FULLTEXT DEL 1 AV 2
10-Q – 2025-08-07 – wmg-20250630.htm
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Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-32502 Warner Music Group Corp. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 13-4271875 (I.R.S. Employer Identification No.) 1633 Broadway New York , NY 10019 (Address of principal executive offices) (212) 275-2000 (Registrant’s telephone number, including area code) ___________________________________________________________________________________________ Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Class A Common Stock, $0.001 par value per share WMG The Nasdaq Stock Market LLC Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes ☐ No ☒ As of August 4, 2025, there were 145,886,566 shares of Class A Common Stock and 375,380,313 shares of Class B Common Stock of the registrant outstanding. WARNER MUSIC GROUP CORP. QUARTERLY REPORT ON FORM 10-Q FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2025 TABLE OF CONTENTS Page Number Part I. Financial Information Item 1. Financial Statements (Unaudited) 1 Condensed Consolidated Balance Sheets as of June 3 0 , 2025 and September 30, 2024 1 Condensed Consolidated Statements of Operations for the Three and Nine Months Ended June 3 0 , 2025 and June 3 0 , 2024 2 Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended June 3 0 , 2025 and June 3 0 , 2024 3 Condensed Consolidated Statements of Cash Flows for the Three and Nine Months Ended June 3 0 , 2025 and June 3 0 , 2024 4 Condensed Consolidated Statements of Equity for the Three and Nine Months Ended June 3 0 , 2025 and June 3 0 , 2024 5 Notes to Condensed Consolidated Financial Statements 7 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 23 Item 3. Quantitative and Qualitative Disclosures About Market Risk 54 Item 4. Controls and Procedures 55 Part II. Other Information Item 1. Legal Proceedings 57 Item 1A. Risk Factors 57 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 57 Item 3. Defaults Upon Senior Securities 57 Item 4. Mine Safety Disclosures 57 Item 5. Other Information 57 Item 6. Exhibits 59 Signatures 60 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Warner Music Group Corp. Condensed Consolidated Balance Sheets (In millions, except share amounts which are reflected in thousands) (Unaudited) June 30, 2025 September 30, 2024 Assets Current assets: Cash and equivalents $ 527 $ 694 Accounts receivable, net of allowances of $ 24 million and $ 26 million 1,305 1,255 Inventories 101 99 Royalty advances expected to be recouped within one year 579 470 Prepaid and other current assets 166 125 Total current assets 2,678 2,643 Royalty advances expected to be recouped after one year 1,075 874 Property, plant and equipment, net of accumulated depreciation of $ 701 million and $ 615 million 472 481 Operating lease right-of-use assets, net 216 225 Goodwill 2,064 2,021 Intangible assets subject to amortization, net 2,764 2,359 Intangible assets not subject to amortization 154 152 Deferred tax assets, net 46 52 Other assets 308 348 Total assets $ 9,777 $ 9,155 Liabilities and Equity Current liabilities: Accounts payable $ 241 $ 289 Accrued royalties 2,828 2,549 Accrued liabilities 533 641 Accrued interest 39 17 Operating lease liabilities, current 43 45 Deferred revenue 278 246 Other current liabilities 88 110 Total current liabilities 4,050 3,897 Acquisition Corp. long-term debt 4,061 4,014 Asset-based long-term debt 302 — Operating lease liabilities, noncurrent 212 228 Deferred tax liabilities, net 204 195 Other noncurrent liabilities 136 146 Total liabilities $ 8,965 $ 8,480 Equity: Class A common stock, $ 0.001 par value; 1,000,000 shares authorized, 145,887 and 142,559 shares issued and outstanding as of June 30, 2025 and September 30, 2024, respectively $ — $ — Class B common stock, $ 0.001 par value; 1,000,000 shares authorized, 375,380 issued and outstanding as of June 30, 2025 and September 30, 2024, respectively 1 1 Additional paid-in capital 2,102 2,077 Accumulated deficit ( 1,340 ) ( 1,313 ) Accumulated other comprehensive loss, net ( 174 ) ( 247 ) Total Warner Music Group Corp. equity 589 518 Noncontrolling interest 223 157 Total equity 812 675 Total liabilities and equity $ 9,777 $ 9,155 See accompanying notes 1 Warner Music Group Corp. Condensed Consolidated Statements of Operations (In millions, except share amounts which are reflected in thousands, and per share data) (Unaudited) Three Months Ended June 30, Nine Months Ended June 30, 2025 2024 2025 2024 Revenue $ 1,689 $ 1,554 $ 4,839 $ 4,796 Costs and expenses: Cost of revenue ( 913 ) ( 830 ) ( 2,598 ) ( 2,501 ) Selling, general and administrative expenses (a) ( 471 ) ( 462 ) ( 1,395 ) ( 1,384 ) Restructuring and impairments ( 69 ) ( 1 ) ( 109 ) ( 96 ) Amortization expense ( 67 ) ( 55 ) ( 186 ) ( 167 ) Total costs and expenses ( 1,520 ) ( 1,348 ) ( 4,288 ) ( 4,148 ) Net gain on divestitures — 1 — 32 Operating income 169 207 551 680 Interest expense, net ( 43 ) ( 40 ) ( 119 ) ( 121 ) Other (expense) income ( 137 ) 4 ( 48 ) ( 9 ) (Loss) income before income taxes ( 11 ) 171 384 550 Income tax expense ( 5 ) ( 30 ) ( 123 ) ( 120 ) Net (loss) income ( 16 ) 141 261 430 Less: Income attributable to noncontrolling interest — ( 2 ) ( 5 ) ( 36 ) Net (loss) income attributable to Warner Music Group Corp. $ ( 16 ) $ 139 $ 256 $ 394 Net income (loss) per share attributable to common stockholders: Class A – Basic and Diluted $ ( 0.03 ) $ 0.27 $ 0.49 $ 0.75 Class B – Basic and Diluted $ ( 0.03 ) $ 0.27 $ 0.49 $ 0.75 Weighted average common shares: Class A – Basic and Diluted 145,878 141,568 144,623 140,531 Class B – Basic and Diluted 375,380 376,315 375,380 376,868 (a) Includes depreciation expense: $ ( 29 ) $ ( 25 ) $ ( 86 ) $ ( 77 ) See accompanying notes 2 Warner Music Group Corp. Condensed Consolidated Statements of Comprehensive Income (In millions) (Unaudited) Three Months Ended June 30, Nine Months Ended June 30, 2025 2024 2025 2024 Net (loss) income $ ( 16 ) $ 141 $ 261 $ 430 Other comprehensive income (loss), net of tax: Foreign currency adjustment 118 ( 10 ) 73 13 Deferred loss on derivative financial instruments — — — ( 1 ) Minimum pension liability — — — ( 1 ) Other comprehensive income (loss), net of tax 118 ( 10 ) 73 11 Total comprehensive income 102 131 334 441 Less: Income attributable to noncontrolling interest — ( 2 ) ( 5 ) ( 36 ) Comprehensive income attributable to Warner Music Group Corp. $ 102 $ 129 $ 329 $ 405 See accompanying notes 3 Warner Music Group Corp. Condensed Consolidated Statements of Cash Flows (In millions) (Unaudited) Nine Months Ended June 30, 2025 2024 Cash flows from operating activities Net income $ 261 $ 430 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 272 244 Unrealized losses and remeasurement of foreign-denominated loans and foreign currency forward exchange contracts 84 10 Deferred income taxes 7 29 Net gain on investments ( 27 ) ( 4 ) Net gain on divestitures — ( 32 ) Non-cash interest expense 4 5 Non-cash stock-based compensation expense 43 28 Non-cash impairments 102 50 Changes in operating assets and liabilities: Accounts receivable, net ( 21 ) ( 95 ) Inventories — 34 Royalty advances ( 295 ) ( 183 ) Other noncurrent assets — ( 85 ) Accounts payable and accrued liabilities ( 191 ) ( 119 ) Royalty payables 246 352 Accrued interest 15 8 Operating lease liabilities ( 12 ) ( 4 ) Deferred revenue 24 ( 205 ) Other balance sheet changes, net ( 65 ) ( 13 ) Net cash provided by operating activities 447 450 Cash flows from investing activities Acquisition of music publishing rights and music catalogs ( 152 ) ( 123 ) Capital expenditures ( 111 ) ( 83 ) Investments and acquisitions of businesses, net of cash received ( 46 ) ( 26 ) Proceeds from the sale of investments 36 12 Proceeds from divestitures — 19 Net cash used in investing activities ( 273 ) ( 201 ) Cash flows from financing activities Partial proceeds from Senior Term Loan Facility refinancing — 42 Partial repayment of Senior Term Loan Facility refinancing — ( 42 ) Deferred financing costs paid — ( 2 ) Repayment of Term Loan Mortgage ( 1 ) — Distribution to noncontrolling interest holders ( 8 ) ( 6 ) Dividends paid ( 283 ) ( 267 ) Payment of deferred consideration ( 23 ) — Taxes paid related to net share settlement of restricted stock units and common stock ( 19 ) ( 5 ) Common stock repurchased and retired ( 3 ) — Other financing activity ( 7 ) — Net cash used in financing activities ( 344 ) ( 280 ) Effect of exchange rate changes on cash and equivalents 3 ( 3 ) Net decrease in cash and equivalents ( 167 ) ( 34 ) Cash and equivalents at beginning of period 694 641 Cash and equivalents at end of period $ 527 $ 607 See accompanying notes 4 Warner Music Group Corp. Condensed Consolidated Statements of Equity (In millions, except share amounts which are reflected in thousands, and per share data) (Unaudited) Nine Months Ended June 30, 2025 Class A Common Stock Class B Common Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Warner Music Group Corp. Equity Non-controlling Interest Total Equity Shares Value Shares Value Balance at September 30, 2024 142,559 $ — 375,380 $ 1 $ 2,077 $ ( 1,313 ) $ ( 247 ) $ 518 $ 157 $ 675 Net income — — — — — 256 — 256 5 261 Other comprehensive income, net of tax — — — — — — 73 73 — 73 Dividends ($ 0.54 per share) — — — — — ( 283 ) — ( 283 ) — ( 283 ) Stock-based compensation expense — — — — 49 — — 49 — 49 Distribution to noncontrolling interest holders — — — — — — — — ( 8 ) ( 8 ) Acquisition of noncontrolling interests — — — — — — — — 74 74 Vesting of restricted stock units, net of shares withheld for employee taxes 801 — — — ( 19 ) — — ( 19 ) — ( 19 ) Shares issued under the Plan 2,607 — — — — — — — — — Common shares repurchased and retired ( 80 ) — — — ( 3 ) — — ( 3 ) — ( 3 ) Other — — — — ( 2 ) — — ( 2 ) ( 5 ) ( 7 ) Balance at June 30, 2025 145,887 $ — 375,380 $ 1 $ 2,102 $ ( 1,340 ) $ ( 174 ) $ 589 $ 223 $ 812 Three Months Ended June 30, 2025 Class A Common Stock Class B Common Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Warner Music Group Corp. Equity Non-controlling Interest Total Equity Shares Value Shares Value Balance at March 31, 2025 145,032 $ — 375,380 $ 1 $ 2,088 $ ( 1,230 ) $ ( 292 ) $ 567 $ 223 $ 790 Net loss — — — — — ( 16 ) — ( 16 ) — ( 16 ) Other comprehensive income, net of tax — — — — — — 118 118 — 118 Dividends ($ 0.18 per share) — — — — — ( 94 ) — ( 94 ) — ( 94 ) Stock-based compensation expense — — — — 15 — — 15 — 15 Vesting of restricted stock units, net of shares withheld for employee taxes 6 — — — — — — — — — Shares issued under the Plan 869 — — — — — — — — — Common shares repurchased and retired ( 20 ) — — — ( 1 ) — — ( 1 ) — ( 1 ) Balance at June 30, 2025 145,887 $ — 375,380 $ 1 $ 2,102 $ ( 1,340 ) $ ( 174 ) $ 589 $ 223 $ 812 5 Nine Months Ended June 30, 2024 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 Balance at September 30, 2023 138,345 $ — 377,650 $ 1 $ 2,015 $ ( 1,387 ) $ ( 322 ) $ 307 $ 123 $ 430 Net income — — — — — 394 — 394 36 430 Other comprehensive income, net of tax — — — — — — 11 11 — 11 Dividends ($ 0.51 per share) — — — — — ( 267 ) — ( 267 ) — ( 267 ) Stock-based compensation — — — — 43 — — 43 — 43 Distribution to noncontrolling interest holders — — — — — — — — ( 6 ) ( 6 ) Acquisition of noncontrolling interests — — — — — — — — ( 1 ) ( 1 ) Shares issued under the Plan 1,738 — — — — — — — — — Exchange of Class B shares for Class A shares 1,335 — ( 1,335 ) — — — — — — — Shares issued under Omnibus Incentive Plan 185 — — — ( 5 ) — — ( 5 ) — ( 5 ) Balance at June 30, 2024 141,603 $ — 376,315 $ 1 $ 2,053 $ ( 1,260 ) $ ( 311 ) $ 483 $ 152 $ 635 Three Months Ended June 30, 2024 Class A Common Stock Class B Common Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Warner Music Group Corp. Equity Non-controlling Interest Total Equity Shares Value Shares Value Balance at March 31, 2024 141,596 $ — 376,315 $ 1 $ 2,043 $ ( 1,310 ) $ ( 301 ) $ 433 $ 152 $ 585 Net income — — — — — 139 — 139 2 141 Other comprehensive loss, net of tax — — — — — — ( 10 ) ( 10 ) — ( 10 ) Dividends ($ 0.17 per share) — — — — — ( 89 ) — ( 89 ) — ( 89 ) Stock-based compensation — — — — 10 — — 10 — 10 Distribution to noncontrolling interest holders — — — — — — — — ( 1 ) ( 1 ) Acquisition of noncontrolling interests — — — — — — — — ( 1 ) ( 1 ) Shares issued under Omnibus Incentive Plan 7 — — — — — — — — — Balance at June 30, 2024 141,603 $ — 376,315 $ 1 $ 2,053 $ ( 1,260 ) $ ( 311 ) $ 483 $ 152 $ 635 See accompanying notes 6 Warner Music Group Corp. Notes to Condensed Consolidated Financial Statements (Unaudited) 1. Description of Business Warner Music Group Corp. (the “Company”) was formed on November 21, 2003. The Company is the direct parent of WMG Holdings Corp. (“Holdings”), which is the direct parent of WMG Acquisition Corp. (“Acquisition Corp.”). Acquisition Corp. is one of the world’s major music entertainment companies. We classify our business interests into two fundamental operations: Recorded Music and Music Publishing. Recorded Music Operations Our Recorded Music business primarily consists of the discovery and development of recording artists and the related marketing, promotion, distribution, sale and licensing of music created by such recording artists. We play an integral role in virtually all aspects of the recorded music value chain from discovering and developing talent to producing, distributing and selling music to marketing and promoting recording artists and their music. Music Publishing Operations While Recorded Music is focused on marketing, promoting, distributing and licensing a particular recording of a musical composition, Music Publishing is an intellectual property business focused on generating revenue from uses of the musical composition itself. In return for promoting, placing, marketing and administering the creative output of a songwriter, or engaging in those activities for other rightsholders, our Music Publishing business shares the revenues generated from use of the musical compositions with the songwriter or other rightsholders. 2. Summary of Significant Accounting Policies Interim Financial Statements The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and notes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended June 30, 2025 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2025. The consolidated balance sheet at September 30, 2024 has been derived from the audited consolidated financial statements at that date but does not include all the information and notes required by U.S. GAAP for complete financial statements. For further information, refer to the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2024 (File No. 001-32502). Basis of Consolidation The accompanying financial statements present the consolidated accounts of all entities in which the Company has a controlling 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 June 30, 2025 and September 30, 2024, there were approximately $ 68 million and $ 77 million of assets, respectively, related to VIEs included in our condensed consolidated balance sheets. As of June 30, 2025 and September 30, 2024, there were approximately $ 2 million of liabilities related to VIEs included in our condensed consolidated balance sheets. The Company has performed a review of all subsequent events through the date the financial statements were issued and has determined that no additional disclosures are necessary. 7 Income Taxes The Company uses the estimated annual effective tax rate method in computing its interim tax provision. Certain items, including those deemed to be unusual and infrequent are excluded from the estimated annual effective tax rate. In such cases, the actual tax expense or benefit is reported in the same period as the related item. Certain tax effects are also not reflected in the estimated annual effective tax rate, primarily certain changes in the realizability of deferred tax assets and uncertain tax positions, and are recorded in the period in which the change occurs. Global Intangible Low-Taxed Income (“GILTI”) imposes U.S. taxes on the excess of a deemed return on tangible assets of certain foreign subsidiaries. The Company made an election to recognize GILTI tax in the specific period in which it occurs. New Accounting Pronouncements Accounting Pronouncements Not Yet Adopted In 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 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 is in the process of evaluating the effect that the adoption of these standards will have on its consolidated financial statements. 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 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. 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. The potentially dilutive common shares did not have a dilutive effect on the Company’s EPS calculation for the three and nine months ended June 30, 2025 and 2024. The following table sets forth the calculation of basic and diluted net income per common share under the two-class method for the three and nine months ended June 30, 2025 and 2024 (in millions, except share amounts, which are reflected in thousands, and per share data): 8 Three Months Ended June 30, 2025 2024 Class A Class B Class A Class B Basic and Diluted EPS: Numerator Net income (loss) attributable to Warner Music Group Corp. $ ( 4 ) $ ( 12 ) $ 39 $ 100 Less: Net loss attributable to participating securities (a) — — ( 2 ) — Net income (loss) attributable to common stockholders $ ( 4 ) $ ( 12 ) $ 37 $ 100 Denominator Weighted average shares outstanding 145,878 375,380 141,568 376,315 Basic and Diluted Earnings (Loss) Per Share $ ( 0.03 ) $ ( 0.03 ) $ 0.27 $ 0.27 Nine Months Ended June 30, 2025 2024 Class A Class B Class A Class B Basic and Diluted EPS: Numerator Net income attributable to Warner Music Group Corp. $ 73 $ 183 $ 111 $ 283 Less: Net income attributable to participating securities (a) ( 3 ) — ( 5 ) — Net income attributable to common stockholders $ 70 $ 183 $ 106 $ 283 Denominator Weighted average shares outstanding 144,623 375,380 140,531 376,868 Basic and Diluted EPS $ 0.49 $ 0.49 $ 0.75 $ 0.75 ______________________________________ (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. 9 4. Revenue Recognition Disaggregation of Revenue The Company’s revenue consists of the following categories, which aggregate into the segments – Recorded Music and Music Publishing: Three Months Ended June 30, Nine Months Ended June 30, 2025 2024 2025 2024 (in millions) Revenue by Type Digital $ 929 $ 882 $ 2,643 $ 2,638 Physical 119 120 397 385 Total digital and physical 1,048 1,002 3,040 3,023 Artist services and expanded-rights 195 159 508 489 Licensing 111 90 326 373 Total Recorded Music 1,354 1,251 3,874 3,885 Performance 58 52 167 155 Digital 204 194 599 577 Mechanical 16 13 46 43 Synchronization 54 42 142 129 Other 4 4 15 11 Total Music Publishing 336 305 969 915 Intersegment eliminations ( 1 ) ( 2 ) ( 4 ) ( 4 ) Total revenues $ 1,689 $ 1,554 $ 4,839 $ 4,796 Revenue by geographical location U.S. Recorded Music $ 536 $ 517 $ 1,565 $ 1,652 U.S. Music Publishing 186 161 520 503 Total U.S. 722 678 2,085 2,155 International Recorded Music 818 734 2,309 2,233 International Music Publishing 150 144 449 412 Total international 968 878 2,758 2,645 Intersegment eliminations ( 1 ) ( 2 ) ( 4 ) ( 4 ) Total revenues $ 1,689 $ 1,554 $ 4,839 $ 4,796 Sales Returns and Uncollectible Accounts Based on management’s analysis of sales returns, refund liabilities of $ 16 million and $ 20 million were established at June 30, 2025 and September 30, 2024, respectively. Based on management’s analysis of estimated credit losses, reserves of $ 24 million and $ 26 million were established at June 30, 2025 and September 30, 2024, respectively. Deferred Revenue Deferred revenue increased by $ 845 million during the nine months ended June 30, 2025 related to cash received from customers for fixed fees and minimum guarantees in advance of performance, including amounts recognized in the period. Revenues of $ 197 million were recognized during the nine months ended June 30, 2025 related to the balance of deferred revenue at September 30, 2024. There were no other significant changes to deferred revenue during the reporting period. Performance Obligations For the three months ended June 30, 2025 and June 30, 2024, the Company recognized revenue of $ 10 million and $ 35 million, respectively, from performance obligations satisfied in previous periods. For the nine months ended June 30, 2025 and June 30, 2024, the Company recognized revenue of $ 67 million and $ 109 million, respectively, from performance obligations satisfied in previous periods. 10 Revenues expected to be recognized in the future related to performance obligations that are unsatisfied at June 30, 2025 are as follows: Rest of FY25 FY26 FY27 Thereafter Total (in millions) Remaining performance obligations $ 422 $ 647 $ 171 $ 169 $ 1,409 Total $ 422 $ 647 $ 171 $ 169 $ 1,409 5. Comprehensive Income Comprehensive income, which is reported in the accompanying condensed consolidated statements of equity, consists of net income and other gains and losses affecting equity that, under U.S. GAAP, are excluded from net income. For the Company, the components of other comprehensive income primarily consist of foreign currency translation gains and losses, minimum pension liabilities, and deferred gains and losses on financial instruments designated as hedges under ASC 815, Derivatives and Hedging . The following summary sets forth the changes in the components of accumulated other comprehensive loss. Foreign Currency Translation Loss (a) Minimum Pension Liability Adjustment Accumulated Other Comprehensive Loss, net (in millions) Balances at September 30, 2024 $ ( 244 ) $ ( 3 ) $ ( 247 ) Other comprehensive income 73 — 73 Balances at June 30, 2025 $ ( 171 ) $ ( 3 ) $ ( 174 ) ______________________________________ (a) Includes historical foreign currency translation related to certain intra-entity transactions. 6. Goodwill and Intangible Assets Goodwill The following analysis details the changes in goodwill for each reportable segment: Recorded Music Music Publishing Total (in millions) Balances at September 30, 2024 $ 1,557 $ 464 $ 2,021 Acquisitions 22 — 22 Other adjustments (a) 21 — 21 Balances at June 30, 2025 $ 1,600 $ 464 $ 2,064 ______________________________________ (a) Other adjustments during the nine months ended June 30, 2025 represent foreign currency movements. 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. No indicators of impairment were identified during the current period that required the Company to perform an interim assessment or recoverability test. 11 Intangible Assets Intangible assets consist of the following: Weighted-Average Useful Life June 30, 2025 September 30, 2024 (in millions) Intangible assets subject to amortization: Recorded music catalog 12 years $ 1,780 $ 1,616 Music publishing copyrights 24 years 2,677 2,227 Artist and songwriter contracts 13 years 1,143 1,125 Trademarks 16 years 55 69 Other intangible assets 6 years 88 69 Total gross intangible assets subject to amortization 5,743 5,106 Accumulated amortization ( 2,979 ) ( 2,747 ) Total net intangible assets subject to amortization 2,764 2,359 Intangible assets not subject to amortization: Trademarks and tradenames Indefinite 154 152 Total net intangible assets $ 2,918 $ 2,511 The increase in net intangible assets during the nine months ended June 30, 2025 is primarily related to the acquisition of Tempo Music Holdings, LLC (“Tempo”) which is further described below. Additionally, the Company completed various business combinations during the nine months ended June 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 intangibles. The increase in net intangible assets was partially offset by the impairment of trademarks and other intangible assets of $ 29 million, in the aggregate, within the Recorded Music segment . 