10-K – 2025-11-20 – wmg-20250930.htm

amount of the 3.750% Senior Secured Notes redeemed, plus accrued and unpaid interest, subject to the same provisos as the 3.875% Senior Secured Notes Equity Redemption. On or after December 1, 2024, Acquisition Corp. may redeem all or a portion of the 3.750% Senior Secured Notes, at its option, at the redemption prices starting at 101.875% (expressed as a percentage of principal amount) plus accrued and unpaid interest thereon, if any, on the 3.750% Senior Secured Notes to be redeemed to the applicable redemption date, if redeemed during the twelve-month period beginning on December 1, 2024. Additionally, during any twelve-month period prior to December 1, 2024, the 3.750% Senior Secured Notes may be redeemed pursuant to a Secured Notes Redemption. As of September 30, 2025, there have been no redemptions on the 3.750% Senior Secured Notes.
General Terms of Our Indebtedness
Certain terms of the Senior Credit Facilities and certain terms of each series of notes under our Secured Notes Indenture are described below.
Ranking
The indebtedness incurred pursuant to the Revolving Credit Facility and the Senior Term Loan Facility and the Secured Notes are Acquisition Corp.’s senior secured obligations and are secured on an equal and ratable basis with all existing and future indebtedness secured with the same security arrangements. The Secured Notes rank senior in right of payment to Acquisition Corp.’s existing and future subordinated indebtedness; rank equally in right of payment with all of Acquisition Corp.’s existing and future senior indebtedness and any future senior secured credit facility; are effectively senior to Acquisition Corp.’s unsecured senior indebtedness to the extent of the value of the collateral securing the senior secured obligations; and are structurally subordinated in right of payment to all existing and future indebtedness and other liabilities of any of Acquisition Corp.’s non-guarantor subsidiaries (other than indebtedness and liabilities owed to Acquisition Corp. or one of its subsidiary guarantors (as such term is defined below)).
 
Guarantees and Security
The obligations under each of the Revolving Credit Facility, the Senior Term Loan Facility and the Secured Notes Indenture are guaranteed by each direct and indirect U.S. restricted subsidiary of Acquisition Corp., other than certain excluded subsidiaries. All obligations of Acquisition Corp. and each guarantor under the Revolving Credit Facility, the Senior Term Loan Facility and the Secured Notes Indenture are secured by substantially all the assets of Acquisition Corp and each subsidiary guarantor.
Covenants, Representations and Warranties
The Revolving Credit Facility, the Senior Term Loan Facility and the Secured Notes contain customary representations and warranties and certain affirmative and negative covenants. The negative covenants applicable to securities issued pursuant to the Secured Notes Indenture, Senior Term Loan Facility and the Revolving Credit Facility limit the ability of Acquisition Corp. and its restricted subsidiaries to, among other things, create liens and consolidate, merge, sell or otherwise dispose of all or substantially all of its assets. In addition, our Revolving Credit Facility includes additional covenants, which are incurrence-based high yield covenants and limit the ability of Acquisition Corp. and its restricted subsidiaries to, among other things, incur additional indebtedness or issue certain preferred shares; pay dividends, redeem stock or make other distributions; repurchase, prepay or redeem subordinated indebtedness; make investments; create restrictions on the ability of its restricted subsidiaries to pay dividends to it or make other intercompany transfers; transfer or sell assets; enter into certain transactions with its affiliates; and designate subsidiaries as unrestricted subsidiaries. These additional covenants are currently suspended. These covenants will be reinstated if Acquisition Corp.’s Total Indebtedness to EBITDA Ratio increases above 3.50:1.00 and the term loans do not achieve an investment grade rating.
The negative covenants are subject to customary exceptions. There are no financial covenants included in the Revolving Credit Agreement, other than a springing leverage ratio of 5.00:1.00 (with no step-down), which is not tested, unless at the end of a fiscal quarter the outstanding amount of loans and drawings under letters of credit which have not been reimbursed exceeds $140 million. There are no financial covenants included in the Senior Term Loan Credit Agreement or the Secured Notes Indenture.
Events of Default
Events of default under the Revolving Credit Facility, the New Senior Term Loan Facility and the Secured Notes Indenture include, as applicable, nonpayment of principal when due, nonpayment of interest or other amounts, inaccuracy of representations or warranties in any material respect, violation of covenants, cross default and cross acceleration to other material debt, certain bankruptcy or insolvency events, certain ERISA events, certain material judgments, actual or asserted invalidity of security interests in excess of $50 million, or $75 million in the case of the Secured Notes Indenture, in each case subject to customary thresholds, notice and grace period provisions.
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Change of Control
Upon the occurrence of a change of control triggering event, which is defined in the Secured Notes Indenture, each holder of the Secured Notes has the right to require Acquisition Corp. to repurchase some or all of such holder’s Secured Notes at a purchase price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the repurchase date.
Existing Debt as of September 30, 2025
As of September 30, 2025, our long-term debt consists of the following (in millions):

Revolving Credit Facility (a) $ — 
Senior Term Loan Facility due 2031
1,295 
2.750% Senior Secured Notes due 2028 (€325 face amount)
381 
3.750% Senior Secured Notes due 2029
540 
3.875% Senior Secured Notes due 2030
535 
2.250% Senior Secured Notes due 2031 (€445 face amount)
522 
3.000% Senior Secured Notes due 2031
800 
Mortgage Term Loan due 2033 17 
Total Acquisition Corp. debt, including the current portion
4,090 
Premium less unamortized discount and unamortized deferred financing costs
(27)
Total Acquisition Corp. long-term debt, including the current portion, net
$ 4,063 
Beethoven JV Credit Agreement (b)
— 
Tempo Asset-Based Notes due 2050
311 
Unamortized discount
(9)
Total asset-based long-term debt, including the current portion, net (c)
$ 302 
Total long-term debt, including the current portion, net $ 4,365 

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(a) Reflects $350 million of commitments under the Revolving Credit Facility with no letters of credit outstanding at September 30, 2025. There were no loan outstanding under the Revolving Credit Facility at September 30, 2025.
(b) Reflects $500 million of commitments under the Beethoven JV Credit Agreement. There were no loans outstanding under the Beethoven JV Credit Agreement at September 30, 2025.
(c) The Asset-Based Notes are secured only by certain music rights owned by Tempo Music and are nonrecourse to the Company and its subsidiaries, other than Tempo Music. There are currently no amounts outstanding under the Beethoven Credit Agreement.
Repurchase Program
On November 14, 2024, the Company’s board of directors authorized a new $100 million share repurchase program (the “Share Repurchase Program”), which is intended to offset dilution from the Omnibus Incentive Plan. The $100 million share repurchase authorization does not obligate the Company to purchase any shares and the Share Repurchase Program does not have a fixed expiration date. As of September 30, 2025, approximately $84 million of the $100 million share repurchase authorization remained available.
The Company repurchased and retired 477,281 shares for $16 million during the f iscal year ended September 30, 2025.
Dividends
The Company’s ability to pay dividends may be restricted by covenants in the credit agreement for the Revolving Credit Facility which are currently suspended but which will be reinstated if Acquisition Corp.’s Total Indebtedness to EBITDA Ratio increases above 3.50:1.00 and the term loans do not achieve an investment grade rating.
The Company intends to pay quarterly cash dividends to holders of its Class A Common Stock and Class B Common Stock. The declaration of each dividend will continue to be at the discretion of the Company’s board of directors and will depend on the Company’s financial condition, earnings, liquidity and capital requirements, level of indebtedness, contractual restrictions with respect to payment of dividends, restrictions imposed by Delaware law, general business conditions and any other factors that the Company’s board of directors deems relevant in making such a determination. Therefore, there can be no assurance that the Company will pay any dividends to holders of the Company’s common stock, or as to the amount of any such dividends.
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On August 7, 2025, the Company’s board of directors declared a cash dividend of $0.19 per share on the Company’s Class A Common Stock and Class B Common Stock, as well as related payments under certain stock-based compensation plans, payable on September 3, 2025 to stockholders of record as of the close of business on August 20, 2025.
On November 7, 2025, the Company’s board of directors declared a cash dividend of $0.19 per share on the Company’s Class A Common Stock and Class B, as well as related payments under certain stock-based compensation plans, payable on December 2, 2025 to stockholders of record as of the close of business on November 19, 2025.
The Company paid cash dividends to stockholders and participating security holders of $383 million and $361 million for the fiscal years ended September 30, 2025 and 2024, respectively.
Covenant Compliance
The Company was in compliance with its covenants under its outstanding notes, the Revolving Credit Facility, the Senior Term Loan Facility, and the Asset-Based Notes as of September 30, 2025.
On January 18, 2019, we delivered a notice to the trustee under the 2012 Secured Indenture and 2014 Unsecured Indenture changing the Fixed GAAP Date, as defined under the indentures, to October 1, 2018. Under the Senior Term Loan Facility, the Revolving Credit Facility and the Secured Notes Indenture, the Fixed GAAP Date is set for April 3, 2020, other than in respect of capital leases, which are frozen at November 1, 2012.
The Revolving Credit Facility contains a springing leverage ratio that is tied to a ratio based on EBITDA, which is defined under the Revolving Credit Agreement. Our ability to borrow funds under the Revolving Credit Facility may depend upon our ability to meet the leverage ratio test at the end of a fiscal quarter to the extent we have drawn a certain amount of revolving loans. On May 4, 2021, certain covenants set forth in our Revolving Credit Facility were suspended, including the restriction on incurring certain additional indebtedness, based on the determination that the total indebtedness to EBITDA ratio is below the required threshold specified therein. EBITDA as defined in the Revolving Credit Facility is based on Consolidated Net Income (as defined in the Revolving Credit Facility), both of which terms differ from the terms “EBITDA” and “net income” as they are commonly used. For example, the calculation of EBITDA under the Revolving Credit Facility, in addition to adjusting net income to exclude interest expense, income taxes and depreciation and amortization, also adjusts net income by excluding items or expenses such as, among other items, (1) the amount of any restructuring charges or reserves; (2) any non-cash charges (including any impairment charges); (3) any net loss resulting from hedging currency exchange risks; (4) the amount of management, monitoring, consulting and advisory fees paid to Access; (5) business optimization expenses (including consolidation initiatives, severance costs and other costs relating to initiatives aimed at profitability improvement); (6) transaction expenses; (7) equity-based compensation expense; and (8) certain extraordinary, unusual or non-recurring items. The definition of EBITDA under the Revolving Credit Facility also includes adjustments for the pro forma impact of certain projected cost savings, operating expense reductions and synergies and any quality of earnings analysis prepared by independent certified public accountants in connection with an acquisition, merger, consolidation or other investment. The Senior Term Loan Facility and the Secured Notes Indenture use financial measures called “Consolidated EBITDA” or “EBITDA” and “Consolidated Net Income” that have substantially the same definitions to EBITDA and Consolidated Net Income, each as defined under the Revolving Credit Agreement.
EBITDA as defined in the Revolving Credit Facility (referred to in this section as “Adjusted EBITDA”) is presented herein because it is a material component of the leverage ratio contained in the Revolving Credit Agreement. Non-compliance with the leverage ratio could result in the inability to use the Revolving Credit Facility, which could have a material adverse effect on our results of operations, financial position and cash flow. Adjusted EBITDA does not represent net income or cash from operating activities as those terms are defined by U.S. GAAP and does not necessarily indicate whether cash flows will be sufficient to fund cash needs. While Adjusted EBITDA and similar measures are frequently used as measures of operations and the ability to meet debt service requirements, these terms are not necessarily comparable to other similarly titled captions of other companies due to the potential inconsistencies in the method of calculation. Adjusted EBITDA does not reflect the impact of earnings or charges resulting from matters that we may consider not to be indicative of our ongoing operations. In particular, the definition of Adjusted EBITDA in the Revolving Credit Agreement allows us to add back certain non-cash, extraordinary, unusual or non-recurring charges that are deducted in calculating net income. However, these are expenses that may recur, vary greatly and are difficult to predict.
Adjusted EBITDA as presented below should not be used by investors as an indicator of performance for any future period. Further, our debt instruments require that it be calculated for the most recent four fiscal quarters. As a result, the measure can be disproportionately affected by a particularly strong or weak quarter. Further, it may not be comparable to the measure for any subsequent four quarter period or any complete fiscal year. In addition, our debt instruments require that the leverage ratio be calculated on a pro forma basis for certain transactions including acquisitions as if such transactions had occurred on the first date of the measurement period and may include expected cost savings and synergies resulting from or related to any such transaction. There can be no assurances that any such cost savings or synergies will be achieved in full.
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In addition, Adjusted EBITDA is a key measure used by our management to understand and evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. Some of those limitations include: (1) it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenue for our business; (2) it does not reflect the significant interest expense or cash requirements necessary to service interest or principal payments on our indebtedness; and (3) it does not reflect every cash expenditure, future requirements for capital expenditures or contractual commitments. In particular, this measure adds back certain non-cash, extraordinary, unusual or non-recurring charges that are deducted in calculating net income; however, these are expenses that may recur, vary greatly and are difficult to predict. In addition, Adjusted EBITDA is not the same as net income or cash flow provided by operating activities as those terms are defined by U.S. GAAP and does not necessarily indicate whether cash flows will be sufficient to fund cash needs. Accordingly, Adjusted EBITDA should be considered in addition to, not as a substitute for, net income (loss) and other measures of financial performance reported in accordance with U.S. GAAP.
The following is a reconciliation of net income, which is a U.S. GAAP measure of our operating results, to Adjusted EBITDA as defined, for the most recently ended four fiscal quarters, or the twelve months ended September 30, 2025, for the twelve months ended September 30, 2024 and for the three months ended September 30, 2025 and September 30, 2024. In addition, the reconciliation includes the calculation of the Senior Secured Indebtedness to Adjusted EBITDA ratio, which we refer to as the Leverage Ratio, under the Revolving Credit Agreement for the most recently ended four fiscal quarters, or the twelve months ended September 30, 2025. The terms and related calculations are defined in the Revolving Credit Agreement. All amounts in the reconciliation below reflect Acquisition Corp. (in millions, except ratios):

Twelve Months Ended
September 30, Three Months Ended
September 30,
2025 2024 2025 2024
Net Income $ 370  $ 478  $ 109  $ 48 
Income tax expense 120  123  (3) 3 
Interest expense, net 162  161  43  40 
Depreciation and amortization 376  327  104  83 

Net losses (gains) on divestitures and sale of securities
(30) (42) (1) — 
Restructuring and severance (a)
107  133  92  81 
Net hedging and foreign exchange (gains) losses (b)
80  74  (6) 54 

Transaction costs
4  7  —  2 
Business optimization expenses (c)
89  102  21  28 
Non-cash stock-based compensation expense (d)
54  52  12  25 
Other non-cash charges (e)
142  54  37  (3)
Unrestricted subsidiary income
(16) —  (6) — 
Pro forma impact of cost savings initiatives and specified transactions (f)
294  150  69  34 
Adjusted EBITDA $ 1,752   $ 1,619   $ 471   $ 395  
Senior Secured Indebtedness (g)
$ 3,546  
Leverage Ratio (h)
2.02x

