, 2026
	(Level 1)		(Level 2)		(Level 3)		Total
	(in millions)
Other Current Assets:
Foreign currency forward exchange contracts (a)	$	—	$	3	$	—	$	3

Other current liabilities:

Foreign currency forward exchange contracts (a)	$	—	$	(2)	$	—	$	(2)

Other noncurrent assets:


Equity investments with readily determinable fair value (b)	$	7	$	—	$	—	$	7


	Fair Value Measurements as of September 30, 2025
	(Level 1)		(Level 2)		(Level 3)		Total
	(in millions)
Other current liabilities:
Foreign currency forward exchange contracts (a)	$	—	$	(3)	$	—	$	(3)
Other noncurrent assets:
Equity investment with readily determinable fair value (b)	$	8	$	—	$	—	$	8

______________________________________

(a)The fair value of foreign currency forward exchange contracts is based on dealer quotes of market forward rates and reflects the amount that the Company would receive or pay at their maturity dates for contracts involving the same currencies and maturity dates.

(b)These represent equity investments with a readily determinable fair value. The Company has measured its investments to fair value in accordance with ASC 321, Investments—Equity Securities, based on quoted prices in active markets.

The majority of the Company’s non-financial instruments, which include goodwill, intangible assets, inventories and property, plant and equipment, are not required to be re-measured to fair value on a recurring basis. These assets are evaluated for impairment if certain triggering events occur. If such evaluation indicates that impairment exists, the asset is written down to its fair value. In addition, an impairment analysis is performed at least annually for goodwill and indefinite-lived intangible assets. Furthermore, assets classified as held for sale are measured at the lower of their carrying amount or fair value less costs to sell. When the Company determines that the fair value of an asset group held for sale is less than its carrying value, a non-recurring fair value adjustment is recognized as a loss in the period the held-for-sale criteria are met. The Company estimated the fair value of the assets held for sale based on current market indicators.

Equity Investments Without Readily Determinable Fair Value

The Company evaluates its equity investments without readily determinable fair values for impairment if factors indicate that a significant decrease in value has occurred. The Company has elected to use the measurement alternative to fair value that will allow these investments to be recorded at cost, less impairment, and adjusted for subsequent observable price changes. The Company did not record any impairment charges on these investments during the three and six months ended March 31, 2026 and recorded approximately $2 million and $3 million of impairment charges on these investments during the three and six months ended March 31, 2025, respectively. In addition, there were no observable price changes events that were completed during the three and six months ended March 31, 2026 and 2025.

Fair Value of Debt

Based on the level of interest rates prevailing at March 31, 2026, the fair value of the Company’s debt was $4.574 billion. Based on the level of interest rates prevailing at September 30, 2025, the fair value of the Company’s debt was $4.270 billion. The fair value of the Company’s debt instruments is determined using quoted market prices from less active markets or by using quoted market prices for instruments with identical terms and maturities; both approaches are considered a Level 2 measurement.

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;

•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.

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

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

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

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

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

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;

•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.

2024 Strategic Restructuring Plan

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.

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.

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.

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.

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.

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.

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.

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.

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.

Music Publishing

Revenues

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.

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.

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

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

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

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


	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.

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.

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.

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)	$	—

Warner Music Group Corp. 10-Q