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, a proprietary music rights acquisition platform, for consideration of $ 76 million, including transaction costs, with an option, exercisable on or prior to November 30, 2027, to acquire the remaining 49.9 % of Tempo 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 $ 87 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’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 and is nonrecourse to the Company and its subsidiaries, other than Tempo (refer to Note 7 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. 12 7. Debt Debt Capitalization As of June 30, 2025, our long-term debt consists of the following: June 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 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 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 ( 29 ) ( 34 ) Total Acquisition Corp. long-term debt, including the current portion, net $ 4,061 $ 4,014 Tempo Asset-Based Notes due 2050 311 — Unamortized discount ( 9 ) — Total asset-based long-term debt, including the current portion, net (b) $ 302 $ — Total long-term debt, including the current portion, net $ 4,363 $ 4,014 ______________________________________ (a) Reflects $ 350 million of commitments under the Revolving Credit Facility with no letters of credit outstanding at June 30, 2025 and September 30, 2024. There were no loans outstanding under the Revolving Credit Facility as of June 30, 2025 and September 30, 2024. (b) The Tempo Asset-Based Notes due 2050 are secured only by certain music rights owned by Tempo and are nonrecourse to the Company and its subsidiaries, other than Tempo. 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 June 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 June 30, 2025 . Fiscal 2025 Transactions Acquisition of Tempo 13 Following its acquisition of Tempo 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 and secured only by certain music rights owned by Tempo and is nonrecourse to the Company and its subsidiaries, other than Tempo. These notes, which consist of multiple fixed rate tranches, will accrue at a fixed weighted average rate of 4.62 % until November 30, 2027, with higher interest rates thereafter. Principal and interest are payable in equal semi-annual installments. 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 from time to time 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 customary affirmative and negative covenants for this type of facility, and the ability, subject to the consent of the Lenders, to increase the size of the facility to $ 700 million. 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 2.07 x at June 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. 14 Interest on the Asset-Based Notes, which consist of multiple fixed rate tranches, will accrue at a fixed weighted average rate of 4.62 % until November 30, 2027. Following November 30, 2027, if the Asset-Based Notes remain outstanding, the interest rate on the outstanding Asset-Based Notes will increase by a per annum rate equal to the greater of: (i) 5.0 % and (ii) the amount, if any, by which the sum of the following exceeds the interest rate otherwise payable with respect to such Asset-Based Notes: (A) the yield to maturity (adjusted to a quarterly bond-equivalent basis) on November 30, 2027 of the U.S. treasury security having a term closest to seven years plus (B) 5.0 %, plus (C) with respect to class A notes, 3.53 % and, with respect to class B notes, 4.28 %. The advances under the Beethoven Credit Agreement shall bear interest (a) in the case of a base rate advance, at a rate equal to the base rate, which means, for any day, the highest of (i) the prime rate in effect on such day; (ii) the federal funds rate in effect on such day plus 0.50 %; and (iii) Term SOFR for a one-month tenor in effect on such day plus 1.00 % per annum, plus the applicable margin of 1.00 % and (b) in the case of a Term SOFR advance, the Term SOFR for the interest accrual period plus the applicable margin of 2.00 %. The Company has entered into, and in the future may enter into, interest rate swaps to manage interest rate risk. As of June 30, 2025, there are no interest rate swaps outstanding. 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 June 30, 2025, there are no scheduled maturities of notes until 2028, when $ 381 million is scheduled to mature. Thereafter, $ 2.708 billion is scheduled to mature. Maturity of Term Loan Mortgage The maturity date of the Term Loan Mortgage is January 27, 2033, subject to a call option exercisable by Truist Bank at any time after January 27, 2028 if certain criteria relating to the Company’s creditworthiness are met. Maturity of Tempo Asset-Based Notes The maturity date of the Asset-Based Notes is November 30, 2050. Maturity of Beethoven Credit Agreement The maturity date of the Beethoven Credit Facility is June 29, 2030. Interest Expense, net Total interest expense, net was $ 43 million and $ 40 million for the three months ended June 30, 2025 and 2024, respectively, and $ 119 million and $ 121 million for the nine months ended June 30, 2025 and 2024, respectively. Interest expense, net includes interest expense related to our outstanding indebtedness of $ 45 million and $ 46 million for the three months ended June 30, 2025 and 2024, respectively, and $ 132 million and $ 137 million for the nine months ended June 30, 2025 and 2024, respectively. The weighted-average interest rate of the Company’s total debt was 4.1 % at June 30, 2025, 4.3 % at September 30, 2024, and 4.5 % at June 30, 2024. 8. Restructuring and Impairments 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 three months ended June 30, 2025, the Company recognized a $ 1 million benefit in our Recorded Music segment due a change in estimate of severance costs. For the nine months ended June 30, 2025, total severance and other contract termination costs recorded in connection with the 2024 Strategic Restructuring Plan were $ 7 million, of which $ 8 million of expense was recognized in 15 our Recorded Music segment while there was a $ 1 million benefit recognized at Corporate due to a change in estimate. Additionally, for the nine months ended June 30, 2025, the Company recognized $ 32 million of impairment losses, all of which were recognized in our Recorded Music segment. Impairment charges recognized during the period primarily relate to the write-off of certain long-form audiovisual production assets and lease termination costs for office closures. As of June 30, 2025, total cumulative restructuring and impairment charges recognized in connection with the 2024 Strategic Restructuring Plan were $ 217 million with $ 207 million of costs recognized in our Recorded Music segment and $ 10 million recognized at Corporate. These costs are composed of $ 135 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 nine months ended June 30, 2025 in the restructuring accrual associated with the 2024 Strategic Restructuring Plan included within accrued liabilities in the accompanying condensed consolidated balance sheets. Severance Costs Contract Termination Costs Total (in millions) Balance at September 30, 2024 $ 99 $ 5 $ 104 Restructuring charges — 7 7 Cash payments ( 63 ) ( 5 ) ( 68 ) Foreign currency movements — — — Balance at June 30, 2025 $ 36 $ 7 $ 43 Other Impairments For the three and nine months ended June 30, 2025, the Company recognized a pre-tax impairment charge of $ 70 million ($ 48 million after-tax) within the Recorded Music segment for long-lived assets associated with certain of the Company’s non-core e-tailer operations due to a triggering event that indicated the carrying amount was no longer recoverable. The recoverable fair value was determined based on current market indicators. 9. Commitments and Contingencies From time to time the Company is involved in claims and legal proceedings that arise in the ordinary course of business. The Company is currently subject to several such claims and legal proceedings. Based on currently available information, the Company does not believe that resolution of pending matters will have a material adverse effect on its financial condition, cash flows or results of operations. However, litigation is subject to inherent uncertainties, and there can be no assurances that the Company’s defenses will be successful or that any such lawsuit or claim would not have a material adverse impact on the Company’s business, financial condition, cash flows and results of operations in a particular period. Any claims or proceedings against the Company, whether meritorious or not, can have an adverse impact because of defense costs, diversion of management and operational resources, negative publicity and other factors. 10. Equity Stock-Based Compensation The Company’s stock-based compensation plans are described in Note 14, “Equity,” to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2024. Stock-based compensation consists primarily of common stock, restricted stock units, stock options, and market-based performance share units granted to eligible employees and executives under the Omnibus Incentive Plan. For the three months ended June 30, 2025, the Company recognized a total of $ 16 million of non-cash stock-based compensation expense, of which $ 15 million was recorded to additional paid-in capital and $ 1 million was recorded as a shared-based compensation liability. For the nine months ended June 30, 2025, the Company recognized a total of $ 43 million of non-cash stock-based compensation expense, of which $ 42 million was recorded to additional paid-in capital and $ 1 million was recorded as a shared-based compensation liability. For the three and nine months ended June 30, 2024, the Company recognized a total of $ 10 million and $ 28 million of non-cash stock-based compensation expense, respectively, all of which was recorded to additional paid-in capital. During the nine months ended June 30, 2025 and 2024, $ 7 million and $ 15 million of share-based compensation liabilities were reclassified to additional paid-in capital upon a certain number of awards becoming determinable, respectively. Common Stock 16 During the three and nine months ended June 30, 2025, in connection with the Senior Management Free Cash Flow Plan (the “Plan”), the Company issued a total of 869,009 and 2,607,027 shares, respectively, of Class A Common Stock to settle all remaining participants’ deferred equity units previously issued under the Plan. During the three and nine months ended June 30, 2025, the Company satisfied the vesting of RSUs by issuing 5,959 and 800,748 shares of Class A Common Stock under the Omnibus Incentive Plan, respectively, which is net of shares used to settle employee income tax obligations. Noncontrolling Interest On August 5, 2025, the Company acquired the remaining equity interest from noncontrolling interest holders for an aggregate consideration of $ 165 million, which includes cash consideration of $ 40 million and $ 125 million payable in the form of the Company’s Class A Common Stock. The Company issued 1,416,666 shares of Class A Common Stock on the closing date and expects to issue an additional 2,750,000 shares of Class A Common Stock on the first anniversary of the closing. These shares are subject to specific lock-up periods. Share Repurchase Program On November 14, 2024, the Company’s board of directors authorized a new $ 100 million share repurchase program (the “Share Repurchase Program”), which is intended to offset dilution from the Omnibus Incentive Plan. Under this authorization, the Company may, from time to time, purchase shares of its Class A Common Stock through open market transactions, privately negotiated transactions, forward, derivative, or accelerated repurchase transactions, tender offers or otherwise, in accordance with all applicable securities laws and regulations, including Rule 10b-18 of the Exchange Act. The $ 100 million