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(a) Reflects severance costs and other restructuring related expenses, including those related to the Company’s restructuring plans as well as the executive transition costs in the current and prior year.
(b) Reflects unrealized losses (gains) due to foreign exchange on our Euro-denominated debt, losses (gains) from foreign currency forward exchange contracts and intercompany transactions.
(c) Reflects costs associated with our transformation initiatives and technology system updates, which includes costs of $17 million and $70 million related to our finance transformation for the three and twelve months ended September 30, 2025, respectively, as well as $20 million and $76 million for the three and twelve months ended September 30, 2024, respectively.
(d) Reflects non-cash stock-based compensation expense related to the Omnibus Incentive Plan.
(e) Reflects non-cash activity, including the unrealized losses (gains) on the mark-to-market adjustment of equity investments, investment losses (gains) and $60 million of non-cash impairment losses resulting from the Company’s restructuring plans as well as an impairment charge of $79 million for long-lived assets associated with EMP, which is now classified as held for sale as of September 30, 2025.
(f) Reflects expected savings resulting from transformation initiatives, including the 2025 Restructuring Plan, the 2024 Strategic Restructuring Plan, and the 2023 Restructuring Plan, as well as the pro forma impact of certain specified transactions for the three and twelve months ended September 30, 2025. Certain of these cost savings initiatives and transactions impacted quarters prior to the quarter during which they were identified within the last twelve-month period. The pro forma impact of
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these specified transactions and initiatives resulted in a $125 million increase in the twelve months ended September 30, 2025 Adjusted EBITDA.
(g) Reflects the balance of senior secured debt at Acquisition Corp. of approximately $4.063 billion less cash of $516 million, which excludes cash and debt held at Tempo Music, a restricted subsidiary.
(h) Reflects the ratio of Senior Secured Indebtedness, including Revolving Credit Agreement Indebtedness, to Adjusted EBITDA. This is calculated net of cash and equivalents of the Company as of September 30, 2025 not exceeding $750 million in accordance with the Sixth Revolving Credit Agreement Amendment as described further in Note 10. If the outstanding aggregate principal amount of borrowings and drawings under letters of credit which have not been reimbursed under our Revolving Credit Facility is greater than $140 million at the end of a fiscal quarter, the maximum leverage ratio permitted under the Revolving Credit Facility is 5.00:1.00. The Company’s Revolving Credit Facility does not impose any “leverage ratio” maintenance requirement on the Company when the aggregate principal amount of borrowings and drawings under letters of credit, which have not been reimbursed under the Revolving Credit Facility, is less than or equal to $140 million at the end of a fiscal quarter. On May 4, 2021, certain covenants set forth in our Revolving Credit Facility were suspended, including the restriction on incurring certain additional indebtedness, based on the determination that the total indebtedness to EBITDA ratio is below the required threshold specified therein. In connection with the acquisition of Tempo Music, the acquired entity was designated as an unrestricted subsidiary, and therefore net income and Adjusted EBITDA do not include the results of Tempo Music, and the Asset-Based Notes issued by a subsidiary of Tempo Music are not included in our indebtedness for purposes of calculating the Leverage Ratio.
Summary
Management believes that funds generated from our operations and borrowings under the Revolving Credit Facility and available cash and equivalents will be sufficient to fund our debt service requirements, working capital requirements and capital expenditure requirements for the foreseeable future. We also have additional borrowing capacity under our indentures and the Senior Term Loan Facility. However, our ability to continue to fund these items and to reduce debt may be affected by general economic, financial, competitive, legislative and regulatory factors, as well as other industry-specific factors such as the ability to control music piracy and the continued transition from physical to digital formats in the recorded music and music publishing industries. It could also be affected by the severity and duration of geopolitical conflicts or natural or man-made disasters, including pandemics. We and our affiliates continue to evaluate opportunities to, from time to time, depending on market conditions and prices, contractual restrictions, our financial liquidity and other factors, seek to pay dividends or prepay outstanding debt or repurchase or retire Acquisition Corp.’s outstanding debt or debt securities or repurchase our outstanding equity securities in open market purchases, privately negotiated purchases or otherwise. The amounts involved in any such transactions, individually or in the aggregate, may be material and may be funded from available cash or from additional borrowings. In addition, from time to time, depending on market conditions and prices, contractual restrictions, our financial liquidity and other factors, we may seek to refinance the Senior Credit Facilities or our outstanding debt or debt securities with existing cash and/or with funds provided from additional borrowings.
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Contractual and Other Obligations
Firm Commitments
The following table summarizes the Company’s aggregate contractual obligations at September 30, 2025, and the estimated timing and effect that such obligations are expected to have on the Company’s liquidity and cash flow in future periods.

Firm Commitments and Outstanding Debt Less than
1 year 1-3
years 3-5
years After 5
years Total
(in millions)
Senior Secured Notes (1) $ —  $ 381  $ 1,075  $ 1,322  $ 2,778 
Interest on Senior Secured Notes (1) 87  174  143  24  428 
Senior Term Loan Facility (1) —  —  —  1,295  1,295 
Interest on Senior Term Loan Facility (1) 71  126  133  28  358 
Term Loan Mortgage (1) —  —  —  17  17 
Interest on Term Loan Mortgage (1) 1  1  1  2  5 
Tempo Asset-Based Notes (1) (5)
—  —  —  311  311 
Interest on Tempo Asset-Based Notes (1) (5)
15  31  37  383  466 
Operating leases (2) 53  112  76  42  283 
Artist, songwriter and co-publisher commitments (3) 593  * * * 593 
Minimum funding commitments to investees and other obligations (4) 25  20  1  —  46 
Total firm commitments and outstanding debt $ 845  $ 845  $ 1,466  $ 3,424  $ 6,580 

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The following is a description of our firmly committed contractual obligations at September 30, 2025:
(1) Outstanding debt obligations consist of the Senior Secured Notes, Senior Term Loan Facility, the Term Loan Mortgage, and the Tempo Asset-Based Notes . These obligations have been presented based on the principal amounts due as of September 30, 2025. Amounts do not include any fair value adjustments, bond premiums, discounts or unamortized deferred financing costs.
(2) Operating lease obligations primarily relate to the minimum lease rental obligations for our real estate and operating equipment in various locations around the world.
(3) The Company routinely enters into long-term commitments with recording artists, songwriters and publishers for the future delivery of music. Such commitments generally become due only upon delivery and Company acceptance of albums from the recording artists or future musical compositions from songwriters and publishers. Additionally, such commitments are typically cancellable at the Company’s discretion, generally without penalty. Based on contractual obligations and the Company’s expected release schedule, off-balance sheet aggregate firm commitments to such talent approximated $593 million at September 30, 2025. The aggregate firm commitments expected for the next twelve-month period based on contractual obligations and the Company’s expected release schedule approximates $348 million at September 30, 2025.
(4) We have minimum funding commitments and other related obligations to support the operations of various investments, which are reflected in the table above. Other long-term liabilities, which are not included in the table above, include $12 million and $10 million of liabilities for uncertain tax positions as of September 30, 2025 and September 30, 2024, respectively. We are unable to accurately predict when these amounts will be realized or released.
(5) Outstanding debt obligations related to Tempo Asset-Based Notes, including the estimated timing and effect of those obligations, reflect the contractual repayment date of November 2050.

* Because the timing of payment, and even whether payment occurs, is dependent upon the timing of delivery of albums and musical compositions, the timing and amount of payment of these commitments as presented in the above summary can vary significantly.
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CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The SEC’s Financial Reporting Release No. 60, “Cautionary Advice Regarding Disclosure About Critical Accounting Policies” (“FRR 60”), suggests companies provide additional disclosure and commentary on those accounting policies considered most critical. FRR 60 considers an accounting policy to be critical if it is important to our financial condition and results, and requires significant judgment and estimates on the part of management in our application. We believe the following list represents critical accounting policies as contemplated by FRR 60. For a summary of all of our significant accounting policies, see Note 2 to our consolidated financial statements included elsewhere herein.
Business Combinations
We account for our business acquisitions under the FASB ASC Topic 805, Business Combinations (“ASC 805”) guidance for business combinations. The total cost of acquisitions is allocated to the underlying identifiable net assets based on their respective estimated fair values. The excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill. Determining the fair value of assets acquired and liabilities assumed requires management’s judgment and often involves the use of estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates, asset lives and market multiples, among other items. If our assumptions or estimates in the fair value calculation change based on information that becomes available during the one-year period from the acquisition date, the fair value of our acquired intangible assets could change; this would also change the value of our goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings.
Goodwill and Other Intangible Assets
We account for our goodwill and other indefinite-lived intangible assets as required by FASB ASC Topic 350, Intangibles - Goodwill and Other (“ASC 350”). We test goodwill for impairment at the reporting unit level and have concluded that our reporting units are generally the same as our reportable segments. We evaluate the determination of our reporting units periodically or whenever events or substantive changes in circumstances occur. ASC 350 requires that goodwill and certain intangible assets be assessed for impairment using fair value measurement techniques on an annual basis and when events occur that may suggest that the fair value of such assets cannot support the carrying value. ASC 350 gives an entity the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit or intangible asset is less than its carrying amount. If an entity determines it is not more likely than not that the fair value of a reporting unit or intangible asset is less than its carrying amount, then performing the quantitative impairment test is unnecessary. However, if an entity concludes otherwise, then the quantitative impairment test shall be used to identify the impairment and measure the amount of an impairment loss to be recognized (if applicable).
As of September 30, 2025, we had recorded goodwill in the amount of $2.061 billion, including $1.597 billion and $464 million for our Recorded Music and Music Publishing businesses, respectively, primarily related to the Merger and PLG Acquisition. As of September 30, 2025, we had recorded indefinite-lived intangible assets of $154 million. We test our goodwill and other indefinite-lived intangible assets for impairment on an annual basis in the fourth quarter of each fiscal year as of July 1. We performed a qualitative assessment for our reporting units and other indefinite-lived intangible assets in fiscal 2025. This assessment considered changes in our projected future cash flows and discount rates, recent market transactions and overall macroeconomic conditions. Based on this assessment, we concluded that it was more likely than not that the estimated fair values of our reporting units and other indefinite-lived intangible assets were higher than their carrying values and that the performance of a quantitative impairment test was not required.
See Note 8 to the consolidated financial statements for a further discussion of our goodwill and intangible assets.
Revenue Recognition
Recorded Music
As required by FASB ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), the Company recognizes revenue when, or as, control of the promised services or goods is transferred to our customers and in an amount that reflects the consideration the Company is contractually due in exchange for those services or goods. The Company’s revenue recognition process involves several applications that are responsible for the initiation and processing of transactions in order to recognize revenue in accordance with the Company’s policy and ASC 606.
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Revenues from the sale or license of Recorded Music products through digital distribution channels are typically recognized when sale or usage occurs based on usage reports received from the customer. Certain contracts contain minimum guarantees, which are recoupable against royalties. Upon contract inception, the Company will assess whether a shortfall or breakage is expected (i.e., where the minimum guarantee will not be recouped through royalties) in order to determine timing of revenue recognition for the minimum guarantee.
For fixed fee contracts and minimum guarantee contracts where breakage is expected, the total transaction price (fixed fee or minimum guarantee) is typically recognized using an appropriate measure of progress over the contractual term. The Company updates its assessment of the transaction price each reporting period to see if anticipated royalty earnings exceed the minimum guarantee. For contracts where breakage is not expected, royalties are recognized as revenue as sales or usage occurs based upon the licensee’s usage reports and, when these reports are not available, revenue is based on historical data, industry information and other relevant trends.
Music Publishing
Music Publishing revenues are earned from the receipt of royalties relating to the licensing of rights in musical compositions and the sale of published sheet music and songbooks. The receipt of royalties principally relates to amounts earned from the public performance of musical compositions, the mechanical reproduction of musical compositions on recorded media, including digital formats and the use of musical compositions in synchronization with visual images. Music publishing royalties, except for synchronization royalties, generally are recognized when the sale or usage occurs. The most common form of consideration for publishing contracts is sales- and usage-based royalties. The collecting societies submit usage reports, typically with payment for royalties due, often on a quarterly or biannual reporting period, in arrears. Royalties are recognized as the sale or usage occurs based upon usage reports and, when these reports are not available, royalties are estimated based on historical data, such as recent royalties reported, company-specific information with respect to changes in repertoire, industry information and other relevant trends. Synchronization revenue is typically recognized as revenue when control of the license is transferred to the customer in accordance with ASC 606.
Royalty Costs and Royalty Advances
The Company incurs royalty costs that are payable to our recording artists and songwriters generated from the sale or license of our Recorded Music catalog and Music Publishing copyrights. Royalties owed to artists are calculated using negotiated rates which is applied to revenue earned in accordance with recording artist and songwriter contracts. There are instances where such data is not available to be processed and royalty cost calculations may involve judgments about significant volumes of data to be processed and analyzed.
We had $2,740 million and $2,549 million of royalty payables in our balance sheet at September 30, 2025 and September 30, 2024, respectively.
In many instances, the Company commits to pay our recording artists and songwriters royalties in advance of future sales. The Company accounts for these advances under the related guidance in FASB ASC Topic 928, Entertainment—Music (“ASC 928”). Under ASC 928, the Company capitalizes as assets advances that it believes are recoverable from future royalties to be earned by the recording artist or songwriter. Recoverability is assessed upon initial commitment of the advance based upon the Company’s forecast of anticipated revenue from the sale of future and existing albums or musical compositions. In determining whether the advance is recoverable, the Company evaluates the current and past popularity of the recording artist or songwriter, the sales history of the recording artist or songwriter, the initial or expected commercial acceptability of the product, the current and past popularity of the genre of music that the product is designed to appeal to, and other relevant factors. Advances vary in both amount and expected life based on the underlying recording artist or songwriter. To the extent that a portion of an outstanding advance is no longer deemed recoverable, that amount will be expensed in the period the determination is made.
We had $1,660 million and $1,344 million of advances in our balance sheet at September 30, 2025 and September 30, 2024, respectively. We believe such advances are recoverable through future royalties to be earned by the applicable recording artists and songwriters.
Recent Accounting Pronouncements
Refer to Note 2 to our consolidated financial statements included elsewhere herein for more information regarding recently issued accounting pronouncements.
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ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As discussed in Note 16 to our consolidated financial statements included herein, the Company is exposed to market risk arising from changes in market rates and prices, including movements in foreign currency exchange rates and interest rates. As of September 30, 2025, other than as described below, there have been no material changes to the Company’s exposure to market risk since September 30, 2024.
Foreign Currency Risk
Within our global business operations, we have transactional exposures that may be adversely affected by changes in foreign currency exchange rates relative to the U.S. dollar. We may at times choose to use foreign exchange currency derivatives, primarily forward contracts, to manage the risk associated with the volatility of future cash flows denominated in foreign currencies, such as unremitted or future royalties and license fees owed to our U.S. companies for the sale or licensing of U.S.-based music and merchandise abroad that may be adversely affected by changes in foreign currency exchange rates. We focus on managing the level of exposure to the risk of foreign currency exchange rate fluctuations on major currencies, which can include the Euro, British pound sterling, Japanese yen, Canadian dollar, Swedish krona, Australian dollar, Brazilian real, Mexican Peso, Norwegian krone, and Polish Zloty and in many cases we have natural hedges where we have expenses associated with local operations that offset the revenue in local currency and our Euro-denominated debt, which can offset fluctuations in the Euro. As of September 30, 2025, the Company had outstanding foreign currency forward exchange contracts for sale of $460 million and the purchase of $170 million of foreign currencies at fixed rates.
The fair value of foreign exchange contracts is subject to changes in foreign currency exchange rates. For the purpose of assessing the specific risks, we use a sensitivity analysis to determine the effects that market risk exposures may have on the fair value of our financial instruments. For foreign exchange forward contracts outstanding at September 30, 2025, we typically perform a sensitivity analysis assuming a hypothetical 10% depreciation of the U.S. dollar against foreign currencies from prevailing foreign currency exchange rates and assuming no change in interest rates. The fair value of the foreign exchange forward contracts would have decreased by $29 million based on this analysis. Hypothetically, even if there was a decrease in the fair value of the forward contracts, because our foreign exchange contracts are used to manage foreign currency exchange rate risk, these losses would be largely offset by gains on the underlying transactions.
Interest Rate Risk
We had $4.401 billion of principal debt outstanding at September 30, 2025, of which $1.312 billion was variable-rate debt and $3.089 billion was fixed-rate debt. As such, we are exposed to changes in interest rates. At September 30, 2025, 70% of the Company’s debt was at a fixed rate. In addition, as of September 30, 2025, we have the option under our floating rate loans under the Senior Term Loan Facility to select a one, two, three or six month SOFR rate.
Based on the level of interest rates prevailing at September 30, 2025, the fair value of the Company’s fixed-rate and variable-rate debt was approximately $4.270 billion. Further, as of September 30, 2025, based on the amount of the Company’s fixed-rate debt, a 25 basis point increase or decrease in the level of interest rates would decrease the fair value of the fixed-rate debt by approximately $30 million or increase the fair value of the fixed-rate debt by approximately $30 million. This potential fluctuation is based on the simplified assumption that the level of fixed-rate debt remains constant with an immediate across the board increase or decrease in the level of interest rates with no subsequent changes in rates for the remainder of the period.
Inflation Risk
Inflationary factors such as increases in overhead costs may adversely affect our results of operations. We do not believe that inflation has had a material effect on our business, financial condition or results of operations to date. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases for services. Our inability or failure to do so could harm our business, financial condition or results of operations.
76

ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
WARNER MUSIC GROUP CORP.
ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2025
TABLE OF CONTENTS

Page
Number
Reports of Independent Registered Public Accounting Firm (PCAOB ID: 185 )
78

Consolidated Financial Statements:
Consolidated Balance Sheets as of September 30, 2025 and September 30, 2024
81

Consolidated Statements of Operations for the fiscal years ended September 30, 2025, September 30, 2024 and September 30, 2023
82

Consolidated Statements of Comprehensive Income for the fiscal years ended September 30, 2025, September 30, 2024 and September 30, 2023
83

Consolidated Statements of Cash Flows for the fiscal years ended September 30, 2025, September 30, 2024 and September 30, 2023
84

Consolidated Statements of Equity for the fiscal years ended September 30, 2025, September 30, 2024 and September 30, 2023
85

Notes to Consolidated Financial Statements
86

Financial Statement Schedule:
Schedule II—Valuation and Qualifying Accounts
120

77

Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Warner Music Group Corp.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Warner Music Group Corp. and subsidiaries (the Company) as of September 30, 2025 and 2024, the related consolidated statements of operations, comprehensive income, cash flows, and equity for each of the years in the three-year period ended September 30, 2025, and the related notes and financial statement schedule II (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended September 30, 2025, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of September 30, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated November 20, 2025 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
78

Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Sufficiency of audit evidence over Recorded Music digital revenue
As discussed in Notes 2 and 4 to the consolidated financial statements, the Company generated $3,594 million of digital revenues within the Recorded Music segment for the year ended September 30, 2025. The Company’s Recorded Music digital revenue recognition process involves a high volume of royalty transactions dependent on several information technology (IT) applications responsible for the initiation, processing, and recording of transactions in accordance with the Company’s accounting policy.
We identified the evaluation of the sufficiency of audit evidence related to digital revenue in the Recorded Music segment as a critical audit matter. Evaluating the sufficiency of audit evidence required especially subjective auditor judgment due to the multiple IT applications, data interfaces, and processing used for the initiation, processing, and recording of transactions, and therefore required involvement of IT professionals.
The following are the primary procedures we performed to address this critical audit matter. We applied auditor judgment to determine the nature and extent of procedures to be performed over Recorded Music digital revenue. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Recorded Music digital revenue process, including involving IT professionals with specialized skills and knowledge, who assisted in that evaluation and testing. This included controls over the capture and flow of royalty transaction information through the Company’s IT systems. For a selection of Recorded Music digital revenue agreements, we read the underlying agreements and evaluated the Company’s assessment of the contract terms in accordance with revenue recognition requirements. For a sample of revenue transactions, we compared the amounts recognized to (1) underlying sales and usage statements received from customers and cash receipts, where applicable, and (2) underlying documentation, including contracts. For a sample of manual journal entries to Recorded Music digital revenue, which included amounts for contracts that contain non-recoupable fixed fees or minimum guarantees, we agreed amounts to underlying documentation and, where applicable, recalculated the Company’s determination of revenue recognized. In addition, we evaluated the overall sufficiency of audit evidence obtained by assessing the results of procedures performed, including appropriateness of the nature and extent of such evidence.
/s/ KPMG LLP
We have served as the Company’s auditor since 2015.
New York, New York
November 20, 2025
79

Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Warner Music Group Corp.:
Opinion on Internal Control Over Financial Reporting
We have audited Warner Music Group Corp. and subsidiaries' (the Company) internal control over financial reporting as of September 30, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of September 30, 2025 and 2024, the related consolidated statements of operations, comprehensive income, cash flows, and equity for each of the years in the three-year period ended September 30, 2025, and the related notes and financial statement schedule II (collectively, the consolidated financial statements), and our report dated November 20, 2025 expressed an unqualified opinion on those consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ KPMG LLP
New York, New York
November 20, 2025
80

Warner Music Group Corp.
Consolidated Balance Sheets
(In millions, except share amounts which are reflected in thousands)

September 30,
2025 September 30,
2024
Assets
Current assets:
Cash and equivalents $ 532   $ 694  
Accounts receivable, net of allowances of $ 27 million and $ 26 million
1,340   1,255  
Inventories 62   99  
Royalty advances expected to be recouped within one year 581   470  

Assets held for sale
89   —  
Prepaid and other current assets 166   125  
Total current assets 2,770   2,643  
Royalty advances expected to be recouped after one year 1,079   874  
Property, plant and equipment, net 441   481  
Operating lease right-of-use assets, net 189   225  
Goodwill 2,061   2,021  
Intangible assets subject to amortization, net 2,725   2,359  
Intangible assets not subject to amortization 154   152  
Deferred tax assets, net 111   52  
Other assets 299   348  
Total assets $ 9,829   $ 9,155  
Liabilities and Equity
Current liabilities:
Accounts payable $ 257   $ 289  
Accrued royalties 2,740   2,549  
Accrued liabilities 666   641  
Accrued interest 31   17  
Operating lease liabilities, current 43   45  
Deferred revenue 286   246  
Liabilities held for sale
49   —  
Other current liabilities 129   110  
Total current liabilities 4,201   3,897  
Acquisition corp. long-term debt
4,063   4,014  
Asset-based long-term debt
302   —  
Operating lease liabilities, noncurrent 200   228  
Deferred tax liabilities, net 164   195  
Other noncurrent liabilities 142   146  
Total liabilities $ 9,072   $ 8,480  
Equity:
Class A common stock, $ 0.001 par value; 1,000,000 shares authorized, 146,906 and 142,559 shares issued and outstanding as of September 30, 2025 and September 30, 2024, respectively
$ —   $ —  
Class B common stock, $ 0.001 par value; 1,000,000 shares authorized, 375,380 and 375,380 issued and outstanding as of September 30, 2025 and September 30, 2024, respectively
1   1  
Additional paid-in capital 2,166   2,077  
Accumulated deficit ( 1,331 ) ( 1,313 )
Accumulated other comprehensive loss, net ( 189 ) ( 247 )
Total Warner Music Group Corp. equity 647   518  
Noncontrolling interest 110   157  
Total equity 757   675  
Total liabilities and equity $ 9,829   $ 9,155  

See accompanying notes
81

Warner Music Group Corp.
Consolidated Statements of Operations
(In millions, except share amounts which are reflected in thousands, and per share data)

Fiscal Year Ended September 30,
2025 2024 2023
Revenue $ 6,707   $ 6,426   $ 6,037  
Costs and expenses:
Cost of revenue ( 3,632 ) ( 3,355 ) ( 3,177 )
Selling, general and administrative expenses (a) ( 1,889 ) ( 1,879 ) ( 1,826 )
Restructuring and impairments
( 234 ) ( 177 ) ( 40 )
Amortization expense ( 258 ) ( 224 ) ( 245 )
Total costs and expenses ( 6,013 ) ( 5,635 ) ( 5,288 )
Net gain on divestitures
—   32   41  
Operating income 694   823   790  
Loss on extinguishment of debt —   —   ( 4 )
Interest expense, net ( 162 ) ( 161 ) ( 141 )
Other expense, net ( 42 ) ( 61 ) ( 36 )
Income before income taxes 490   601   609  
Income tax expense ( 120 ) ( 123 ) ( 170 )
Net income 370   478   439  
Less: Income attributable to noncontrolling interest ( 5 ) ( 43 ) ( 9 )
Net income attributable to Warner Music Group Corp. $ 365   $ 435   $ 430  

Net income per share attributable to common stockholders:
Class A – Basic and Diluted $ 0.69   $ 0.83   $ 0.82  
Class B – Basic and Diluted $ 0.69   $ 0.83   $ 0.82  
Weighted average common shares:
Class A – Basic and Diluted 145,128 140,882 138,070
Class B – Basic and Diluted 375,380 376,641 377,650

(a) Includes depreciation expense: $ ( 118 ) $ ( 103 ) $ ( 87 )

See accompanying notes
82

Warner Music Group Corp.
Consolidated Statements of Comprehensive Income
(In millions)

Fiscal Year Ended September 30,
2025 2024 2023
Net income $ 370   $ 478   $ 439  
Other comprehensive income, net of tax:
Foreign currency adjustment, net 56   78   36  
Deferred (loss) gain on derivative financial instruments —   ( 1 ) ( 12 )
Minimum pension liability 2   ( 2 ) 1  
Other comprehensive income, net of tax 58   75   25  
Total comprehensive income 428   553   464  
Less: Income attributable to noncontrolling interest ( 5 ) ( 43 ) ( 9 )
Comprehensive income attributable to Warner Music Group Corp. $ 423   $ 510   $ 455  

See accompanying notes
83

Warner Music Group Corp.
Consolidated Statements of Cash Flows
(In millions)

Fiscal Year Ended September 30,
2025 2024 2023
Cash flows from operating activities
Net income $ 370   $ 478   $ 439  
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 376   327   332  
Unrealized losses (gains) and remeasurement of foreign-denominated loans and foreign currency forward exchange contracts 70   68   38  
Deferred income taxes ( 90 ) ( 48 ) ( 13 )
Loss on extinguishment of debt —   —   4  
Net loss (gain) on investments
( 27 ) ( 6 ) ( 3 )
Net loss (gain) on divestitures
—   ( 32 ) ( 42 )
Non-cash interest expense 7   6   2  
Non-cash stock-based compensation expense 54   52   49  
Non-cash impairments and restructuring
139   57   —  
Changes in operating assets and liabilities:
Accounts receivable, net ( 61 ) ( 110 ) ( 113 )
Inventories ( 11 ) 30   ( 12 )
Royalty advances ( 312 ) ( 222 ) ( 191 )
Other noncurrent assets 4   ( 85 ) ( 10 )
Accounts payable and accrued liabilities ( 28 ) 86   77  
Royalty payables 167   275   256  
Accrued interest 7   ( 6 ) 1  
Operating lease liabilities ( 15 ) ( 5 ) ( 4 )
Deferred revenue 40   ( 133 ) ( 58 )
Other balance sheet changes ( 12 ) 22   ( 65 )
Net cash provided by operating activities 678   754   687  
Cash flows from investing activities
Acquisition of music publishing rights and music catalogs
( 195 ) ( 187 ) ( 114 )
Capital expenditures ( 139 ) ( 116 ) ( 127 )
Investments and acquisitions of businesses, net of cash received ( 46 ) ( 40 ) ( 126 )
Proceeds from the sale of investments 40   13   22  
Proceeds from divestitures
—   19   45  
Net cash used in investing activities ( 340 ) ( 311 ) ( 300 )
Cash flows from financing activities
Partial proceeds from Senior Term Loan Facility refinancing
—   104   146  
Partial repayment of Senior Term Loan Facility refinancing
—   ( 104 ) —  

Proceeds from Term Loan Mortgage —   —   19  
Repayment of Term Loan Mortgage ( 1 ) —   ( 1 )

Deferred financing costs paid ( 2 ) ( 2 ) ( 3 )

Distribution to noncontrolling interest holders ( 15 ) ( 8 ) ( 12 )
Dividends paid ( 383 ) ( 361 ) ( 340 )
Payment of deferred and contingent consideration ( 23 ) ( 20 ) ( 133 )
Taxes paid related to net share settlement of restricted stock units and common stock
( 20 ) ( 5 ) —  
Common stock repurchased and retired
( 16 ) —   —  
Redemption of noncontrolling interests
( 37 ) —   ( 1 )
Net cash used in financing activities ( 497 ) ( 396 ) ( 325 )
Effect of exchange rate changes on cash and equivalents —   6   ( 5 )
Cash balances classified as assets held for sale
( 3 ) —   —  
Net (decrease) increase in cash and equivalents ( 162 ) 53   57  
Cash and equivalents at beginning of period 694   641   584  
Cash and equivalents at end of period $ 532   $ 694   $ 641  

See accompanying notes
84

Warner Music Group Corp.
Consolidated Statements of Equity
(In millions, except share amounts which are reflected in thousands, and per share data)
Class A
Common Stock Class B
Common Stock Additional
Paid-in
Capital Accumulated
Deficit Accumulated
Other
Comprehensive
Loss Total
Warner Music
Group Corp.
Equity (Deficit) Non-controlling Interest Total
Equity
(Deficit)
Shares Value Shares Value
Balances at September 30, 2022 137,199   $ —   377,650   $ 1   $ 1,975   $ ( 1,477 ) $ ( 347 ) $ 152   $ 16   $ 168  
Cumulative effect of ASC 842 adoption —  —  —  —  —  —   —  —   —  —  
Net income
—  —  —  —  —  430   —  430   9   439  
Other comprehensive loss, net of tax
—  —  —  —  —  —  25   25   —  25  
Dividends ($ 0.65 per share)
—  —  —  —  —  ( 340 ) —  ( 340 ) —  ( 340 )
Stock-based compensation expense —  —  —  —  39   —  —  39   —  39  
Distribution to noncontrolling interest holders —  —  —  —  —  —  —  —  ( 12 ) ( 12 )
Acquisition of noncontrolling interests
—  —  —  —  —  —  —  112   112  
Shares issued under the Plan
869   —  —  —  —  —  —  —  —  — 
Conversion of Class B shares to Class A shares
—   —  —   —  —  —  —  —  —  — 
Shares issued under Omnibus Incentive Plan 277   —  —  —  —  —  —  —  —  — 
Other —  —  —  —  1   —  —  1   ( 2 ) ( 1 )
Balances at September 30, 2023 138,345   $ —   377,650   $ 1   $ 2,015   $ ( 1,387 ) $ ( 322 ) $ 307   $ 123   $ 430  
Net income —  —  —  —  —  435   —  435   43   478  
Other comprehensive income, net of tax
—  —  —  —  —  —  75   75   —  75  
Dividends ($ 0.69 per share)
—  —  —  —  —  ( 361 ) —  ( 361 ) —  ( 361 )
Stock-based compensation expense —  —  —  —  67   —  —  67   —  67  
Distribution to noncontrolling interest holders —  —  —  —  —  —  —  —  ( 8 ) ( 8 )
Acquisition of noncontrolling interests
—  —  —  —  —  —  —  —  ( 1 ) ( 1 )
Shares issued under the Plan
1,738   —  —  —  —  —  —  —  —  — 
Exchange of Class B shares for Class A shares
2,270   —  ( 2,270 ) —  —  —  —  —  —  — 
Shares issued under Omnibus Incentive Plan 206   —  —  —  ( 5 ) —  —  ( 5 ) —  ( 5 )
Other —  —  —  —  —   —  —  —   —   —  
Balances at September 30, 2024 142,559   $ —   375,380   $ 1   $ 2,077   $ ( 1,313 ) $ ( 247 ) $ 518   $ 157   $ 675  
Net income —  —  —  —  —  365   —  365   5   370  
Other comprehensive income, net of tax —  —  —  —  —  —  58   58   —  58  
Dividends ($ 0.73 per share)
—  —  —  —  —  ( 383 ) —  ( 383 ) —  ( 383 )
Stock-based compensation expense —  —  —  —  61   —  —  61   —  61  
Distribution to noncontrolling interest holders —  —  —  —  —  —  —  —  ( 15 ) ( 15 )
Vesting of restricted stock units, net of shares withheld for employee taxes 800   —  —  —  ( 20 ) —  —  ( 20 ) —  ( 20 )

Acquisition of noncontrolling interests
—  —  —  —  —  —  —  —  74   74  
Shares issued under the Plan
2,607   —  —  —  —  —  —  —  —  — 

Common shares repurchased and retired ( 477 ) —  —  —  ( 16 ) —  —  ( 16 ) —  ( 16 )
Redemption of noncontrolling interests 1,417   —  —  —  64   —  —  64   ( 111 ) ( 47 )