share repurchase authorization does not obligate the Company to purchase any shares and the Share Repurchase Program does not have a fixed expiration date. The Company may enter into a pre-arranged stock trading plan in accordance with the guidelines specified under Rule 10b5-1 to effectuate all or a portion of the Share Repurchase Program. The Company expects to finance any repurchases from a combination of cash on hand and cash provided by operating activities. The timing and method of any repurchases, which will depend on a variety of factors, including market conditions, are subject to our results of operations, financial condition, liquidity and other factors. The authorization for the Share Repurchase Program may be suspended, terminated, increased or decreased by the Company’s board of directors at any time. The following table summarizes our total share repurchases and retirement under the Share Repurchase Program during the three and nine months ended June 30, 2025: Three Months Ended June 30, 2025 Nine Months Ended June 30, 2025 Share Repurchase Type Shares Amount (in millions) Shares Amount (in millions) Open Market Repurchases 20,000 $ 1 80,383 $ 3 11. Income Taxes For the three and nine months ended June 30, 2025, the Company recorded an income tax expense of $ 5 million and $ 123 million, respectively. The income tax expense for the three and nine months ended June 30, 2025 is higher than the expected tax expense at the statutory rate of 21% primarily due to foreign income taxed at rates higher than in the United States, including withholding taxes, non-deductible executive compensation under Internal Revenue Code (“IRC”) Section 162(m), and the net impact of GILTI and foreign derived intangible income (“FDII”). These charges were partially offset by a tax benefit recognized on an impairment charge associated with certain of the Company’s non-core e-tailer operations. The income tax expense for the nine months ended June 30, 2025 is higher than the expected tax expense at the statutory rate of 21% primarily due to foreign income taxed at rates higher than in the United States, including withholding taxes, U.S. state and local taxes, non-deductible executive compensation under IRC Section 162(m), unrecognized tax benefit related to uncertain tax positions, and the net impact of GILTI and FDII. These charges were partially offset by tax benefits associated with Research and Development (“R&D”) credits, and non-controlling interest. For the three and nine months ended June 30, 2024, the Company recorded an income tax expense of $ 30 million and $ 120 million, respectively. The income tax expense for the three and nine months ended June 30, 2024 is lower than the expected tax benefit at the statutory tax rate of 21% primarily due to benefits related to updated allowable costs for reported FDII, non-controlling interest, and the net impact of GILTI and FDII. These benefits were partially offset by foreign income taxed at rates higher than the United States, withholding taxes, and U.S. state and local taxes. The income tax expense for the nine months ended June 30, 2024 is lower than the expected tax expense at the statutory rate of 21% primarily due to the tax benefit from the winding down of the Company’s owned and operated media properties, updated allowable costs for FDII, non-controlling interest, the net impact of GILTI 17 and FDII and tax benefits associated with R&D credits. These benefits were partially offset by withholding taxes, foreign income taxed at rates higher than the United States, U.S. state and local taxes, non-deductible executive compensation under IRC Section 162(m), and unrecognized tax benefit related to uncertain tax positions. The Company has determined that it is reasonably possible that the gross unrecognized tax benefits as of June 30, 2025 could decrease by up to approximately $ 2 million related to various ongoing audits and settlement discussions in various jurisdictions during the next twelve months. The Organization for Economic Co-operation and Development (“OECD”) introduced Base Erosion and Profit Shifting (“BEPS”) Pillar 2 rules that impose a global minimum tax rate of 15%. Numerous countries, including European Union member states, have enacted or are expected to enact legislation with general implementation of a global minimum tax rate by January 1, 2025. The Company has evaluated the potential impact of the rules based on the most recently available information and estimates that the impact to the Company is 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. 12. Derivative Financial Instruments The Company uses derivative financial instruments, primarily foreign currency forward exchange contracts, for the purposes of managing foreign currency exchange rate risk on expected future cash flows. As of June 30, 2025, the Company had outstanding foreign currency forward exchange contracts for the sale of $ 197 million and the purchase of $ 124 million of foreign currencies at fixed rates that will be settled by September 2025. As of September 30, 2024, the Company had no foreign currency forward exchange contracts outstanding. The Company recorded realized pre-tax gains of $ 7 million and unrealized pre-tax losses of $ 5 million related to its foreign currency forward exchange contracts in the condensed consolidated statement of operations as other expense for the nine months ended June 30, 2025. The Company recorded realized pre-tax losses of $ 1 million and unrealized pre-tax gains of $ 1 million related to its foreign currency forward exchange contracts in the condensed consolidated statement of operations as other expense for the nine months ended June 30, 2024. The following is a summary of amounts recorded in the consolidated balance sheets pertaining to the Company’s derivative instruments at June 30, 2025 and September 30, 2024: June 30, 2025 September 30, 2024 (in millions) Other Current Assets: Foreign currency forward exchange contracts (a) 1 — Other Current Liabilities: Foreign currency forward exchange contracts (a) ( 6 ) — ______________________________________ (a) Includes $ 9 million and $ 14 million of foreign exchange derivative contracts in asset and liability positions, respectively, which net to $ 1 million of current assets and $ 6 million of current liabilities, respectively. 13. Segment Information Based on the nature of its products and services, the Company classifies its business interests into two fundamental operations: Recorded Music and Music Publishing, which also represent the reportable segments of the Company. Information as to each of these operations is set forth below. The Company evaluates performance based on several factors, of which the primary financial measure is operating income (loss) before non-cash depreciation of tangible assets and non-cash amortization of intangible assets adjusted to exclude the impact of non-cash stock-based compensation and other related expenses and certain items that affect comparability including but not limited to gains or losses on divestitures and expenses related to restructuring and transformation initiatives, which includes costs associated with the Company’s financial transformation initiative to design and implement new information technology and upgrade our finance infrastructure (“Adjusted OIBDA”). Items excluded are not viewed to contribute directly to management’s evaluation of operating results. 18 The accounting policies of the Company’s business segments are the same as those described in Note 2, “Summary of Significant Accounting Policies,” to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2024. The Company accounts for intersegment sales at fair value as if the sales were to third parties. While intercompany transactions are treated like third-party transactions to determine segment performance, the revenues (and corresponding expenses recognized by the segment that is counterparty to the transaction) are eliminated in consolidation, and therefore, do not themselves impact consolidated results. Recorded Music Music Publishing Corporate expenses and eliminations Total Three Months Ended (in millions) June 30, 2025 Revenues $ 1,354 $ 336 $ ( 1 ) $ 1,689 Adjusted OIBDA 321 96 ( 44 ) 373 June 30, 2024 Revenues $ 1,251 $ 305 $ ( 2 ) $ 1,554 Adjusted OIBDA 281 79 ( 44 ) 316 Recorded Music Music Publishing Corporate expenses and eliminations Total Nine Months Ended (in millions) June 30, 2025 Revenues $ 3,874 $ 969 $ ( 4 ) $ 4,839 Adjusted OIBDA 914 264 ( 139 ) 1,039 June 30, 2024 Revenues 3,885 915 ( 4 ) 4,796 Adjusted OIBDA 965 247 ( 133 ) 1,079 Adjusted OIBDA is not a measure defined by U.S. GAAP but is computed using amounts that are determined in accordance with U.S. GAAP. A reconciliation of the Company’s Adjusted OIBDA to operating income is presented below. For the Three Months Ended June 30, For the Nine Months Ended June 30, 2025 2024 2025 2024 Operating income $ 169 $ 207 $ 551 $ 680 Amortization expense 67 55 186 167 Depreciation expense 29 25 86 77 Restructuring and impairments 69 1 109 96 Transformation initiative costs 19 18 54 56 Executive transition costs 4 — 4 — Net gain on divestitures — ( 1 ) — ( 32 ) Non-cash stock-based compensation and other related costs 16 11 49 35 Adjusted OIBDA $ 373 $ 316 $ 1,039 $ 1,079 19 14. Additional Financial Information Supplemental Cash Flow Disclosures The Company made interest payments of approximately $ 43 million and $ 35 million during the three months ended June 30, 2025 and 2024, respectively, and approximately $ 114 million and $ 125 million during the nine months ended June 30, 2025 and 2024, respectively. The Company paid approximately $ 50 million and $ 33 million of income and withholding taxes, net of refunds, for the three months ended June 30, 2025 and 2024, respectively, and approximately $ 151 million and $ 105 million of income and withholding taxes, net of refunds, for the nine months ended June 30, 2025 and 2024, respectively. Non-cash investing activities were approximately $ 32 million related to business combinations and the acquisition of music publishing rights and music catalogs during the nine months ended June 30, 2025, and $ 18 million related to the acquisition of music publishing rights and music catalogs during the nine months ended June 30, 2024. Net Gain on Divestitures The Company recognized a pre-tax gain of $ 1 million during the three months ended June 30, 2024, in connection with the divestiture of non-core owned and operated media properties. The Company recognized a pre-tax gain of $ 32 million during the nine months ended June 30, 2024 in connection with the divestiture of certain sound recordings rights. For each period, the divestiture has been reflected as a net gain on divestiture in the accompanying condensed consolidated statement of operations. Net Gain on Sale of Investments The Company recognized a pre-tax realized net gain of $ 29 million during the nine months ended June 30, 2025 in connection with the sale of an investment which has been presented within the Other income (expense) line of the accompanying condensed consolidated statement of operations. 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 has been paying quarterly cash dividends to holders of its Class A Common Stock and Class B Common Stock. The declaration of each dividend will continue to be at the discretion of the Company’s board of directors and will depend on the Company’s financial condition, earnings, liquidity and capital requirements, level of indebtedness, contractual restrictions with respect to payment of dividends, restrictions imposed by Delaware law, general business conditions and any other factors that the Company’s board of directors deems relevant in making such a determination. Therefore, there can be no assurance that the Company will pay any dividends to holders of the Company’s common stock, or as to the amount of any such dividends. On May 16, 2025, the Company’s board of directors declared a cash dividend of $ 0.18 per share on the Company’s Class A Common Stock and Class B Common Stock, as well as related payments under certain stock-based compensation plans, which was paid to stockholders on June 3, 2025. The Company paid an aggregate of approximately $ 94 million and $ 283 million, or $ 0.18 and $ 0.54 per share, in cash dividends to stockholders and participating security holders for the three and nine months ended June 30, 2025. 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. 20 15. Fair Value Measurements The following tables show the fair value of the Company’s financial instruments that are required to be measured at fair value as of June 30, 2025 and September 30, 2024. Fair Value Measurements as of June 30, 2025 (Level 1) (Level 2) (Level 3) Total (in millions) Other Current Assets: Foreign currency forward exchange contracts (a) $ — $ 1 $ — $ 1 Other current liabilities: Foreign currency forward exchange contracts (a) $ — $ ( 6 ) $ — $ ( 6 ) Other noncurrent assets: Equity investments with readily determinable fair value (b) 9 — — 9 Fair Value Measurements as of September 30, 2024 (Level 1) (Level 2) (Level 3) Total (in millions) Other noncurrent assets: Equity investment with readily determinable fair value (b) 9 — — 9 ______________________________________ (a) The fair value of foreign currency forward exchange contracts is based on dealer quotes of market forward rates and reflects the amount that the Company would receive or pay at their maturity dates for contracts involving the same currencies and maturity dates. (b) These represent equity investments with a readily determinable fair value. The Company has measured its investments to fair value in accordance with ASC 321, Investments—Equity Securities, based on quoted prices in active markets. The majority of the Company’s non-financial instruments, which include goodwill, intangible assets, inventories and property, plant and equipment, are not required to be re-measured to fair value on a recurring basis. These assets are evaluated for impairment if certain triggering events occur. If such evaluation indicates that impairment exists, the asset is written down to its fair value. In addition, an impairment analysis is performed at least annually for goodwill and indefinite-lived intangible assets. Equity Investments Without Readily Determinable Fair Value The Company evaluates its equity investments without readily determinable fair values for impairment if factors indicate that a significant decrease in value has occurred. The Company has elected to use the measurement alternative to fair value that will allow these investments to be recorded at cost, less impairment, and adjusted for subsequent observable price changes. In the three and nine month periods ended June 30, 2025, the Company recorded approximately $ 1 million and $ 4 million of impairment charges on these investments, respectively. The Company did not record any impairment charges on these investments during the three months ended June 30, 2024 and recorded approximately $ 1 million of impairment charges on these investments during the nine months ended June 30, 2024. In addition, there were no observable price changes events that were completed during the three and nine months ended June 30, 2025 and 2024. Fair Value of Debt Based on the level of interest rates prevailing at June 30, 2025, the fair value of the Company’s debt was $ 4.217 billion. Based on the level of interest rates prevailing at September 30, 2024, the fair value of the Company’s debt was $ 3.836 billion. The fair value of the Company’s debt instruments is determined using quoted market prices from less active markets or by using quoted market prices for instruments with identical terms and maturities; both approaches are considered a Level 2 measurement. 21 16. Subsequent Events 2025 Restructuring Plan On July 1, 2025, the Company announced a strategic restructuring plan (the “2025 Restructuring Plan”) designed to free up funds to invest in music and to accelerate the Company’s long-term growth. The Company expects the 2025 Restructuring Plan to generate pre-tax cost savings of approximately $ 300 million on an annualized run-rate basis by the end of fiscal year 2027 and expects the majority of the cost savings under the 2025 Restructuring Plan to be accretive to Adjusted OIBDA. There were no charges recognized under the 2025 Restructuring Plan for the three and nine months ended June 30, 2025. 22 ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS You should read the following discussion of our results of operations and financial condition with the unaudited interim financial statements included elsewhere in this Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2025 (the “Quarterly Report”). “SAFE HARBOR” STATEMENT UNDER PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 This Quarterly Report includes forward-looking statements and cautionary statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Some of the forward-looking statements can be identified by the use of forward-looking terms such as “believes,” “expects,” “may,” “will,” “shall,” “should,” “would,” “could,” “seeks,” “aims,” “projects,” “is optimistic,” “intends,” “plans,” “estimates,” “anticipates” or other comparable terms or the negative thereof. Forward-looking statements include, without limitation, all matters that are not historical facts. They appear in a number of places throughout this Quarterly Report and include, without limitation, our ability to compete in the highly competitive markets in which we operate, statements regarding our ability to develop talent and attract future talent, our ability to reduce future capital expenditures, our ability to monetize our music, including through new distribution channels and formats to capitalize on the growth areas of the music entertainment industry, our ability to effectively deploy our capital, the development of digital music and the effect of digital distribution channels on our business, including whether we will be able to achieve higher margins from digital sales, the success of strategic actions we are taking to accelerate our transformation as we redefine our role in the music entertainment industry, the effectiveness of our ongoing efforts to reduce overhead expenditures and manage our variable and fixed cost structure and our ability to generate expected cost savings from such efforts, our success in limiting piracy, the growth of the music entertainment industry and the effect of our and the industry’s efforts to combat piracy on the industry, our intention and ability to pay dividends or repurchase or retire our outstanding debt or notes in open market purchases, privately or otherwise, the impact on us of potential strategic transactions, our ability to fund our future capital needs and the effect of litigation on us. Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond our control. We caution you that forward-looking statements are not guarantees of future performance or outcomes and that actual performance and outcomes, including, without limitation, our actual results of operations, financial condition and liquidity, and the development of the market in which we operate, may differ materially from those made in or suggested by the forward-looking statements contained in this Quarterly Report. In addition, even if our results of operations, financial condition and cash flows, and the development of the market in which we operate, are consistent with the forward-looking statements contained in this Quarterly Report, those results or developments may not be indicative of results or developments in subsequent periods. New factors emerge from time to time that may cause our business not to develop as we expect, and it is not possible for us to accurately predict all of them. Factors that could cause actual results and outcomes to differ from those reflected in forward-looking statements include, without limitation: • our inability to compete successfully in the highly competitive markets in which we operate; • our ability to identify, sign and retain recording artists and songwriters and the existence or absence of superstar releases; • slower growth in streaming adoption and revenue; • our dependence on a limited number of digital music services for the online distribution and marketing of our music and their ability to significantly influence the pricing structure for online music stores; • the popular demand for particular recording artists and/or songwriters and music and the timely delivery to us of music by major recording artists and/or songwriters; • risks related to the effects of climate change and natural or man-made disasters; • the diversity and quality of our recording artists, songwriters and releases; • trends, developments or other events in the United States and in some foreign countries in which we operate, including the impact of tariffs imposed or threatened by the U.S. or foreign governments; • risks associated with our non-U.S. operations, including limited legal protections of our intellectual property rights and restrictions on the repatriation of capital; • unfavorable currency exchange rate fluctuations; • the impact of heightened and intensive competition in the recorded music and music publishing industries and our inability to execute our business strategy; 23 • significant fluctuations in our operations, cash flows and the trading price of our common stock from period to period; • our failure to attract and retain our executive officers and other key personnel; • a significant portion of our revenues are subject to rate regulation either by government entities or by local third-party collecting societies throughout the world and rates on other income streams may be set by governmental proceedings, which may limit our profitability; • risks associated with obtaining, maintaining, protecting and enforcing our intellectual property rights; • our involvement in intellectual property litigation; • threats to our business associated with digital piracy, including organized industrial piracy; • risks associated with the development and use of artificial intelligence; • an impairment in the carrying value of goodwill or other intangible and long-lived assets; • the impact of, and risks inherent in, acquisitions or other business combinations; • risks inherent to our outsourcing certain finance and accounting functions; • the fact that we have engaged in substantial restructuring activities in the past, and may need to implement further restructurings in the future and our restructuring efforts may not be successful or generate expected cost savings; • our and our service providers’ ability to maintain the security of information relating to our customers, employees and vendors and our music; • risks related to evolving laws and regulations concerning data privacy which might result in increased regulation and different industry standards; • new legislation that affects the terms of our contracts with recording artists and songwriters; • a potential loss of catalog if it is determined that recording artists have a right to recapture U.S. rights in their recordings under the U.S. Copyright Act; • the impact of our substantial leverage on our ability to raise additional capital to fund our operations, on our ability to react to changes in the economy or our industry and on our ability to meet our obligations under our indebtedness; • the ability to generate sufficient cash to service all of our indebtedness, and the risk that we may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful; • the fact that our debt agreements contain restrictions that may limit our flexibility in operating our business; • the significant amount of cash required to service our indebtedness and the ability to generate cash or refinance indebtedness as it becomes due depends on many factors, some of which are beyond our control; • our indebtedness levels, and the fact that we may be able to incur substantially more indebtedness, which may increase the risks created by our substantial indebtedness; • risks of downgrade, suspension or withdrawal of the rating assigned by a rating agency to us could impact our cost of capital; • the dual class structure of our common stock and Access’s existing ownership of our Class B Common Stock have the effect of concentrating control over our management and affairs and over matters requiring stockholder approval with Access; • the fact that we maintain certain cash deposits in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limits, which could have an adverse effect on liquidity and financial performance in the event of a bank failure or receivership; and • risks related to other factors discussed under “Risk Factors” of this Quarterly Report and in our Annual Report on Form 10-K for the fiscal year ended September 30, 2024. You should read this Quarterly Report completely and with the understanding that actual future results may be materially different from expectations. All forward-looking statements made in this Quarterly Report are qualified by these cautionary statements. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation, other than as may be required by law, to update or revise any forward-looking or cautionary statements to reflect changes in assumptions, the occurrence of events, unanticipated or otherwise, and changes in future operating results over time or otherwise. 24 Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data. Other risks, uncertainties and factors, including those discussed in the “Risk Factors” of our Quarterly Reports and our Annual Report on Form 10-K, could cause our actual results to differ materially from those projected in any forward-looking statements we make. You should read carefully the factors described in the “Risk Factors” section of our Quarterly Reports and our Annual Report on Form 10-K to better understand the risks and uncertainties inherent in our business and underlying any forward-looking statements. INTRODUCTION Warner Music Group Corp. (the “Company”) was formed on November 21, 2003. The Company is the direct parent of WMG Holdings Corp. (“Holdings”), which is the direct parent of WMG Acquisition Corp. (“Acquisition Corp.”). Acquisition Corp. is one of the world’s major music entertainment companies. The Company and Holdings are holding companies that conduct substantially all of their business operations through their subsidiaries. The terms “we,” “us,” “our,” “ours” and the “Company” refer collectively to Warner Music Group Corp. and its consolidated subsidiaries, except where otherwise indicated. Management’s discussion and analysis of financial condition and results of operations (“MD&A”) is provided as a supplement to the unaudited financial statements and related notes thereto included elsewhere herein to help provide an understanding of our financial condition, changes in financial condition and results of our operations. MD&A is organized as follows: • Business overview. This section provides a general description of our business, as well as a discussion of factors that we believe are important in understanding our results of operations and comparability and in anticipating future trends. • Results of operations. This section provides an analysis of our results of operations for the three and nine months ended June 30, 2025 and June 30, 2024. This analysis is presented on both a consolidated and segment basis. • Financial condition and liquidity. This section provides an analysis of our cash flows for the nine months ended June 30, 2025 and June 30, 2024, as well as a discussion of our financial condition and liquidity as of June 30, 2025. The discussion of our financial condition and liquidity includes recent debt financings and a summary of the key debt covenant compliance measures under our debt agreements. Use of Adjusted OIBDA We evaluate our operating performance based on several factors, including our primary financial measure of operating income (loss) before non-cash depreciation of tangible assets and non-cash amortization of intangible assets adjusted to exclude the impact of non-cash stock-based compensation and other related expenses and certain items that affect comparability including but not limited to gains or losses on divestitures and expenses related to restructuring and transformation initiatives (“Adjusted OIBDA”). We consider Adjusted OIBDA to be an important indicator of the operational strengths and performance of our businesses. However, a limitation of the use of Adjusted OIBDA as a performance measure is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in our businesses. Accordingly, Adjusted OIBDA should be considered in addition to, not as a substitute for, operating income (loss), net income (loss) attributable to Warner Music Group Corp. and other measures of financial performance reported in accordance with United States generally accepted accounting principles (“U.S. GAAP”). In addition, our definition of Adjusted OIBDA may differ from similarly titled measures used by other companies. A reconciliation of consolidated Adjusted OIBDA to operating income (loss) and net income (loss) attributable to Warner Music Group Corp. is provided in our “Results of Operations.” Use of Constant Currency As exchange rates are an important factor in understanding period to period comparisons, we believe the presentation of revenue and Adjusted OIBDA on a constant-currency basis in addition to reported results helps improve the ability to understand our operating results and evaluate our performance in comparison to prior periods. Constant-currency information compares revenue and Adjusted OIBDA between periods as if exchange rates had remained constant period over period. We use revenue and Adjusted OIBDA on a constant-currency basis as one measure to evaluate our performance. We calculate constant-currency by calculating prior-year revenue and Adjusted OIBDA using current-year foreign currency exchange rates. We generally refer to such amounts calculated on a constant-currency basis as “excluding the impact of foreign currency exchange rates.” Revenue and Adjusted OIBDA on a constant-currency basis should be considered in addition to, not as a substitute for, revenue and Adjusted OIBDA reported in 25 accordance with U.S. GAAP. Revenue and Adjusted OIBDA on a constant-currency basis, as we present it, may not be comparable to similarly titled measures used by other companies and are not a measure of performance presented in accordance with U.S. GAAP. BUSINESS OVERVIEW We are one of the world’s leading music entertainment companies. Our renowned family of iconic record labels, including Atlantic Records, Warner Records, Elektra Records and Parlophone Records, is home to many of the world’s most popular and influential recording artists. In addition, Warner Chappell Music, our global music publishing business, boasts an extraordinary catalog that includes timeless standards and contemporary hits, representing works by over 180,000 songwriters and composers, with a global collection of more than one and a half million musical compositions. We classify our business interests into two fundamental operations: Recorded Music and Music Publishing. A brief description of each of those operations is presented below. Components of Our Operating Results Recorded Music Operations Our Recorded Music business primarily consists of the discovery and development of recording artists and the related marketing, promotion, distribution, sale and licensing of music created by such recording artists. We play an integral role in virtually all aspects of the recorded music value chain from discovering and developing talent to producing, distributing and selling music to marketing and promoting recording artists and their music. In the United States, our Recorded Music business is conducted principally through our major record labels—Atlantic Records and Warner Records. In October 2018, we launched Elektra Music Group in the United States as a standalone label group, which comprises the Elektra, Fueled by Ramen and Roadrunner labels, and in December 2021, we acquired 300 Entertainment and subsequently launched 300 Elektra Entertainment, or 3EE, a frontline label group that brings together the multi-genre power of 300 Entertainment and Elektra Music Group. Our Recorded Music business also includes Rhino Entertainment, a division that specializes in marketing our recorded music catalog through compilations, reissuances of previously released music and video titles and releasing previously unreleased material from our vault. We also conduct our Recorded Music business through a collection of additional record labels including Asylum, Big Beat, Canvasback, East West, Erato, FFRR, Nonesuch, Parlophone, Reprise, Sire, Spinnin’ Records, TenThousand Projects, Warner Classics and Warner Music Nashville. Outside the United States, our Recorded Music business is conducted in more than 70 countries through various subsidiaries, affiliates and non-affiliated licensees. Internationally, we engage in the same activities as in the United States: discovering and signing artists and distributing, selling, marketing and promoting their music. In most cases, we also market, promote, distribute and sell the music of those recording artists for whom our domestic record labels have international rights. In certain smaller markets, we license the right to distribute and sell our music to non-affiliated third-party record labels. Our Recorded Music business’ operations include WMX, a next generation services division that connects artists with fans and amplifies brands in creative, immersive, and engaging ways. This division includes a rebranded WEA commercial services & marketing network (formerly Warner-Elektra-Atlantic Corporation, or WEA Corp.), which markets, distributes and sells music and video products to retailers and wholesale distributors, as well as acting as the Company’s media and creative content arm. Our business’ distribution operations also include Alternative Distribution Alliance (“ADA”), which markets, distributes and sells the products of independent labels to retail and wholesale distributors; and various distribution centers and ventures operated internationally. In addition to our music being sold in physical retail outlets, our music is also sold in physical form to online physical retailers, such as amazon.com, barnesandnoble.com and bestbuy.com, and distributed in digital form to an expanded universe of digital partners, including streaming services such as those of Amazon, Apple, Deezer, SoundCloud, Spotify, Tencent Music and YouTube, radio services such as iHeart Radio and SiriusXM and other download services. We have integrated the marketing of digital content into all aspects of our business, including artists and repertoire (“A&R”) and distribution. Our business development executives work closely with A&R departments to ensure that while music is being produced, digital assets are also created with all distribution channels in mind, including streaming services, social networking sites, online portals and music-centered destinations. We also work side-by-side with our online and mobile partners to test new concepts. We believe existing and new digital businesses will be a significant source of growth and will provide new opportunities to successfully monetize our assets and create new revenue streams. The proportion of digital revenues attributable to each distribution channel varies by region and proportions may change as the introduction of new technologies continues. As one of the world’s largest music entertainment companies, we believe we are well positioned to take advantage of growth in digital distribution and emerging technologies to maximize the value of our assets. 