Balances at September 30, 2025 146,906   $ —   375,380   $ 1   $ 2,166   $ ( 1,331 ) $ ( 189 ) $ 647   $ 110   $ 757  

See accompanying notes
85

Warner Music Group Corp.
Notes to Consolidated Financial Statements

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.
Initial Public Offering
On June 5, 2020, the Company completed an initial public offering (“IPO”) of Class A common stock of the Company, par value $ 0.001 per share (“Class A Common Stock”). The Company listed its shares on the NASDAQ stock market under the ticker symbol “WMG.” The offering consisted entirely of secondary shares sold by Access Industries, LLC (collectively with its affiliates, “Access”) and certain related selling stockholders.
Access continues to hold all of the Class B common stock of the Company, par value $ 0.001 per share (“Class B Common Stock”), representing approximately 98 % of the total combined voting power of the Company’s outstanding common stock and approximately 72 % of the economic interest as of September 30, 2025. As a result, the Company is a “controlled company” within the meaning of the corporate governance standards of NASDAQ.
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
Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”). In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.
Basis of Consolidation
The accompanying financial statements present the consolidated accounts of all entities in which the Company has a controlling voting interest and/or variable interest required to be consolidated in accordance with U.S. GAAP. All intercompany balances and transactions have been eliminated.
Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, Consolidation (“ASC 810”) requires the Company first evaluate its investments to determine if any investments qualify as a variable interest entity (“VIE”). A VIE is consolidated if the Company is deemed to be the primary beneficiary of the VIE, which is the party involved with the VIE that has both (i) the power to control the most significant activities of the VIE and (ii) either the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. If an entity is not deemed to be a VIE, the Company consolidates the entity if the Company has a controlling voting interest. As of September 30, 2025 and 2024, there were approximately $ 65 million and $ 77 million of assets, respectively, and $ 2 million and $ 2 million of liabilities, respectively, related to VIEs included in our consolidated balance sheets.
86

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.
Earnings per Share
The consolidated statements of operations present basic and diluted earnings per share (“EPS”). The Company utilizes the two-class method to report earnings per share. The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock according to dividends declared and participation rights in undistributed earnings. Undistributed earnings allocated to participating securities are subtracted from net income in determining net income attributable to common stockholders. See also Note 3, Earnings Per Share.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and the accompanying notes. Actual results could differ from those estimates.
Business Combinations
The Company accounts for its business acquisitions under the FASB ASC Topic 805, Business Combinations (“ASC 805”) guidance for business combinations. The total cost of acquisitions is allocated to the underlying identifiable net assets based on their respective estimated fair values. The excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill. Determining the fair value of assets acquired and liabilities assumed requires management’s judgment and often involves the use of estimates and assumptions, including assumptions with respect to future cash inflows and outflows, discount rates, asset lives and market multiples, among other items.
Cash and Equivalents
The Company considers all highly liquid investments with maturities of three months or less at the date of purchase to be cash equivalents. The Company includes checks outstanding at year end as a component of accounts payable, instead of a reduction in its cash balance where there is not a right of offset in the related bank accounts. The Company maintains certain cash deposits in excess of FDIC insurance limits.
Accounts Receivable
Credit is extended to customers based upon an evaluation of the customer’s financial condition. Accounts receivable are recorded net of an allowance for current expected credit losses.
Refund Liabilities and Allowance for Credit Losses
Management’s estimate of Recorded Music physical products that will be returned, and the amount of receivables that will ultimately be collected is an area of judgment affecting reported revenues and operating income. In determining the estimate of physical product sales that will be returned, management analyzes vendor sales of product, historical return trends, current economic conditions, changes in customer demand and commercial acceptance of the Company’s products. Based on this information, management reserves a percentage of each dollar of physical product sales that provide the customer with the right of return. The provision for such sales returns is reflected as a reduction in the revenues from the related sale.
Similarly, the Company monitors customer credit losses related to accounts receivable. Judgments and estimates are involved in evaluating if accounts receivable will ultimately be fully collected. On an ongoing basis, the Company tracks customer exposure based on news reports, ratings agency information, reviews of customer financial data and direct dialogue with customers. Counterparties that are determined to be of a higher risk are evaluated to assess whether the payment terms previously granted to them should be modified. The Company also monitors payment levels from customers, and an allowance for estimated credit losses is maintained based on such payment levels, historical experience, management’s views on trends in the overall receivable aging, for larger accounts, analyses of specific risks per customer, and reasonable and supportable forecasts of the economic and geopolitical conditions that may exist through the contractual life of the receivable. The Company will write off receivables only when they are deemed no longer collectible.
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Concentration of Credit Risk
Customer credit risk represents the potential for financial loss if a customer is unwilling or unable to meet its agreed upon contractual payment obligations. As of September 30, 2025 and September 30, 2024, Spotify AB represented 20 % and 18 %, respectively, of the Company’s accounts receivable balance. No other single customer accounted for more than 10% of accounts receivable in either period. The Company, by policy, routinely assesses the financial strength of its customers. As such, the Company does not believe there is any significant collection risk.
In the Music Publishing business, the Company collects a significant portion of its royalties from copyright collecting societies around the world. Collecting societies and associations generally are not-for-profit organizations that represent composers, songwriters and music publishers. These organizations seek to protect the rights of their members by licensing, collecting license fees and distributing royalties for the use of the members’ works. Accordingly, the Company does not believe there is any significant collection risk from such societies.
Inventories
Inventories consist of merchandise, vinyl, CDs, DVDs and other related music products. Inventories are stated at the lower of cost or estimated realizable value. Cost is determined using first-in, first-out (“FIFO”) and average cost methods, which approximate cost under the FIFO method. Returned goods included in inventory are valued at estimated realizable value, but not in excess of cost.
Derivative and Financial Instruments
The Company accounts for these investments as required by the FASB ASC Topic 815, Derivatives and Hedging (“ASC 815”), which requires that all derivative instruments be recognized on the balance sheet at fair value. ASC 815 also provides that, for derivative instruments that qualify for hedge accounting, changes in the fair value are either (a) offset against the change in fair value of the hedged assets, liabilities or firm commitments through earnings or (b) recognized in equity until the hedged item is recognized in earnings, depending on whether the derivative is being used to hedge changes in fair value or cash flows. In addition, the ineffective portion of a derivative’s change in fair value is immediately recognized in earnings.
The carrying value of the Company’s financial instruments approximates fair value, except for certain differences relating to long-term, fixed-rate debt (see Note 19) and other financial instruments that are not significant. The fair value of financial instruments is generally determined by reference to market values resulting from trading on a national securities exchange or an over-the-counter market. In cases where quoted market prices are not available, fair value is based on estimates using present value or other valuation techniques.
Property, Plant and Equipment
Property, plant and equipment acquired in conjunction with business combinations are recorded at fair value. All other additions are recorded at historical cost. Depreciation is calculated using the straight-line method based upon the estimated useful lives of depreciable assets commencing at the date assets are placed in service as follows: five to seven years for furniture and fixtures, periods of up to five years for computer equipment and software and periods of up to thirteen years for machinery and equipment. Buildings are depreciated over periods of up to forty years . Leasehold improvements are depreciated over the life of the lease or estimated useful lives of the improvements, whichever period is shorter. Construction in progress assets are not depreciated until placed in service and available for their intended use, at which time they are assigned a useful life consistent with the nature of the asset.
The Company accounts for costs incurred to develop or purchase computer software for internal use in accordance with FASB ASC Subtopic 350-40, Internal-Use Software (“ASC 350-40”). As required by ASC 350-40, the Company capitalizes the costs incurred during the application development stage, which include costs to design the software configuration and interfaces, coding, installation, and testing.
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Accounting for Goodwill and Other Intangible Assets
In accordance with FASB ASC Topic 350, Intangibles—Goodwill and Other (“ASC 350”), the Company accounts for business combinations using the acquisition method of accounting and accordingly, the assets and liabilities of the acquired entities are recorded at their estimated fair values at the acquisition date. Goodwill represents synergies and economies of scale expected from the combination of services and is determined based on the excess of the purchase price over the fair value of net assets, including the amount assigned to identifiable intangible assets. Pursuant to this guidance, the Company does not amortize the goodwill balance and instead, performs an annual impairment test to assess the fair value of goodwill over its carrying value. Identifiable intangible assets with finite lives are amortized over their useful lives.
Goodwill is tested annually for impairment on July 1 and at any time upon occurrence of certain events or changes in circumstances. ASC 350 gives an entity the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit or intangible asset is less than its carrying amount. If an entity determines it is not more likely than not that the fair value of a reporting unit or intangible asset is less than its carrying amount, then performing the quantitative impairment test is unnecessary. However, if an entity concludes otherwise, then the quantitative impairment test shall be used to identify the impairment and measure the amount of an impairment loss to be recognized (if applicable).
The Company performs an annual impairment test of its indefinite-lived intangible assets as of July 1 of each fiscal year, unless events occur which trigger the need for an earlier impairment test. The Company has the option to perform a qualitative assessment to determine if an impairment is more likely than not to have occurred. In the qualitative assessment, the Company must evaluate the totality of qualitative factors, including any recent fair value measurements, that impact whether an indefinite-lived intangible asset other than goodwill has a carrying amount that more likely than not exceeds its fair value. The Company must proceed to conduct a quantitative analysis if the Company (i) determines that such an impairment is more likely than not to exist or (ii) forgoes the qualitative assessment entirely.
The impairment tests may require management to make assumptions about future conditions impacting the value of the indefinite-lived intangible assets, including projected growth rates, cost of capital, effective tax rates, tax amortization periods, royalty rates, market share and others.
Valuation of Long-Lived Assets
The Company periodically reviews the carrying value of its long-lived assets, including finite-lived intangibles, property, plant and equipment and amortizable intangible assets, whenever events or changes in circumstances indicate that the carrying value may not be recoverable or that the lives assigned may no longer be appropriate. To the extent the estimated future cash inflows attributable to the asset, less estimated future cash outflows, are less than the carrying amount, an impairment loss is recognized in an amount equal to the difference between the carrying value of such asset and its fair value. Assets to be disposed of and for which there is a committed plan to dispose of the assets, whether through sale or abandonment, are reported at the lower of carrying value or fair value less costs to sell. If it is determined that events and circumstances warrant a revision to the remaining period of amortization, an asset’s remaining useful life would be changed, and the remaining carrying amount of the asset would be amortized prospectively over that revised remaining useful life.
Foreign Currency
The financial position and operating results of substantially all foreign operations are consolidated using the local currency as the functional currency. Local currency assets and liabilities are translated at the rates of exchange on the balance sheet date, and local currency revenues and expenses are translated at average rates of exchange during the period. Resulting translation gains or losses are included in the accompanying consolidated statements of equity as a component of accumulated other comprehensive loss.
Foreign currency transaction gains and losses arise from exchange rate fluctuations on transactions denominated in a foreign currency other than the functional currency. The Company recorded foreign currency transaction losses of $ 5 million, gains of $ 2 million and gains of $ 4 million within operating income on the consolidated statement of operations during the years ended September 30, 2025, 2024 and 2023, respectively. Furthermore, the Company recorded foreign currency transaction losses of $ 75 million, losses of $ 72 million and losses of $ 37 million within other (expense) income, net on the consolidated statement of operations during the years ended September 30, 2025, 2024 and 2023, respectively.
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Revenues
Recorded Music
As required by FASB ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), the Company recognizes revenue when, or as, control of the promised services or goods is transferred to our customers and in an amount that reflects the consideration the Company is contractually due in exchange for those services or goods. The Company’s revenue recognition process involves several applications that are responsible for the initiation and processing of transactions in order to recognize revenue in accordance with the Company’s policy and ASC 606.
Revenues from the sale or license of Recorded Music products through digital distribution channels are typically recognized when sale or usage occurs based on usage reports received from the customer. These licenses typically contain a single performance obligation, which is ongoing access to all intellectual property in an evolving content library, predicated on: (1) the business practice and contractual ability to remove specific content without a requirement to replace the content and without impact to minimum royalty guarantees and (2) the contracts not containing a specific listing of content subject to the license. For certain licenses where the consideration is fixed and the intellectual property being licensed is static, revenue is recognized at the point in time when control of the licensed content is transferred to the customer.
Certain contracts contain minimum guarantees, which are recoupable against royalties. Upon contract inception, the Company will assess whether a shortfall or breakage is expected (i.e., where the minimum guarantee will not be recouped through royalties) in order to determine timing of revenue recognition for the minimum guarantee. For fixed fee contracts and minimum guarantee contracts where breakage is expected, the total transaction price (fixed fee or minimum guarantee) is recognized using an appropriate measure of progress over the contractual term. The Company updates its assessment of the transaction price each reporting period to see if anticipated royalty earnings exceed the minimum guarantee. For contracts where breakage is not expected, royalties are recognized as revenue as sales or usage occurs based upon the licensee’s usage reports and, when these reports are not available, revenue is based on historical data, industry information and other relevant trends.
Music Publishing
Music Publishing revenues are earned from the receipt of royalties relating to the licensing of rights in musical compositions and the sale of published sheet music and songbooks. The receipt of royalties principally relates to amounts earned from the public performance of musical compositions, the mechanical reproduction of musical compositions on recorded media, including digital formats and the use of musical compositions in synchronization with visual images. Music publishing royalties, except for synchronization royalties, generally are recognized when the sale or usage occurs. The most common form of consideration for publishing contracts is sales- and usage-based royalties. The collecting societies submit usage reports, typically with payment for royalties due, often on a quarterly or biannual reporting period, in arrears. Royalties are recognized as the sale or usage occurs based upon usage reports and, when these reports are not available, royalties are estimated based on historical data, such as recent royalties reported, company-specific information with respect to changes in repertoire, industry information and other relevant trends. Synchronization revenue is typically recognized as revenue when control of the license is transferred to the customer in accordance with ASC 606. See also Note 4, Revenue Recognition.
Royalty Costs and Royalty Advances
The Company incurs royalty costs that are payable to our recording artists and songwriters generated from the sale or license of our Recorded Music catalog and Music Publishing copyrights. Royalties are calculated using negotiated rates in accordance with recording artist and songwriter contracts and are based on revenue earned. There are instances where such data is not available to be processed and royalty cost calculations may involve judgments about significant volumes of data to be processed.
In many instances, the Company commits to pay our recording artists and songwriters royalties in advance of future sales. The Company accounts for these advances under the related guidance in FASB ASC Topic 928, Entertainment—Music (“ASC 928”). Under ASC 928, the Company capitalizes as assets certain advances that it believes are recoverable from future royalties to be earned by the recording artist or songwriter. Recoverability is assessed upon initial commitment of the advance based upon the Company’s forecast of anticipated revenue from the sale of future and existing albums or musical compositions. In determining whether the advance is recoverable, the Company evaluates the current and past popularity of the recording artist or songwriter, the sales history of the recording artist or songwriter, the initial or expected commercial acceptability of the product, the current and past popularity of the genre of music that the product is designed to appeal to, and other relevant factors. Advances vary in both amount and expected life based on the underlying recording artist or songwriter. To the extent that a portion of an outstanding advance is no longer deemed recoverable, that amount will be expensed in the period the determination is made.
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Advertising
As required by the FASB ASC Subtopic 720-35, Advertising Costs (“ASC 720-35”), advertising costs are expensed as incurred. Advertising expense amounted to approximately $ 113 million, $ 119 million and $ 136 million for the fiscal years ended September 30, 2025, September 30, 2024 and September 30, 2023, respectively. Deferred advertising costs, which principally relate to advertisements that have been paid for but not been exhibited or services that have not been received, were not material for all periods presented.
Stock-Based Compensation
The Company accounts for stock-based payments in accordance with ASC 718, Compensation—Stock Compensation (“ASC 718”). Stock-based compensation consists primarily of restricted stock units (“RSUs”) granted to the Company’s board of directors and eligible employees and executives under the Omnibus Incentive Plan. The Company measures compensation expense for RSUs based on the fair value of the award on the date of grant. The grant date fair value is based on the closing market price of the Company’s Class A Common Stock on the date of grant. The Company accounts for forfeitures as they occur. Stock-based compensation is recognized on a straight-line basis over the requisite service period, which is generally four years .
The Company has also granted market-based performance share units (“PSUs”) to our Chief Executive Officer, with the PSU award payout determined based on the Company’s total shareholder return compared to a designated peer group, and stock options to our Chief Financial Officer. The Company recognizes stock-based compensation expense based on the grant date fair value of the PSUs and stock options using a Monte Carlo simulation model analysis and Black-Scholes-Merton option-pricing-model, respectively, on a straight-line basis over the requisite service period of the awards, which is approximately three years for PSUs and four years for stock options.
Income Taxes
Income taxes are provided using the asset and liability method presented by FASB ASC Topic 740, Income Taxes (“ASC 740”). Under this method, income taxes (i.e., deferred tax assets, deferred tax liabilities, taxes currently payable/refunds receivable and tax expense) are recorded based on amounts refundable or payable in the current fiscal year and include the results of any differences between U.S. GAAP and tax reporting. Deferred income taxes reflect the tax effect of net operating loss, capital loss and general business credit carryforwards and the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial statements and income tax purposes, as determined under enacted tax laws and rates. Valuation allowances are established when management determines that it is more likely than not that some portion or the entire deferred tax asset will not be realized. The financial effect of changes in tax laws or rates is accounted for in the period of enactment. 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.
From time to time, the Company engages in transactions in which the tax consequences may be subject to uncertainty. Judgment may be required in assessing and estimating the tax consequences of these transactions. The Company prepares and files tax returns based on its interpretation of tax laws and regulations. In the normal course of business, the Company’s tax returns are subject to examination by various taxing authorities. Such examinations may result in future tax and interest assessments by these taxing authorities. In determining the Company’s tax provision for financial reporting purposes, the Company establishes a reserve for uncertain tax positions, unless such positions are determined to be more likely than not of being sustained upon examination based on their technical merits. There is judgment involved in determining whether positions taken on the Company’s tax returns are more likely than not of being sustained.
New Accounting Pronouncements
Accounting Pronouncements Adopted as of September 30, 2025
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures . The amendment enhances reportable segment disclosure requirements, primarily by requiring enhanced disclosures about significant segment expenses, reporting for interim periods, and Chief Operating Decision Maker (“CODM”) related information. The amendments in this ASU are effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. The Company has adopted these standards as of fiscal year ended September 30, 2025. See Note 17 for further information.
Accounting Pronouncements Not Yet Adopted
In December 2023, the 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
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and income taxes paid. The amendments in this ASU are effective for fiscal years beginning after December 15, 2024. The Company is in the process of evaluating the effect that the adoption of these standards will have on its consolidated financial statements.
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 fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. 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 external use software model by introducing updated capitalization criteria and removing existing project staging guidance. The amendments in this ASU are effective for fiscal years beginning after December 15, 2027. 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 dilutive potential common shares, which is calculated using the treasury-stock method. Under the treasury-stock method, potential common shares are excluded from the computation of EPS in periods in which they have an anti-dilutive effect. The potentially dilutive common shares did not have a dilutive effect on the Company’s EPS calculation for the fiscal years ended September 30, 2025, September 30, 2024 and September 30, 2023.
The Company allocates dividends declared to Class A Common Stock and Class B Common Stock based on timing and amounts actually declared for each class of stock and the undistributed earnings are allocated to Class A Common Stock and Class B Common Stock pro rata on a basic weighted average shares outstanding basis since the two classes of stock participate equally on a per share basis upon liquidation.
The following table sets forth the calculation of basic and diluted net income per common share under the two-class method (in millions, except share amounts, which are reflected in thousands, and per share data):

Fiscal Year Ended September 30,
2025 2024 2023
Class A Class B Class A Class B Class A Class B
Basic and Diluted EPS:
Numerator
Net income attributable to Warner Music Group Corp. $ 105   $ 260   $ 122   $ 313   $ 119   $ 311  
Less: Net income attributable to participating securities (a) ( 4 ) —   ( 6 ) —   ( 6 ) —  
Net income attributable to common stockholders $ 101   $ 260   $ 116   $ 313   $ 113   $ 311  
Denominator
Weighted average shares outstanding 145,128   375,380   140,882   376,641   138,070   377,650  
Basic and Diluted EPS (b)
$ 0.69   $ 0.69   $ 0.83   $ 0.83   $ 0.82   $ 0.82  

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(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.
(b) For the fiscal year ended September 30, 2025, the weighted average shares outstanding for Diluted EPS includes the dilutive effect of approximately 397 shares. As the resulting Diluted EPS rounds to the same reported amount as Basic EPS, both Basic and Diluted EPS for the fiscal year ended September 30, 2025 are presented as $ 0.69 per share. There were no dilutive potentially issuable shares in the fiscal years ended September 30, 2024 and September 30, 2023.
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4. Revenue Recognition
For our operating segments, Recorded Music and Music Publishing, the Company accounts for a contract when it has legally enforceable rights and obligations and collectability of consideration is probable. The Company identifies the performance obligations and determines the transaction price associated with the contract, which is then allocated to each performance obligation, using management’s best estimate of standalone selling price for arrangements with multiple performance obligations. Revenue is recognized when, or as, control of the promised services or goods is transferred to the Company’s customers, and in an amount that reflects the consideration the Company is contractually due in exchange for those services or goods. An estimate of variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur. Certain of the Company’s arrangements include licenses of intellectual property with consideration in the form of sales- and usage-based royalties. Royalty revenue is recognized when the subsequent sale or usage occurs using the best estimates available of the amounts that will be received by the Company. Within revenues, there may be settlements related to past infringements of our intellectual property.
Disaggregation of Revenue
The Company’s revenue consists of the following categories, which aggregate into the segments – Recorded Music and Music Publishing:

Fiscal Year Ended September 30,
2025 2024 2023
(in millions)
Revenue by Type
Digital $ 3,594   $ 3,519   $ 3,322  
Physical 527   519   507  
Total digital and physical
4,121   4,038   3,829  
Artist services and expanded-rights 835   684   744  
Licensing 452   501   382  
Total Recorded Music 5,408   5,223   4,955  
Performance 228   198   173  
Digital 800   763   669  
Mechanical 63   58   63  
Synchronization 197   175   167  
Other 18   16   16  
Total Music Publishing 1,306   1,210   1,088  
Intersegment eliminations ( 7 ) ( 7 ) ( 6 )
Total revenues
$ 6,707   $ 6,426   $ 6,037  
Revenue by geographical location

U.S. Recorded Music $ 2,181   $ 2,210   $ 2,184  
U.S. Music Publishing 693   660   582  
Total U.S. 2,874   2,870   2,766  
International Recorded Music 3,227   3,013   2,771  
International Music Publishing 613   550   506  
Total international
3,840   3,563   3,277  
Intersegment eliminations ( 7 ) ( 7 ) ( 6 )
Total revenues
$ 6,707   $ 6,426   $ 6,037  

Recorded Music
Recorded Music mainly involves selling, marketing, distribution and licensing of recorded music produced by the Company’s recording artists. Recorded Music revenues are derived from four main sources, which include digital, physical, artist services and expanded-rights, and licensing.
Digital revenues are generated from the expanded universe of digital partners, including digital streaming services and download services. These licenses typically contain a single performance obligation, which is ongoing access to all intellectual property in an evolving content library, predicated on: (1) the business practice and contractual ability to remove specific content
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without a requirement to replace the content and without impact to minimum royalty guarantees and (2) the contracts not containing a specific listing of content subject to the license. Digital licensing contracts are generally long-term with consideration in the form of sales- and usage-based royalties that are typically received monthly. Certain contracts contain minimum guarantees, which are recoupable against royalties. Upon contract inception, the Company will assess whether a shortfall or breakage is expected (i.e., where the minimum guarantee will not be recouped through royalties) in order to determine timing of revenue recognition for the minimum guarantee.
For fixed fee contracts and minimum guarantee contracts where breakage is expected, the total transaction price (fixed fee or minimum guarantee) is recognized proportionately over the contract term using an appropriate measure of progress which is based on the Company’s digital partner’s subscribers or streaming activity as these are measures of access to an evolving catalog, or on a straight-line basis. The Company updates its assessment of the transaction price each reporting period to see if anticipated royalty earnings exceed the minimum guarantee. For contracts where breakage is not expected, royalties are recognized as revenue as sales or usage occurs based upon the licensee’s usage reports and, when these reports are not available, revenue is based on historical data, industry information and other relevant trends.
Additionally, for certain licenses where the consideration is fixed and the intellectual property being licensed is static, revenue is recognized at the point in time when control of the licensed content is transferred to the customer.
Physical revenues are generated from the sale of physical products such as vinyl, CDs and DVDs. Revenues from the sale of physical Recorded Music products are recognized upon transfer of control to the customer, which typically occurs once the product has been shipped and the ability to direct use and obtain substantially all of the benefit from the asset have been transferred. In accordance with industry practice and as is customary in many territories, certain products, such as vinyl, CDs and DVDs, are sold to customers with the right to return unsold items. Revenues from such sales are generally recognized upon shipment based on gross sales less a provision for future estimated returns.
Artist services and expanded-rights revenues are generated from artist services businesses and participation in expanded-rights associated with artists, including advertising, merchandising including direct-to-consumer sales, touring, concert promotion, ticketing, sponsorship, fan clubs, artist websites, social publishing, and artist and brand management. Artist services and expanded-rights contracts are generally short term. Revenue is recognized as or when services are provided (e.g., at time of an artist’s event) assuming collectability is probable. In some cases, the Company is reliant on the artist to report revenue generating activities. For certain artist services and expanded-rights contracts, collectability is not considered probable until notification is received from the artist’s management. Revenues from the sale of products sold through our e-commerce websites are recognized when control of the goods is transferred to the customer, which is upon receipt of finished goods by the customer.
Licensing revenues represent 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. In certain territories, the Company may also receive royalties when 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. Licensing contracts are generally short term. For fixed-fee contracts, revenue is recognized at the point in time when control of the licensed content is transferred to the customer. Royalty based contracts are recognized as the underlying sales or usage occurs.
Music Publishing
Music Publishing acts as a copyright owner and/or administrator of the musical compositions and generates revenues related to the exploitation of musical compositions (as opposed to recorded music). Music publishers generally receive royalties from the use of the musical compositions in public performances, digital and physical recordings and in combination with visual images. Music publishing revenues are derived from five main sources: mechanical, performance, synchronization, digital and other.
Digital revenues are generated with respect to the musical compositions being embodied in recordings licensed to digital streaming services and digital download services and for digital performance. Performance revenues are received when 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 musical compositions in staged theatrical productions. Mechanical revenues are generated with respect to the musical compositions embodied in recordings sold in any physical format or configuration such as vinyl, CDs and DVDs. Synchronization revenues represent the right to use the 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. Other revenues represent earnings for use in printed sheet music and other uses. Digital and synchronization revenue recognition is similar for both Recorded Music and Music Publishing, therefore refer to the discussion within Recorded Music.
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Included in these revenue streams, excluding synchronization and other, are licenses with performing rights organizations or collecting societies (e.g., ASCAP, BMI, SESAC and GEMA), which are long-term contracts containing a single performance obligation, which is ongoing access to all intellectual property in an evolving content library. The most common form of consideration for these contracts is sales- and usage-based royalties. The collecting societies submit usage reports, typically with payment for royalties due, often on a quarterly or biannual reporting period, in arrears. Royalties are recognized as the sale or usage occurs based upon usage reports and, when these reports are not available, royalties are estimated based on historical data, such as recent royalties reported, company-specific information with respect to changes in repertoire, industry information and other relevant trends. Also included in these revenue streams are smaller, short-term contracts for specified content, which generally involve a fixed fee. For fixed-fee contracts, revenue is recognized at the point in time when control of the license is transferred to the customer.
The Company excludes from the measurement of transaction price all taxes assessed by governmental authorities that are both (i) imposed on and concurrent with a specific revenue-producing transaction and (ii) collected from customers.
Sales Returns and Uncollectible Accounts
In accordance with practice in the recorded music industry and as customary in many territories, certain physical revenue products (such as vinyl, CDs and DVDs) are sold to customers with the right to return unsold items. Revenues from such sales are recognized when the products are shipped based on gross sales less a provision for future estimated returns.
In determining the estimate of physical product sales that will be returned, management analyzes vendor sales of product, historical return trends, current economic conditions, changes in customer demand and commercial acceptance of the Company’s products. Based on this information, management reserves a percentage of each dollar of physical product sales that provide the customer with the right of return and records an asset for the value of the returned goods and liability for the amounts expected to be refunded.
Similarly, management evaluates accounts receivables to determine if they will ultimately be collected. In performing this evaluation, significant judgments and estimates are involved, including an analysis of specific risks on a customer-by-customer basis for larger accounts and customers and a receivables aging analysis that determines the percent that has historically been uncollected by aged category, in addition to other factors to estimate an allowance for credit losses. The time between the Company’s issuance of an invoice and payment due date is not significant; customer payments that are not collected in advance of the transfer of promised services or goods are generally due no later than 30 days from invoice date. Based on this information, management provides a reserve for estimated credit losses.
Based on management’s analysis of sales returns, refund liabilities of $ 17 million and $ 20 million were established at September 30, 2025 and September 30, 2024, respectively.
Based on management’s analysis of estimated credit losses, reserves of $ 27 million and $ 26 million were established at September 30, 2025 and September 30, 2024, respectively.
Principal versus Agent Revenue Recognition
The Company reports revenue on a gross or net basis based on management’s assessment of whether the Company acts as a principal or agent in the transaction. The determination of whether the Company acts as a principal or an agent in a transaction is based on an evaluation of whether the Company controls the good or service before transfer to the customer. When the Company concludes that it controls the good or service before transfer to the customer, the Company is considered a principal in the transaction and records revenue on a gross basis. When the Company concludes that it does not control the good or service before transfer to the customer but arranges for another entity to provide the good or service, the Company acts as an agent and records revenue on a net basis in the amount it earns for its agency service.
In the normal course of business, the Company distributes music content on behalf of third-party record labels. Based on the above guidance, the Company records the distribution of content of third-party record labels on a gross basis, subject to the terms of the contract, as the Company controls the content before transfer to the customer. Conversely, recorded music distributed by other record companies where the Company has a right to participate in the profits are recorded on a net basis.
Deferred Revenue
Deferred revenue principally relates to fixed fees and minimum guarantees received in advance of the Company’s performance or usage by the licensee. Reductions in deferred revenue are a result of the Company’s performance under the contract or usage by the licensee.
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Deferred revenue increased by $ 1.1 billion during the fiscal year ended September 30, 2025 and $ 645 million during the fiscal year ended September 30, 2024 related to cash received from customers for fixed fees and minimum guarantees in advance of performance, offset by amounts recognized in the period. Revenue recognized during the fiscal years ended September 30, 2025 and 2024 which was included in the deferred revenue balance at the beginning of each respective period was $ 207 million and $ 330 million. There were no other significant changes to deferred revenue during the reporting period.
Performance Obligations
For the fiscal years ended September 30, 2025, 2024 and 2023, the Company recognized revenue of $ 82 million, $ 122 million and $ 91 million, respectively, from performance obligations satisfied in previous periods.
Wholly and partially unsatisfied performance obligations represent future revenues not yet recorded under long-term intellectual property licensing contracts containing fixed fees, advances and minimum guarantees. Revenues expected to be recognized in the future related to performance obligations that are unsatisfied at September 30, 2025 are as follows:

FY26
FY27
FY28
Thereafter Total
(in millions)
Remaining performance obligations $ 681   $ 173   $ 129   $ 43   $ 1,026  
Total $ 681   $ 173   $ 129   $ 43   $ 1,026  

5. Comprehensive Income (Loss)
Comprehensive income, which is reported in the accompanying 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, net of a related tax cost of less than $ 1  million.