26 We have diversified our revenues beyond our traditional businesses by entering into expanded-rights deals with recording artists in order to partner with such artists in other aspects of their careers. Under these agreements, we provide services to and participate in recording artists’ activities outside the traditional recorded music business such as touring, merchandising and sponsorships. We have built and acquired artist services capabilities and platforms for marketing and distributing this broader set of music-related rights and participating more widely in the monetization of the artist brands we help create. We believe that entering into expanded-rights deals and enhancing our artist services capabilities in areas such as merchandising, VIP ticketing, fan clubs, concert promotion and management has permitted us to diversify revenue streams and capitalize on other revenue opportunities. This provides for improved long-term relationships with our recording artists and allows us to more effectively connect recording artists and fans. Recorded Music revenues are derived from four main sources: • Digital : the rightsholder receives revenues with respect to streaming and download services; • Physical : the rightsholder receives revenues with respect to sales of physical products such as vinyl, CDs and DVDs; • Artist services and expanded-rights : the rightsholder receives revenues with respect to our artist services businesses and our participation in expanded rights, including advertising, merchandising such as direct-to-consumer sales, touring, concert promotion, ticketing, sponsorship, fan clubs, artist websites, social publishing, and artist and brand management; and • Licensing : the rightsholder receives royalties or fees for the right to use sound recordings in combination with visual images such as in films or television programs, television commercials and video games; the rightsholder also receives royalties if sound recordings are performed publicly through broadcast of music on television, radio and cable, and in public spaces such as shops, workplaces, restaurants, bars and clubs. The principal costs associated with our Recorded Music business are as follows: • A&R costs : the costs associated with (i) paying royalties to recording artists, producers, songwriters, other copyright holders and trade unions; (ii) signing and developing recording artists; and (iii) creating master recordings in the studio; • Product costs : the costs to manufacture, package and distribute products to wholesale and retail distribution outlets, the royalty costs associated with distributing products of independent labels to wholesale and retail distribution outlets, as well as the costs related to our artist services business; • Selling and marketing expenses : the costs associated with the promotion and marketing of recording artists and music, including costs to produce music videos for promotional purposes and artist tour support; and • General and administrative expenses : the costs associated with general overhead and other administrative expenses. Music Publishing Operations While Recorded Music is focused on marketing, promoting, distributing and licensing a particular recording of a musical composition, Music Publishing is an intellectual property business focused on generating revenue from uses of the musical composition itself. In return for promoting, placing, marketing and administering the creative output of a songwriter, or engaging in those activities for other rightsholders, our Music Publishing business shares the revenues generated from use of the musical compositions with the songwriter or other rightsholders. The operations of our Music Publishing business are conducted principally through Warner Chappell Music, our global music publishing company headquartered in Los Angeles, with operations in over 70 countries through various subsidiaries, affiliates, and non-affiliated licensees and sub-publishers. We own or control rights to more than one and a half million musical compositions, including numerous pop hits, American standards, folk songs and motion picture and theatrical compositions. Assembled over decades, our award-winning catalog includes over 180,000 songwriters and composers and a diverse range of genres including pop, rock, jazz, classical, country, R&B, hip-hop, rap, reggae, Latin, folk, blues, symphonic, soul, Broadway, electronic, alternative and gospel. Warner Chappell Music also administers the music and soundtracks of several third-party television and film producers and studios. We have an extensive production music catalog collectively branded as Warner Chappell Production Music. Music Publishing revenues are derived from five main sources: • Digital : the rightsholder receives revenues with respect to musical compositions embodied in recordings distributed in streaming services, download services, digital performance and other digital music services; • Performance : the rightsholder receives revenues if the musical composition is performed publicly through broadcast of music on television, radio and cable and in retail locations (e.g., bars and restaurants), live performance at a 27 concert or other venue ( e.g. , arena concerts and nightclubs), and performance of music in staged theatrical productions; • Mechanical : the rightsholder receives revenues with respect to musical compositions embodied in recordings sold in any physical format or configuration such as vinyl, CDs and DVDs; • Synchronization : the rightsholder receives revenues for the right to use the musical composition in combination with visual images such as in films or television programs, television commercials and video games as well as from other uses such as in toys or novelty items and merchandise; and • Other : the rightsholder receives revenues for use in sheet music and other uses. The principal costs associated with our Music Publishing business are as follows: • A&R costs : the costs associated with (i) paying royalties to songwriters, co-publishers and other copyright holders in connection with income generated from the uses of their works and (ii) signing and developing songwriters; and • Selling and marketing, general overhead and other administrative expenses : the costs associated with selling and marketing, general overhead and other administrative expenses. Recent Events and Factors Affecting Results of Operations and Comparability 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. The cost savings under the 2024 Strategic Restructuring Plan will be achieved through a combination of the disposal or winding down of non-core operations, continuing to manage overhead, sharpening focus, expanding shared services, and implementing previously disclosed expected operational efficiencies made possible by the Company’s financial transformative initiative. The Company expects allocating a majority of the costs savings to increase investment in the Company’s core Recorded Music and Music Publishing businesses, new skill sets and tech capabilities. For the three months ended June 30, 2025, the Company recognized a $1 million benefit in our Recorded Music segment due a change in estimate of severance costs. For the nine months ended June 30, 2025, total severance and other contract termination costs recorded in connection with the 2024 Strategic Restructuring Plan were $7 million, of which $8 million of expense was recognized in our Recorded Music segment while there was a $1 million benefit recognized at Corporate due to a change in estimate. Additionally, for the nine months ended June 30, 2025, the Company recognized $32 million of impairment losses, all of which were recognized in our Recorded Music segment. Impairment charges recognized during the period primarily relate to the write-off of certain long-form audiovisual production assets and lease termination costs for office closures. Other Impairments For the three and nine months ended June 30, 2025, the Company recognized a pre-tax impairment charge of $70 million ($48 million after-tax) within the Recorded Music segment for long-lived assets associated with certain of the Company’s non-core e-tailer operations due to a triggering event that indicated the carrying amount was no longer recoverable. The recoverable fair value was determined based on current market indicators. BMG Termination In September 2023, the Company terminated its distribution agreement with BMG as BMG began to bring digital distribution in-house and license directly with digital service partners in fiscal 2024 while also licensing its physical distribution with a different provider (the “BMG Termination”). Alternative Distribution Alliance (“ADA”), which is part of our Recorded Music business, had previously been distributing BMG’s recorded music catalog and revenues are reported within our Recorded Music segment. The shift to digital direct deals by BMG is a phased in-sourcing of distribution during the current fiscal year and we expect BMG to be rolled off by the end of the current fiscal year. 28 RESULTS OF OPERATIONS Three Months Ended June 30, 2025 Compared with Three Months Ended June 30, 2024 Consolidated Results Revenues Our revenues were composed of the following amounts (in millions): For the Three Months Ended June 30, 2025 vs. 2024 2025 2024 $ Change % Change Revenue by Type Digital $ 929 $ 882 $ 47 5 % Physical 119 120 (1) -1 % Total digital and physical 1,048 1,002 46 5 % Artist services and expanded-rights 195 159 36 23 % Licensing 111 90 21 23 % Total Recorded Music 1,354 1,251 103 8 % Performance 58 52 6 12 % Digital 204 194 10 5 % Mechanical 16 13 3 23 % Synchronization 54 42 12 29 % Other 4 4 — — % Total Music Publishing 336 305 31 10 % Intersegment eliminations (1) (2) 1 -50 % Total revenues $ 1,689 $ 1,554 $ 135 9 % Revenue by Geographical Location U.S. Recorded Music $ 536 $ 517 $ 19 4 % U.S. Music Publishing 186 161 25 16 % Total U.S. 722 678 44 6 % International Recorded Music 818 734 84 11 % International Music Publishing 150 144 6 4 % Total international 968 878 90 10 % Intersegment eliminations (1) (2) 1 -50 % Total revenues $ 1,689 $ 1,554 $ 135 9 % Total Revenues Total revenues increased by $135 million, or 9%, to $1,689 million for the three months ended June 30, 2025 from $1,554 million for the three months ended June 30, 2024. Revenue growth was favorably impacted by the settlement of certain copyright infringement cases (the “Copyright Settlement”), which resulted in $16 million higher Recorded Music revenue. The prior-year quarter included $22 million of incremental revenue recognized in Recorded Music from a Digital Service Provider (“DSP”) for performance obligations satisfied in previous periods (the “DSP True-Up Payments”). Recorded Music revenue growth was also unfavorably impacted by the BMG Termination, which resulted in $14 million less Recorded Music revenue compared to the prior-year quarter. The increase in total revenue includes $24 million of favorable currency exchange fluctuations. Prior to intersegment eliminations, Recorded Music and Music Publishing revenues represented 80% and 20% of total revenue for each of the three months ended June 30, 2025 and June 30, 2024, respectively. Prior to intersegment eliminations, U.S. and international revenues represented 43% and 57% of total revenues for the three months ended June 30, 2025, respectively, and 44% and 56% of total revenues for the three months ended June 30, 2024, respectively. 