Foreign Currency Translation Gains (Losses) (a)
Minimum Pension Liability Adjustment Deferred Gains (Losses) On Derivative Financial Instruments
Accumulated Other Comprehensive Loss, net
(in millions)
Balances at September 30, 2022 $ ( 358 ) $ ( 2 ) $ 13   $ ( 347 )
Other comprehensive income 36   1   ( 12 ) 25  
Balances at September 30, 2023 $ ( 322 ) $ ( 1 ) $ 1   $ ( 322 )
Other comprehensive income 78   ( 2 ) ( 1 ) 75  
Balances at September 30, 2024 $ ( 244 ) $ ( 3 ) $ —   $ ( 247 )
Other comprehensive income 56   2   —   58  
Balances at September 30, 2025 $ ( 188 ) $ ( 1 ) $ —   $ ( 189 )

______________________________________
(a) Includes historical foreign currency translation related to certain intra-entity transactions.
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6. Property, Plant and Equipment
Property, plant and equipment consist of the following:

September 30,
2025 September 30,
2024
(in millions)
Land $ 10   $ 11  
Buildings and improvements 190   216  
Furniture and fixtures 47   45  
Computer hardware and software 788   650  
Construction in progress 89   132  
Machinery and equipment 18   42  
Gross Property, Plant and Equipment $ 1,142   $ 1,096  
Less: Accumulated depreciation ( 701 ) ( 615 )
Net Property, Plant and Equipment $ 441   $ 481  

The Company recognized $ 5 million of impairment expense associated with leasehold improvements in connection with our restructuring plans which are presented within Restructuring and Impairments in our consolidated statement of operations. Refer to Note 12 for additional information.
The Company’s classification of its EMP business as held for sale resulted in $ 49 million of impairment expense associated with buildings and improvements within the Recorded Music segment, with the remaining $ 20 million of property, plant and equipment reclassified as held for sale within our consolidated balance sheet as of September 30, 2025. Please refer to Note 18 for further discussion.

7. Leases
The Company’s lease portfolio consists of operating real estate leases for its corporate offices and, to a lesser extent, storage and other equipment. Under FASB ASC Topic 842, Leases (“ASC 842”), a contract is or contains a lease when (1) an explicitly or implicitly identified asset has been deployed in the contract and (2) the customer obtains substantially all of the economic benefits from the use of that underlying asset and directs how and for what purpose the asset is used during the term of the contract. The Company determines if an arrangement is or contains a lease at inception of the contract. For all leases (finance and operating), other than those that qualify for the short-term recognition exemption, the Company will recognize on the balance sheet a lease liability for its obligation to make lease payments arising from the lease and a corresponding right-of-use (“ROU”) asset representing its right to use the underlying asset over the period of use based on the present value of lease payments over the lease term as of the lease commencement date. ROU assets are adjusted for initial direct costs, lease payments made and incentives. As the rates implicit in our leases are not readily determinable, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. This rate is based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments. The lease term used to calculate the lease liability will include options to extend or terminate the lease when the option to extend or terminate is at the Company’s discretion and it is reasonably certain that the Company will exercise the option. Fixed payments are recognized as lease expense on a straight-line basis over the lease term. For leases with a term of one year or less, the lease payments are recognized in the consolidated statements of operations on a straight-line basis over the lease term.
ASC 842 requires that only limited types of variable payments be included in the determination of lease payments, which affects lease classification and measurement. Variable lease costs, if any, are recognized as incurred and such costs are excluded from lease balances recorded on the consolidated balance sheet. The initial measurement of the lease liability and ROU asset are determined based on fixed lease payments. Lease payments that depend on an index or a rate (such as the Consumer Price Index or a market interest rate) are variable and are recognized in the period in which the payments are incurred.
The Company’s operating ROU assets are included in operating lease right-of-use assets and the Company’s current and non-current operating lease liabilities are included in operating lease liabilities, current and operating lease liabilities, noncurrent, respectively, in the Company’s balance sheet.
Operating lease liabilities are amortized using the effective interest method. That is, in each period, the liability will be increased to reflect the interest that is accrued on the related liability by using the appropriate discount rate and decreased by the lease payments made during the period. The subsequent measurement of the ROU asset is linked to the amount recognized as the lease liability. Accordingly, the ROU asset is measured as the lease liability adjusted by (1) accrued or prepaid rents (i.e., the aggregate
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difference between the cash payment and straight-line lease cost), (2) remaining unamortized initial direct costs and lease incentives, and (3) impairments of the ROU asset. Operating lease costs are included in Selling, general and administrative expenses.
For lease agreements that contain both lease and non-lease components, the Company has elected the practical expedient provided by ASC 842 that permits the accounting for these components as a single lease component (rather than separating the lease from the non-lease components and accounting for the components individually).
The Company enters into operating leases for buildings, office equipment, production equipment, warehouses, and other types of equipment. Our leases have remaining lease terms of 1 year to 18 years, some of which include options to extend the leases for up to 10 years, and some of which include options to terminate the leases within 1 year.
Among the Company’s operating leases are its leases for the Ford Factory Building, located at 777 S. Santa Fe Avenue in Los Angeles, California, and for 27 Wrights Lane, Kensington, London, United Kingdom. The landlord for both leases is an affiliate of Access. As of September 30, 2025 and September 30, 2024, the aggregate lease liability related to these leases was $ 85  million and $ 99  million, respectively. See also Note 14, Related Party Transactions.
There are no restrictions or covenants, such as those relating to dividends or incurring additional financial obligations, relating to our lease portfolio, and residual value guarantees are not significant.
The components of lease expense were as follows:

Fiscal Year Ended September 30,
2025 2024
(in millions)
Lease Cost
Operating lease cost $ 55   $ 53  

Variable lease cost 14   12  

Total lease cost $ 69   $ 65  

The Company incurred and recorded other occupancy expenses of $ 21  million and $ 26  million for the fiscal years ended September 30, 2025 and 2024, respectively.
The Company additionally recognized approximately $ 20  million of impairment expense associated with right of use assets that are no longer in use during the fiscal year ended September 30, 2025 in connection with our restructuring plans which are presented within Restructuring and Impairments in our consolidated statement of operations. Refer to Note 12 for additional information.
Supplemental cash flow information related to leases was as follows:

Fiscal Year Ended September 30,
2025 2024
(in millions)
Cash paid for amounts included in the measurement of operating lease liabilities $ 63   $ 59  
Right-of-use assets obtained in exchange for operating lease obligations 11   18  

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Supplemental balance sheet information related to leases was as follows:

September 30,
2025 September 30,
2024
(in millions)
Operating Leases
Operating lease right-of-use assets $ 189   $ 225  

Operating lease liabilities, current $ 43   $ 45  
Operating lease liabilities, noncurrent 200   228  
Total operating lease liabilities $ 243   $ 273  

Weighted Average Remaining Lease Term
Operating leases 6 years 6 years
Weighted Average Discount Rate
Operating leases 5.21   % 5.56   %

Maturities of lease liabilities were as follows:

Fiscal Year Ended September 30, Operating
Leases
(in millions)
2026 $ 53  
2027 57  
2028 55  
2029 51  
2030 25  
Thereafter 42  
Total lease payments 283  
Less: Imputed interest ( 40 )
Total $ 243  

8. 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, 2023 $ 1,529   $ 464   $ 1,993  
Acquisitions 5   —   5  
Other adjustments 23   —   23  
Balances at September 30, 2024 $ 1,557   $ 464   $ 2,021  
Acquisitions 24   —   24  
Impairments
( 4 ) —   ( 4 )
Other adjustments 20   —   20  
Balances at September 30, 2025 $ 1,597   $ 464   $ 2,061  

______________________________________
The increase in goodwill during the fiscal years ended September 30, 2025 and September 30, 2024 primarily relate to acquisitions entered into during each fiscal year. The other adjustments during both the fiscal years ended September 30, 2025 and September 30, 2024 primarily represent foreign currency movements.

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The impairment for the fiscal year ended September 30, 2025 is associated with the Company’s classification of its EMP Merchandising (“EMP”) business as held for sale (Please refer to Note 18 for further discussion). The classification of EMP as held for sale required the disposal group to be measured at the lower of its carrying amount or its estimated fair value less costs to sell and resulted in an impairment loss of $ 4  million. Please refer to Note 18 for further discussion.

    The Company performs its annual goodwill impairment test in accordance with ASC 350, Intangibles—Goodwill and Other (“ASC 350”) 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. The performance of the annual fiscal 2025 impairment analysis did not result in an impairment of the Company’s goodwill.
Intangible Assets
Intangible assets consist of the following:

Weighted-Average Useful Life September 30,
2025 September 30,
2024
(in millions)
Intangible assets subject to amortization:
Recorded music catalog 12 years $ 1,799   $ 1,616  
Music publishing copyrights 23 years 2,692   2,227  
Artist and songwriter contracts 13 years 1,137   1,125  
Trademarks 16 years 29   69  
Other intangible assets 6 years 58   69  
Total gross intangible assets subject to amortization 5,715   5,106  
Accumulated amortization ( 2,990 ) ( 2,747 )
Total net intangible assets subject to amortization 2,725   2,359  
Intangible assets not subject to amortization:
Trademarks and tradenames Indefinite 154   152  
Total net intangible assets $ 2,879   $ 2,511  

The increase in net intangible assets during the fiscal year ended September 30, 2025 primarily related to the acquisition of Tempo Music Holdings, LLC (“Tempo Music”) which is further described below. Additionally, the Company completed various business combinations during the fiscal year ended September 30, 2025 which resulted in the recognition of intangible assets with a preliminary estimated fair value of $ 39  million in the aggregate within recorded music catalogs, artist and songwriter contracts, trademarks, and other intangi bles. The increase in net intangible assets was partially offset by the Company’s classification of its EMP business as held for sale which resulted in the impairment of EMP trademarks and other intangible assets of $ 31  million, in the aggregate, within the Recorded Music segment, with the remaining $ 10  million intangible assets subject to amortization reclassified as held for sale within our consolidated balance sheet as of September 30, 2025. Please refer to Note 18 for further discussion.
On February 5, 2025, WMG Tempo Holdco LLC, a wholly owned subsidiary of Acquisition Corp. and an indirect subsidiary of the Company, which has majority representation on the board of WMG Tempo Holdco LLC, acquired a 50.1 % interest in Tempo Music, a proprietary music rights acquisition platform, for consideration of $ 77  million, including transaction costs, with an option, exercisable on or prior to November 30, 2027, to acquire the remaining 49.9 % of Tempo Music for approximately $ 73  million, subject to contractual adjustments. The transaction was accounted for as an asset acquisition in accordance with ASC 805, Business Combinations , and the Company recognized $ 351  million of music publishing copyrights and $ 88  million of recorded music catalogs which will each be amortized over an estimated useful life of 15 years. Additionally, the Company recognized approximately $ 13  million of net assets, which consists primarily of cash and accounts receivables. In connection with the transaction, the Company assumed long-term debt held by one of Tempo Music’s subsidiaries, which was recognized on the acquisition date at its estimated fair value of approximately $ 302  million. The assumed long-term debt is secured only by certain music rights owned by Tempo Music and is nonrecourse to the Company and its subsidiaries, other than Tempo Music (refer to Note 9 for more information on the acquired long-term debt). Finally, the Company recognized a corresponding noncontrolling interest of $ 73  million based on the fair value of the acquired assets.
The Company performs its annual indefinite-lived intangible assets impairment test in accordance with ASC 350 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 indefinite-lived intangible assets may not be recoverable. The performance of the annual fiscal 2025 impairment analysis did not result in an impairment of the Company’s indefinite-lived intangible assets.
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Amortization
Based on the amount of intangible assets subject to amortization at September 30, 2025, the expected amortization for each of the next five fiscal years and thereafter are as follows:

Fiscal Year Ended September 30, Amortization
Expense
(in millions)
2026 $ 276  
2027 236  
2028 219  
2029 213  
2030 204  
Thereafter 1,577  
Total $ 2,725  

9. Debt
Debt Capitalization
As of September 30, 2025, our long-term debt consists of the following:

September 30,
2025 September 30,
2024
(in millions)
Revolving Credit Facility (a) $ —   $ —  
Senior Term Loan Facility due 2031
1,295   1,295  
2.750 % Senior Secured Notes due 2028 (€ 325 face amount)
381   363  
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 (€ 445 face amount)
522   497  
3.000 % Senior Secured Notes due 2031
800   800  
Mortgage Term Loan due 2033
$ 17   $ 18  
Total debt, including the current portion
$ 4,090   $ 4,048  
Premium less unamortized discount and unamortized DFCs
$ ( 27 ) $ ( 34 )
Total Acquisition Corp. long-term debt, including the current portion, net
4,063   4,014  
Beethoven JV Credit Agreement (b)
—   —  
Tempo Asset-Based Notes due 2050
311   —  
Unamortized discount
$ ( 9 ) $ —  
Total asset-based long-term debt, including the current portion, net (c)
302   —  
Total long-term debt, including the current portion, net $ 4,365   $ 4,014  

______________________________________
(a) Reflects $ 350 million of commitments under the Revolving Credit Facility with no letters of credit outstanding at September 30, 2025 and September 30, 2024. There were no loans outstanding under the Revolving Credit Facility at September 30, 2025 or September 30, 2024.
(b) Reflects $ 500  million of commitments under the Beethoven JV Credit Agreement. There were no loans outstanding under the Beethoven JV Credit Agreement at September 30, 2025.
(c) The Tempo Asset-Based Notes due 2050 are secured only by certain music rights owned by Tempo Music and are nonrecourse to the Company and its subsidiaries, other than Tempo Music.
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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 senior secured term loan credit facility, pursuant to a credit agreement dated November 1, 2012, as amended or supplemented (the “Senior Term Loan Credit Agreement”) with JPMorgan Chase Bank NA, as administrative agent and collateral agent, and the other financial institutions and lenders from time to time party thereto (the “Senior Term Loan Facility”). Additionally, as of September 30, 2025 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. Accordingly, while 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 agreements for the Acquisition Corp. Senior Credit Facilities, including the Revolving Credit Facility (as defined below) and the Senior Term Loan Facility, should Acquisition Corp.’s Total Indebtedness to EBITDA Ratio increase above 3.50 :1.00 and the term loans not achieve an investment grade rating, the covenants under the Revolving Credit Facility, which are currently suspended, will be reinstated and the ability of the Company and Holdings to obtain funds from their subsidiaries will be restricted by the Revolving Credit Facility. The Company was in compliance with its covenants under its outstanding notes, the Revolving Credit Facility and the Senior Term Loan Facility as of September 30, 2025.
Fiscal 2025 Transactions
Acquisition of Tempo Music
Following its acquisition of Tempo Music on February 5, 2025, the Company holds approximately $ 311 million of asset-based securities due November 2050 (“Asset-Based Notes”) issued by a subsidiary of Tempo Music and 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 the estimated term of November 30, 2027, with higher interest rates thereafter if the notes are not refinanced by then. Pursuant to the indenture governing the Asset-Based Notes, the outstanding Asset-Based Notes may be redeemed in whole or in part at any time upon providing notice to the trustee and paying agent. Principal and interest are payable in equal semi-annual installments. The Company was in compliance with its covenants under its Asset-Based Notes as of September 30, 2025.
Beethoven Credit Agreement
On June 29, 2025, the Company, through its wholly owned indirect subsidiary, WMG BC Holdco LLC, entered into a joint venture agreement (the “JV Agreement”) with BCSS W JV Investments (B), L.P. (“BainCo”), a Delaware limited partnership and wholly owned indirect subsidiary of Bain Capital Special Situations, LP, pursuant to which the Company and BainCo will operate Beethoven JV 1, LLC, a Delaware limited liability company.
In connection with the JV Agreement, on the same date, Beethoven Financing 1, LLC, a Delaware limited liability company and an indirect subsidiary of the Company, as borrower (the “Initial Borrower”), the additional borrowers that may from time to time become party thereto (together with the Initial Borrower, the “Borrowers”), Beethoven Holdings 1, LLC, a Delaware limited liability company, as guarantor (the “Initial Guarantor”), the additional guarantors from time to time party thereto (together with the Initial Guarantor, the “Guarantors”), each of the commercial paper conduits from time to time party thereto (the “Conduit Lenders”), each of the financial institutions from time to time party thereto as committed lenders (the “Committed Lenders” and, together with the Conduit Lenders, the “Lenders”), the conduit managing agents from time to time party thereto, 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), entered into a Credit and Security Agreement (the “Beethoven Credit Agreement”) pursuant to which the Lenders have agreed to extend up to $ 500  million in commitment amounts to the Borrowers (the “Beethoven Credit Facility”). The obligations of the Borrowers under the Beethoven Credit Agreement will be (a) secured by the Borrowers with a first priority security interest in all of their respective assets and (b) guaranteed by the Guarantors with a first priority security interest in all of their 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 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.
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There were no drawdowns on the Beethoven Credit Agreement during the fiscal year ended September 30, 2025. The Company is also in compliance with all covenants and there are no amounts outstanding for the fiscal year ended September 30, 2025.
Historical Transactions
November 2023 Revolving Credit Agreement Amendment
On November 30, 2023, Acquisition Corp. entered into an amendment (the “Fifth Revolving Credit Agreement Amendment”) to the revolving credit agreement, dated January 31, 2018, as amended, among Acquisition Corp., the several banks and other financial institutions party thereto and Credit Suisse AG, Cayman Islands Branch, as predecessor administrative agent, governing Acquisition Corp.’s revolving credit facility (the “Revolving Credit Facility”) with JPMorgan Chase Bank, N.A., as administrative agent, and the other financial institutions and lenders from time to time party thereto. The Fifth Revolving Credit Agreement Amendment (among other changes): (i) increased the commitments under the Fifth Revolving Credit Agreement Amendment from an aggregate principal amount of $ 300  million to an aggregate principal amount of $ 350  million, (ii) extended the final maturity date of the Revolving Credit Facility from April 3, 2025 to November 30, 2028, (iii) appointed JPMorgan Chase Bank, N.A. as administrative agent in the place of Credit Suisse AG, Cayman Islands Branch, (iv) modified the existing springing Secured Indebtedness to EBITDA Ratio financial maintenance covenant by increasing the springing threshold from $ 105,000,000 to $ 140,000,000 , and (v) included provisions that allow Acquisition Corp. to terminate the security interests securing the obligations under the Revolving Credit Facility upon the satisfaction of certain conditions and, in the event that the security interests are so terminated, the existing springing Secured Indebtedness to EBITDA Ratio financial maintenance covenant (which is calculated net of up to $ 250  million of cash and cash equivalents held by Acquisition Corp. and its restricted subsidiaries) shall automatically be replaced with a new financial maintenance covenant prohibiting Acquisition Corp. from permitting the Total Indebtedness to EBITDA Ratio to be greater than 3.60 :1.00 (calculated net of all cash and cash equivalents held by Acquisition Corp. and its restricted subsidiaries) as of the end of any fiscal quarter.
December 2023 Senior Term Loan Credit Agreement Amendment
On December 29, 2023, Acquisition Corp. entered into an amendment (the “Thirteenth Amendment”) to the Senior Term Loan Credit Agreement among Acquisition Corp., the other loan parties, Holdings, each lender party hereto, Credit Suisse AG, Cayman Islands Branch as the resigning administrative agent, and JPMorgan Chase Bank, N.A, as the successor administrative agent. The Thirteenth Amendment appointed JPMorgan Chase Bank, N.A. as administrative agent in the place of Credit Suisse AG, Cayman Islands Branch.
January 2024 Senior Term Loan Credit Agreement Amendment

On January 24, 2024, Acquisition Corp entered into an amendment (the “Fourteenth Amendment”) to the credit agreement, dated November 1, 2012 (as amended by the amendments dated as of May 9, 2013, July 15, 2016, November 21, 2016, May 22, 2017, December 6, 2017, March 14, 2018, June 7, 2018, January 20, 2021, March 8, 2021, November 1, 2022, May 10, 2023, June 30, 2023 and December 29, 2023), among Acquisition Corp., the guarantors party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent, governing Acquisition Corp.’s senior secured term loan facility with JPMorgan Chase Bank N.A., as administrative agent, and the other financial institutions and lenders from time to time party thereto. The Fourteenth Amendment (among other changes) extends the maturity date of its outstanding term loans from January 20, 2028 to January 24, 2031 through the issuance of tranche I term loans and refinancing of the existing tranche G term loans. The tranche I term loans shall bear interest at a rate equal to, at Acquisition Corp.’s election (i) the 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 (“Term SOFR”) subject to a zero floor, plus 2.00 % per annum or (ii) the base rate, which is the highest of (x) the corporate base rate established by the administrative agent as its prime rate in effect at its principal office in New York City from time to time, (y) 0.50 % in excess of the overnight federal funds rate and (z) one-month Term SOFR, plus 1.00 % per annum, in each case, subject to a 1.00 % floor, plus 1.00 % per annum. In connection with the Fourteenth Amendment, the Company recognized approximately $ 3  million of expenses associated with fees paid to third parties and capitalized approximately $ 2  million in fees paid to creditors. Certain participating lenders were repaid and replaced by new lenders. The proceeds and repayments of $ 42  million have been presented in the accompanying consolidated statement of cash flows.
September 2024 Senior Term Loan Credit Agreement Amendment

On September 17, 2024, Acquisition Corp. entered into an amendment (the “Fifteenth Amendment”) to the credit agreement, dated November 1, 2012 (as amended by the amendments dated as of May 9, 2013, July 15, 2016, November 21, 2016, May 22, 2017, December 6, 2017, March 14, 2018, June 7, 2018, January 20, 2021, March 8, 2021, November 1, 2022, May 10, 2023, June 30, 2023, December 29, 2023 and January 24, 2024), among Acquisition Corp., the guarantors party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent, governing Acquisition Corp.’s senior secured term loan facility with JPMorgan
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Chase Bank N.A., as administrative agent, and the other financial institutions and lenders from time to time party thereto. The Fifteenth Amendment (among other changes) reprices the term loans through the issuance of tranche J term loans and the refinancing of the existing tranche I term loans. The tranche J term loans shall bear interest at a rate equal to, at Acquisition Corp.’s election (i) Term SOFR subject to a zero floor, plus 1.75 % per annum or (ii) the base rate, which is the highest of (x) the corporate base rate established by the administrative agent as its prime rate in effect at its principal office in New York City from time to time, (y) 0.50 % in excess of the overnight federal funds rate and (z) one-month Term SOFR, plus 1.00 % per annum, in each case, subject to a 1.00 % floor, plus 1.00 % per annum. In connection with the Fifteenth Amendment, the Company recognized approximately $ 2  million of expenses associated with fees paid to third parties. Certain participating lenders were repaid and replaced by new lenders. The proceeds and repayments of $ 62  million have been presented in the accompanying consolidated statement of cash flows.
September 2024 Revolving Credit Agreement Amendment
On September 20, 2024, Acquisition Corp. entered into an amendment (the “Sixth Revolving Credit Agreement Amendment”) to the revolving credit agreement, dated January 31, 2018, as amended, among Acquisition Corp., the several banks and other financial institutions party thereto and Credit Suisse AG, Cayman Islands Branch, as predecessor administrative agent, governing the Revolving Credit Facility with JPMorgan Chase Bank, N.A., as administrative agent, and the other financial institutions and lenders from time to time party thereto. The Sixth Revolving Credit Agreement Amendment amended the leverage ratios so that the leverage ratios are calculated net of up to $ 750  million of cash and cash equivalents held by Acquisition Corp. and its restricted subsidiaries as of the date of determination.
Interest Rates
The loans under the Revolving Credit Facility bear interest at Acquisition Corp.’s election at a rate equal to (i) the secured overnight financing rate as administered by the Federal Reserve Bank of New York for the applicable interest period (“Revolving Term SOFR”), and other rates for alternate currencies, such as EURIBOR and SONIA, as provided in the Revolving Credit Agreement, subject to a zero floor, plus 1.75 % per annum in the case of Initial Revolving Loans (as defined in the Revolving Credit Agreement), or 1.875 % per annum in the case of 2020 Revolving Loans (as defined in the Revolving Credit Agreement), or (ii) the base rate, 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) the one-month Revolving Term SOFR plus 1.0 % per annum, plus, in each case, 0.75 % per annum in the case of Initial Revolving Loans, or 0.875 % per annum in the case of 2020 Revolving Loans; provided that, in respect of 2020 Revolving Loans, the applicable margin with respect to such loans is subject to adjustment as set forth in the pricing grid in the Revolving Credit Agreement. Based on the Senior Secured Indebtedness to EBITDA Ratio of 2.02 x at September 30, 2025, the applicable margin for SOFR loans and risk-free rate loans would be 1.375 % instead of 1.875 % and the applicable margin for ABR loans would be 0.375 % instead of 0.875 % in the case of 2020 Revolving Loans. 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 loans under the Senior Term Loan Facility bear interest at Acquisition Corp.’s election at a rate equal to (i) the forward-looking term rate based on Term SOFR subject to a zero floor, plus 1.75 % per annum or (ii) the base rate, which is the highest of (x) the corporate base rate established by the administrative agent as its prime rate in effect at its principal office in New York City from time to time, (y) 0.50 % in excess of the overnight federal funds rate and (z) one-month Term SOFR, plus 1.00 % per annum, subject to a 1.00 % floor, plus, in each case, 1.00 % per annum. If there is a payment default at any time, then the interest rate applicable to overdue principal and interest will be the rate otherwise applicable to such loan plus 2.00 % per annum. Default interest will also be payable on other overdue amounts at a rate of 2.00 % 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 %.
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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. Please refer to Note 16 of our consolidated financial statements for further discussion.
Maturity of Senior Term Loan Facility
The loans outstanding under the Senior Term Loan Facility mature on January 24, 2031.
Maturity of Revolving Credit Facility
The maturity date of the Revolving Credit Facility is November 30, 2028.
Maturities of Senior Secured Notes
As of September 30, 2025, there are no scheduled maturities of notes until 2028, when $ 381  million is scheduled to mature. Thereafter, $ 2.397 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 20, 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 $ 162  million, $ 161  million and $ 141  million for the fiscal years ended September 30, 2025, 2024 and 2023, respectively. Interest expense, net includes interest expense related to our outstanding indebtedness of $ 177  million, $ 182  million, $ 157  million for the fiscal years ended September 30, 2025, 2024 and 2023, respectively. The weighted-average interest rate of the Company’s total debt was 4.1 % at September 30, 2025, 4.3 % at September 30, 2024 and 4.1 % at September 30, 2023.
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10. Income Taxes
The domestic and foreign pretax income from continuing operations is as follows:

Fiscal Year Ended September 30,
2025 2024 2023
(in millions)
Domestic $ 137   $ 67   $ 218  
Foreign 353   534   391  
Income before income taxes $ 490   $ 601   $ 609  

Current and deferred income tax expense provided are as follows:

Fiscal Year Ended September 30,
2025 2024 2023
(in millions)
Federal:
Current $ 33   $ 26   $ 36  
Deferred ( 28 ) ( 45 ) ( 5 )
Foreign:
Current (a) 163   137   128  
Deferred ( 62 ) 3   ( 3 )
U.S. State:
Current 14   8   19  
Deferred —   ( 6 ) ( 5 )
Income tax expense $ 120   $ 123   $ 170  

______________________________________
(a) Includes withholding taxes of $ 46 million, $ 28 million and $ 38 million for the fiscal years ended September 30, 2025, 2024 and 2023, respectively.
The differences between the U.S. federal statutory income tax rate of 21.0 % for each of the fiscal years ended September 30, 2025, 2024 and 2023 and income taxes provided are as follows:

Fiscal Year Ended September 30,
2025 2024 2023
(in millions)
Taxes on income at the U.S. federal statutory rate $ 103   $ 126   $ 128  
U.S. state and local taxes 6   1   12  
Foreign income taxed at different rates, including withholding taxes
22   29   33  
Valuation allowance
26   —   ( 5 )
Change in tax rates —   3   —  
GILTI and FDII
( 4 ) ( 3 ) ( 4 )
Federal research and development credits ( 2 ) ( 3 ) ( 8 )
Uncertain tax positions 2   ( 3 ) 7  
Non-deductible compensation
7   11   8  
Wind down of O&O media properties
—   ( 17 ) —  
Return to provision adjustments
( 5 ) ( 15 ) 4  
Nontaxable income from partnerships
( 1 ) ( 9 ) ( 1 )
Change in indefinite reinvestment assertion
( 34 ) 3   —  
Other —   —   ( 4 )
Total income tax expense
$ 120   $ 123   $ 170  

During the fiscal year ended September 30, 2025, the Company recognized a tax benefit of $ 37  million due to impairment and held for sale designation of its EMP business. $ 14  million of this benefit was recognized as a result of change in indefinite reinvestment assertion, for which the Company established a deferred tax asset of $ 38  million with a valuation allowance of $ 24  million. During the fiscal year ended September 30, 2024, the Company recognized a tax benefit of $ 15  million primarily related
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to change in prior year estimate for allowable costs for reported foreign derived intangible income. During the fiscal year ended September 30, 2023, the Company recognized a tax benefit of $ 8  million related to Federal research and development credits, which was partially offset by $ 7  million of income tax expense arising from an increase in uncertain tax positions in various jurisdictions.
For the fiscal years ended September 30, 2025 and September 30, 2024, the Company incurred losses in certain foreign territories and has offset the tax benefit associated with these losses with a valuation allowance as the Company has determined that it is more likely than not that these losses will not be utilized. Significant components of the Company’s net deferred tax liabilities are summarized below:

September 30,
2025 September 30,
2024
(in millions)
Deferred tax assets:
Allowance and reserves $ 26   $ 27  
Employee benefits and compensation 82   80  
Other accruals 66   45  
Property, plant and equipment 61   61  
Operating lease liabilities 62   69  
Tax attribute carryforwards 74   62  
Deferred revenue and debt 9   14  
Investment in subsidiaries
27   —  
Total deferred tax assets 407   358  
Less: Valuation allowance ( 51 ) ( 25 )
Deferred tax assets, net of valuation allowance 356   333  

Deferred tax liabilities:
Royalty advances ( 52 ) ( 34 )
Operating lease right-of-use assets ( 49 ) ( 57 )
Accrued royalties ( 50 ) ( 52 )
Intangible assets ( 236 ) ( 284 )
Debt and other ( 22 ) ( 49 )

Total deferred tax liabilities ( 409 ) ( 476 )
Net deferred tax liabilities $ ( 53 ) $ ( 143 )

At September 30, 2025, the Company has no remaining U.S. federal tax net operating loss carryforwards and $ 21  million tax net operating loss carryforwards in U.S. state and local jurisdictions that expire in various periods. The Company also has tax net operating loss carryforwards, with no expiration date, in France and the United Kingdom of $ 1 million and $ 4  million, respectively, and other tax net operating loss carryforwards in foreign jurisdictions that expire in various periods.
Deferred income taxes have not been recorded on indefinitely reinvested earnings of certain foreign subsidiaries of approximately $ 1  billion at September 30, 2025. Distribution of these earnings may result in foreign withholding taxes and U.S. state taxes. However, variables existing if and when remittance occurs make it impracticable to estimate the amount of the ultimate tax liability, if any, on these accumulated foreign earnings.
The Company classifies interest and penalties related to uncertain tax position as a component of income tax expense. As of September 30, 2025 and September 30, 2024, the Company had accrued $ 2 million and $ 1 million of interest and penalties, respectively.
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The following table reflects changes in the gross unrecognized tax benefits:

Fiscal Year Ended September 30,
2025 2024 2023
(in millions)
Gross unrecognized tax benefits - beginning of period $ 10   $ 13   $ 8  
Additions for current year tax positions 2   2   3  
Additions for prior year tax positions 1   —   9  
Subtractions for prior year tax positions ( 1 ) ( 3 ) ( 7 )
Settlements —   ( 2 ) —  
Gross unrecognized tax benefits - end of period $ 12   $ 10   $ 13  

Included in the total unrecognized tax benefits at September 30, 2025 and September 30, 2024 are $ 14 million and $ 11 million, respectively, that if recognized, would reduce the effective income tax rate. The Company has determined that it is reasonably possible that the gross unrecognized tax benefits as of September 30, 2025 could decrease by up to approximately $ 2 million related to various ongoing audits and settlement discussions in various foreign jurisdictions during the next twelve months.
The Company and its subsidiaries file income tax returns in the U.S. and various foreign jurisdictions. The Company has completed tax audits in the U.S. for tax years ended through September 30, 2013, in the UK for the tax years ended through September 30, 2020, in Germany for the tax years ended through September 30, 2019 and in France for the tax years ended through September 30, 2018. The Company is at various stages in the tax audit process in certain foreign and local jurisdictions.
The Organization 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, 2025, the impact on the Company was 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. These provisions are scheduled to take affect beginning in our fiscal year 2026. The Company is currently evaluating the potential impact of this law. The most significant and beneficial provisions to the Company include changes to the business interest expense deduction limitation, restored expensing for domestic research and development costs, and changes to GILTI.

11. Employee Benefit Plans
Certain international employees, such as those in Germany and Japan, participate in locally sponsored defined benefit plans, which are not considered to be material either individually or in the aggregate and have a combined projected benefit obligation of approximately $ 56 million and $ 58 million as of September 30, 2025 and September 30, 2024, respectively. Pension benefits under the plans are based on formulas that reflect the employees’ years of service and compensation levels during their employment period. The Company had unfunded pension liabilities relating to these plans of approximately $ 38 million and $ 38 million recorded within other noncurrent liabilities in the accompanying consolidated balance sheets as of September 30, 2025 and September 30, 2024, respectively. The Company uses a September 30 measurement date for its plans. For the fiscal years ended September 30, 2025, September 30, 2024 and September 30, 2023, pension expense amounted to $ 3 million, $ 3 million and $ 3 million, respectively.
Certain employees also participate in defined contribution plans. The Company’s contributions to the defined contribution plans are based upon a percentage of the employees’ elected contributions. The Company’s defined contribution plan expense amounted to approximately $ 16 million for the fiscal year ended September 30, 2025, $ 16 million for the fiscal year ended September 30, 2024 and $ 14 million for the fiscal year ended September 30, 2023.
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12. 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 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 fiscal year ended September 30, 2025, total severance and other termination costs recorded in connection with the 2025 Strategic Restructuring Plan were $ 90 million, of which $ 74 million of expense was recognized in our Recorded Music segment, $ 5 million was recorded in our Music Publishing segment, and $ 11 million was recognized in Corporate. Additionally, for the fiscal year ended September 30, 2025, the Company recognized $ 28 million of impairment losses, of which $ 6 million of expense was recognized in our Recorded Music segment and $ 22 million was recognized in Corporate. Impairment charges recognized primarily relate 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 fiscal year ended September 30, 2025 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, 2024
$ —  
Restructuring charges 90  
Cash payments ( 5 )
Balance at September 30, 2025
$ 85  

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 substantially complete and the remaining associated cash payments are expected to be made by the end of fiscal year 2026.
For the fiscal year ended September 30, 2025, total severance and other termination costs recorded in connection with the 2024 Strategic Restructuring Plan were $ 6  million, of which $ 8  million of expense was recognized in our Recorded Music segment while there was an $ 2  million benefit recognized in Corporate due to a change in estimate. Additionally, for the fiscal year ended September 30, 2025, the Company recognized $ 32  million of impairment losses, all of which were recognized in our Recorded Music segment. Impairment charges recognized primarily relate to the write-off of certain long-form audiovisual production assets and impairments of operating lease right-of-use assets that are no longer in use.
As of September 30, 2025, total cumulative restructuring and impairment charges recognized in connection with the 2024 Strategic Restructuring Plan were $ 216 million with $ 206 million of costs recognized in our Recorded Music segment and $ 10 million recognized at Corporate. These costs are composed of $ 134 million of severance and other contract termination costs, of which $ 7 million was non-cash, and $ 82 million of non-cash impairment charges.
The below table sets forth the activity for the fiscal year ended September 30, 2025 in the restructuring accruals associated with the 2024 Strategic Restructuring Plan included within accrued liabilities in the accompanying consolidated balance sheets.

Severance Costs Contract Termination Costs Total
(in millions)
Balance at September 30, 2024 $ 99   $ 5   $ 104  
Restructuring charges ( 1 ) 7   6  
Cash payments ( 75 ) ( 5 ) ( 80 )
Balance at September 30, 2025 $ 23   $ 7   $ 30  

Other Impairments
For the fiscal year ended September 30, 2025, the Company recognized an impairment of $ 79  million within the Recorded Music segment for long-lived assets associated with EMP, which is now classified as held for sale as of September 30, 2025. Please refer to Note 18 for further discussion.
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13. Equity
Warner Music Group Corp. 2020 Omnibus Incentive Plan
In connection with the IPO, the Company’s board of directors and stockholders approved the Warner Music Group Corp. 2020 Omnibus Incentive Plan, or the “Omnibus Incentive Plan.” The Omnibus Incentive Plan provides for the grant of incentive common stock, stock options, restricted stock, RSUs, PSUs and stock appreciation rights to employees, consultants and directors. The aggregate number of shares of common stock available for issuance under the Omnibus Incentive Plan is 31,169,099 shares of Class A Common Stock over the 10-year period from the date of adoption.
To date, the Company has issued common stock, RSUs, restricted stock, PSUs, Deferred Share Units (“DSUs”), and stock options under the Omnibus Incentive Plan. RSUs have been granted to eligible employees, executives, and the Company’s board of directors while common stock, restricted stock, and DSUs have been granted to members of the Company’s board of directors. Additionally, PSUs have been granted to our CEO while stock options have been granted to our CFO. Except in the case of stock options and certain awards issued in connection with the IPO, which became fully vested during the fiscal year ended September 30, 2025, holders of RSUs and restricted stock are entitled to cash dividends during the vesting period. For PSUs, DSUs, and RSUs issued to the Company’s board of directors, the awards accumulate dividends granted throughout the vesting period, which are payable in additional shares upon vesting.
During the fiscal years ended September 30, 2025, 2024 and 2023, shares of Class A Common Stock issued under the Omnibus Incentive Plan were 799,748 , 206,298 , and 276,516 , respectively. During the fiscal years ended September 30, 2025, 2024, and 2023, shares of Class A Common Stock issued, which were net of shares used to settle employee income tax obligations of approximately $ 20 million, $ 5 million, and $ 0 million, respectively.
As of September 30, 2025, a total of 1,812,081 shares of Class A Common Stock were issued under the Omnibus Incentive Plan. As of September 30, 2025, there were 29,357,018 shares of Class A Common Stock available to be issued.
Restricted Stock Units, Performance Share Units, and Stock Options
The following table summarizes the activity for the Company’s unvested RSUs (inclusive of DSUs), PSUs, and stock options:

Restricted Stock Units
Performance Share Units
Stock Options

Number of
Share Units Weighted-Average Grant
Date Fair Value Number of
Share Units Weighted-Average Grant
Date Fair Value Number of
Share Units Weighted-Average Exercise Price

Unvested and outstanding balance as of September 30, 2024 4,126,605   $ 36.84   565,579   $ 51.04   —   —  
Granted 2,236,097   30.73   —   —   471,698   27.48  
Vested 1,442,026   34.74   —   —   —   —  
Forfeited/canceled 23,978   32.79   —   —   —   —  
Unvested and outstanding balance as of September 30, 2025 4,896,698   $ 34.70   565,579   $ 51.04   471,698   $ 27.48  

The weighted-average grant date fair value of RSUs granted during the fiscal years ended September 30, 2025, 2024 and 2023 was $ 30.73 , $ 35.79 and $ 34.93 , respectively. The total intrinsic value of RSUs vested during the fiscal years ended September 30, 2025, 2024 and 2023 was $ 45 million, $ 4 million and $ 1 million, respectively, computed as of the date of vesting. As of September 30, 2025, total unrecognized compensation cost related to RSUs was approximately $ 56 million, which is expected to be recognized over a weighted-average period of approximately 2.9 years. The Company satisfies the vesting of RSUs by issuing new shares of its Class A Common Stock. While RSUs will be settled through the issuance of Class A Common Stock at the time of vesting, the settlement of DSUs will be deferred until 30 days following the director’s departure from the board.
The weighted-average grant date fair value of PSUs granted during the fiscal years ended September 30, 2024 and 2023 was $ 43.49 and $ 60.25 respectively. There were no PSUs granted during the fiscal year ended September 30, 2025. As of September 30, 2025, total unrecognized compensation cost related to PSUs was approximately $ 5 million, which is expected to be recognized over a weighted-average period of approximately 1 year. The Company satisfies the vesting of PSUs by issuing new shares of its Class A Common Stock. In October 2025, the Company satisfied the vesting of 254,731 PSUs by issuing 90,588 shares of Class A Common Stock, which were net of shares used to settle employee income tax obligations.
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The weighted-average exercise price of stock options granted during the fiscal year ended September 30, 2025 was $ 27.48 . The fair value of stock options granted during the fiscal year ended September 30, 2025 was $ 8.48 and was determined on the grant date using the Black-Scholes valuation model. There were no stock options granted during the fiscal years ended September 30, 2024 and 2023. As of September 30, 2025, total unrecognized compensation cost related to stock options was approximately $ 4 million, which is expected to be recognized over a weighted-average period of approximately 3.7 years.
Common Stock
Prior to the IPO, certain eligible employees elected to participate in our Senior Management Free Cash Flow Plan (the “Plan”) which offered them the opportunity to share in the appreciation of the value of our common stock. During the fiscal years ended September 30, 2025 and 2024, in connection with the Plan, the Company issued a total of 2,607,027 and 1,738,016 shares, respectively, of Class A Common Stock to settle all remaining participants’ deferred equity units previously issued under the Plan. Additionally, during the fiscal year ended September 30, 2024 remaining Plan participants redeemed the remaining portions of their vested Class B equity units of WMG Management Holdings LLC in exchange for a total of 2,270,136 shares of Class B Common Stock which were converted to shares of Class A Common Stock upon the exchange.
Stock-Based Compensation Expense
Stock-based compensation expense is included in the consolidated statements of operations as selling, general and administrative expenses. The Company recognized total non-cash stock-based compensation expense of $ 54 million, $ 52 million and $ 49 million for the fiscal years ended September 30, 2025, 2024 and 2023, respectively.
During the fiscal years ended September 30, 2024 and 2023, the Company issued PSUs to our Chief Executive Officer whereby the PSU award payout is determined based on the Company’s total shareholder return compared to a designated peer group. During the fiscal years ended September 30, 2025, 2024 and 2023, the Company recognized non-cash stock-based compensation expense of approximately $ 11  million, $ 8  million, and $ 4 million, respectively, associated with these PSUs. These amounts are a component of total non-cash stock-based compensation recognized for each respective period.
In connection with executive transition, the Company recognized non-cash stock-based compensation expense of approximately $ 5 million, $ 0 million, and $ 13 million for the fiscal years ended September 30, 2025, 2024 and 2023, respectively, related to the accelerated vesting of certain RSUs as there is no remaining service required for vesting. Amounts are a component of total non-cash stock-based compensation recognized for each respective period.
During the fiscal years ended September 30, 2025, 2024 and 2023, the Company recognized $ 4 million, $ 14 million, and $ 2 million of non-cash stock-based compensation, respectively, related to the accelerated vesting of certain RSUs in connection with the Company’s restructuring plans. Amounts are a component of total non-cash stock-based compensation recognized for each respective period.

Redemption of Noncontrolling Interests

     August 5, 2025 (the “Closing Date”), the Company, entered into a Unit Purchase Agreement (the “Agreement”) by and among WMG, TenThousand Projects Holdings LLC (“10K Projects”), TenThousand Projects, LLC (“Seller”) and certain other parties thereto, pursuant to which WMG acquired from Seller, all of the common units of 10K Projects not already directly or indirectly owned by WMG (the “10K Units”), representing 49 % of the issued and outstanding equity interests of 10K Projects. Seller is controlled by an employee of the Company who is involved in management of one of the Company’s affiliates.
The aggregate contractually agreed consideration for the 10K Units is $ 165 million, subject to contractual adjustments, payable by WMG in two installments. The first installment was satisfied by a cash payment of $ 40 million (of which $ 30 million was paid on the Closing Date and $ 10 million will be paid on or about December 1, 2025) and issuance on the Closing Date of 1,416,666 shares of Class A Common Stock, the number of which was determined by dividing approximately $ 43 million by $ 30 per share at the Closing Date. The second installment is payable on the first anniversary of the Closing Date and includes two components. There is a fixed component, that represents an amount of $ 70 million due that will be satisfied either by the issuance of 2,333,333 shares of Class A Common Stock, the number of which was determined by dividing $ 70 million by $ 30 per share, or in cash for an amount determined by multiplying 2,333,333 shares by the share price on the trading day immediately preceding issuance at the sole discretion of WMG, and a contingent component that represents an amount of approximately $ 13 million that is contingent upon certain purchase price adjustments as specified in the Agreement, and will be satisfied at the sole discretion of WMG either by the issuance of up to 416,667 shares of Class A Common Stock or in cash for an amount determined by multiplying 416,667 shares by the share price on the trading day immediately preceding issuance. The final number of shares to be delivered under the contingent portion of the second installment will be determined based on the approximately $ 13 million due less any adjustments, divided by the fixed share value of $ 30 per share. The fixed component has been accounted for as an increase to additional paid in capital within the
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consolidated statements of equity at closing, while the contingent component has been recognized within accrued liabilities and is remeasured each reporting period.
The Class A Common Stock issued pursuant to the Agreement will be governed by lock-up periods, subject to certain exceptions, which will begin on the date of issuance and end (i) in respect of 1,416,666 shares of the Class A Common Stock issued on the Closing Date, on March 1, 2026 and (ii) in respect to the shares of Class A Common Stock, as further described above, issued at the first anniversary of the Closing Date on the date that is the second anniversary of the Closing Date.
The Class A Common Stock issued pursuant to the Agreement was and will be sold in reliance on the exemption from registration provided in Section 4(a)(2) of the Securities Act, in a transaction not involving a public offering.
The redemption of the noncontrolling interest was accounted for as an equity transaction, consistent with transactions with owners acting in their capacity as owners. The difference between the aggregate contractually agreed consideration and the carrying amount of the noncontrolling interest of $ 106 million was recognized as reduction to additional paid in capital of $ 46 million, which was net of the recognition of a $ 13 million deferred tax asset. The reduction in additional paid in capital was offset by an increase of $ 112 million representing the fair value of the fixed number of Class A Common shares to be transferred as part of the transaction. This activity is reflected within “Redemption of Noncontrolling Interest” within the Consolidated Statements of Equity.
In connection with the transaction, the Company had noncash financing activities of $ 134 million consisting of $ 43 million of equity transferred at closing, $ 81 million of equity expected to be transferred at a later date, of which, $ 12 million was recognized as a share-based liability, and $ 10 million in cash to be paid in FY 2026.
Share Repurchase Program
On November 14, 2024, the Company’s board of directors author ized 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, whi ch 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 fiscal year ended September 30, 2025.

September 30,
2025
Share Repurchase Type
Shares Amount
(in millions)
Open Market Repurchases
477,281   $ 16  

14. Related Party Transactions
Lease Arrangements with Related Parties
On March 29, 2019, an affiliate of Access acquired the Ford Factory Building, located on 777 S. Santa Fe Avenue in Los Angeles, California from an unaffiliated third party. The building is the Company’s Los Angeles, California headquarters and the Company is the sole tenant of the building acquired by Access. The existing lease agreement was assumed by Access upon purchase of the building and was not modified as a result of the purchase. Rental payments by the Company under the existing lease for the 2025 fiscal year were approximately $ 15 million and are subject to annual fixed increases throughout the remainder of the lease term. The remaining lease term is approximately 5 years, after which the Company may exercise a single option to extend the term of the lease for 10 years thereafter.
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