29 Total digital revenues after intersegment eliminations increased by $57 million, or 5%, to $1,132 million for the three months ended June 30, 2025 from $1,075 million for the three months ended June 30, 2024. Total streaming revenue increased by $42 million, driven by growth in Recorded Music and Music Publishing. Total streaming revenue includes $11 million of favorable currency exchange fluctuations. Prior to intersegment eliminations, total digital revenues for the three months ended June 30, 2025 were composed of U.S. revenues of $535 million and international revenues of $598 million, or 47% and 53% of total digital revenues, respectively. Prior to intersegment eliminations, total digital revenues for the three months ended June 30, 2024 were composed of U.S. revenues of $504 million and international revenues of $572 million, or 47% and 53% of total digital revenues, respectively. Recorded Music revenues increased by $103 million, or 8%, to $1,354 million for the three months ended June 30, 2025 from $1,251 million for the three months ended June 30, 2024. The increase includes $21 million of favorable currency exchange fluctuations. U.S. Recorded Music revenues were $536 million and $517 million, or 40% and 41% of consolidated Recorded Music revenues for each of the three months ended June 30, 2025 and June 30, 2024, respectively. International Recorded Music revenues were $818 million and $734 million, or 60% and 59%, of consolidated Recorded Music revenues for each of the three months ended June 30, 2025 and June 30, 2024, respectively. The overall increase in Recorded Music revenue was driven by increases in digital, artist services and expanded-rights and licensing revenues, partially offset by a decrease in physical revenue. Digital revenue increased by $47 million, or 5%, which includes a favorable impact of currency exchange fluctuations of $10 million. Revenue from streaming services increased by $32 million to $895 million for the three months ended June 30, 2025 from $863 million for the three months ended June 30, 2024. The increase in streaming revenue was driven by subscription streaming growth and includes a favorable impact of foreign currency exchange rates of $9 million, partially offset by the unfavorable impact of the DSP True-Up Payments and the BMG Termination of $4 million in the prior-year quarter. Download and other digital revenues increased by $15 million, or 79%, to $34 million for the three months ended June 30, 2025 from $19 million for the three months ended June 30, 2024 due to the impact of the Copyright Settlement of $16 million, partially offset by the continued shift to streaming services. Licensing revenue increased by $21 million, or 23%, driven by higher licensing activity primarily in the U.K. and China, and timing of other copyright infringement settlements. Licensing revenue includes a favorable impact of foreign currency exchange rates of $3 million. Artist services and expanded-rights revenue increased by $36 million, or 23%, due to higher concert promotion revenue primarily in France and Spain, and a favorable impact of foreign currency exchange rates of $4 million. Physical revenue, which includes a favorable impact of foreign currency exchange rates of $4 million, decreased by $1 million, or 1%, as growth from strong releases in Korea and Japan was offset by the $10 million impact of the BMG Termination. Top sellers in the quarter included BAEKHYUN, ROSÉ, Bruno Mars, Grateful Dead, and Teddy Swims. Music Publishing revenues increased by $31 million, or 10%, to $336 million for the three months ended June 30, 2025 from $305 million for the three months ended June 30, 2024. U.S. Music Publishing revenues were $186 million and $161 million, or 55% and 53% of consolidated Music Publishing revenues, for the three months ended June 30, 2025 and June 30, 2024, respectively. International Music Publishing revenues were $150 million and $144 million, or 45% and 47% of consolidated Music Publishing revenues, for the three months ended June 30, 2025 and June 30, 2024, respectively. The overall increase in Music Publishing revenue was driven by increases in digital, performance, synchronization, and mechanical revenues. Digital revenue increased by $10 million, or 5%, driven by an increase in streaming revenue, which includes a favorable impact of foreign currency exchange rates of $1 million. Revenue from streaming services grew by $10 million, or 5%, to $202 million for the three months ended June 30, 2025 from $192 million for the three months ended June 30, 2024, driven by the impact of digital deal renewals, primarily in the U.S, and a favorable impact of foreign currency exchange rates of $1 million. Performance revenue increased by $6 million, or 12%, driven by growth from concerts, radio and live events primarily in Europe, and a favorable impact of foreign currency exchange rates of $1 million. Mechanical revenue increased by $3 million, or 23%, and includes a favorable impact of foreign currency exchange rates of $1 million. Synchronization revenue increased by $12 million, or 29%, attributable to timing of other copyright infringement settlements, higher television and commercial licensing activity, and the $3 million impact of our acquisition of Tempo. 30 Revenue by Geographical Location U.S. revenue increased by $44 million, or 6%, to $722 million for the three months ended June 30, 2025 from $678 million for the three months ended June 30, 2024. U.S. Recorded Music revenue increased by $19 million, or 4%. U.S. Recorded Music digital revenue increased by $20 million, or 5%, driven by higher download and other digital revenue of $15 million, or 150%, including the impact of the Copyright Settlement in the quarter, and higher streaming revenue of $5 million, or 1%. U.S. Recorded Music licensing revenue increased by $8 million, or 30%, driven by timing of other copyright infringement settlements. U.S. Recorded Music artist services and expanded-rights revenues decreased by $5 million, or 10%, driven by lower merchandising revenue, and physical revenue decreased by $4 million, or 8% . U.S. Music Publishing revenue increased by $25 million, or 16%, to $186 million for the three months ended June 30, 2025 from $161 million for the three months ended June 30, 2024. U.S. Music Publishing digital revenue increased by $11 million, or 10%, attributable to higher streaming revenue of $11 million, or 10%. U.S. Music Publishing streaming revenue reflects impact of digital deal renewals. U.S. Music Publishing performance and mechanical revenues remained constant during the three months ended June 30, 2025 compared to the three months ended June 30, 2024. U.S. Music Publishing synchronization revenue increased by $13 million, or 54%, driven by timing of other copyright infringement settlements, higher television and commercial licensing activity and the impact of acquisitions. International revenue increased by $90 million, or 10%, to $968 million for the three months ended June 30, 2025 from $878 million for the three months ended June 30, 2024. Excluding the favorable impact of foreign currency exchange rates of $23 million, International revenue increased by $67 million, or 7%. International Recorded Music revenue increased by $84 million, which includes a favorable impact of foreign currency exchange rates of $21 million, driven by growth across digital, artist services and expanded rights, licensing and physical revenues. International Recorded Music licensing revenue increased by $13 million, or 21%, driven by licensing deals primarily in the U.K. and China, and timing of other copyright infringement settlements. International Recorded Music artist services and expanded-rights revenue increased by $41 million, or 37%, driven by higher concert promotion revenue primarily in France and Spain, and the favorable impact of foreign currency exchange rates of $4 million. International Recorded Music digital revenue increased by $27 million, attributable to higher streaming revenue of $27 million, or 6%, which includes the impact of the BMG Termination, and reflects a favorable impact of foreign currency exchange rates of $9 million. Physical revenue increased by $3 million driven by the favorable impact of foreign currency exchange rates of $4 million, partially offset by the impact of the BMG Termination. International Music Publishing revenue increased by $6 million, or 4%, to $150 million for the three months ended June 30, 2025 from $144 million for the three months ended June 30, 2024. International Music Publishing revenue growth was driven by increases in performance revenue of $6 million due to growth from concerts, radio and live events in Europe and mechanical revenue of $3 million. This was partially offset by decreases in digital revenue of $1 million, synchronization revenue of $1 million, and other revenue of $1 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. Cost of revenues Our cost of revenues was composed of the following amounts (in millions): For the Three Months Ended June 30, 2025 vs. 2024 2025 2024 $ Change % Change Artist and repertoire costs $ 584 $ 548 $ 36 7 % Product costs 329 282 47 17 % Total cost of revenues $ 913 $ 830 $ 83 10 % Artist and repertoire costs increased by $36 million, to $584 million for the three months ended June 30, 2025 from $548 million for the three months ended June 30, 2024. Artist and repertoire costs as a percentage of revenue remained constant at 35% for each of the three months ended June 30, 2025 and June 30, 2024. Product costs increased by $47 million, to $329 million for the three months ended June 30, 2025 from $282 million for the three months ended June 30, 2024. Product costs as a percentage of revenue increased to 19% for the three months ended June 30, 2025 from 18% for the three months ended June 30, 2024 due to revenue and deal mix. 31 Selling, general and administrative expenses Our selling, general and administrative expenses were composed of the following amounts (in millions): For the Three Months Ended June 30, 2025 vs. 2024 2025 2024 $ Change % Change General and administrative expense (1) $ 282 $ 264 $ 18 7 % Selling and marketing expense 167 173 (6) -3 % Distribution expense 22 25 (3) -12 % Total selling, general and administrative expense $ 471 $ 462 $ 9 2 % ______________________________________ (1) Includes depreciation expense of $29 million and $25 million for the three months ended June 30, 2025 and June 30, 2024, respectively. Total selling, general and administrative expense increased by $9 million, to $471 million for the three months ended June 30, 2025 from $462 million for the three months ended June 30, 2024. Expressed as a percentage of revenue, total selling, general and administrative expense decreased to 28% for the three months ended June 30, 2025 from 30% for the three months ended June 30, 2024 due to the factors noted below. General and administrative expense increased by $18 million to $282 million for the three months ended June 30, 2025 from $264 million for the three months ended June 30, 2024. The increase in general and administrative expense was driven by incremental investment in technology of $7 million, higher non-cash stock-based compensation costs of $5 million due to the departure of our former Chief Financial Officer (“CFO”) in the current year, the impact of acquisitions of $4 million and higher depreciation expense of $4 million, primarily driven by the core financials component of our new technology platform being placed into service, partially offset by savings from the 2024 Strategic Restructuring Plan, of which a portion has been reinvested in the Company’s business. Expressed as a percentage of revenue, general and administrative expense remained constant at 17% for each of the three months ended June 30, 2025 and June 30, 2024. Selling and marketing expense decreased by $6 million, or 3%, to $167 million for the three months ended June 30, 2025 from $173 million for the three months ended June 30, 2024. Expressed as a percentage of revenue, selling and marketing expense decreased to 10% for the three months ended June 30, 2025 from 11% for the three months ended June 30, 2024 due to savings from the 2024 Strategic Restructuring Plan, of which a portion has been reinvested in the Company’s business. Distribution expense decreased by $3 million to $22 million for the three months ended June 30, 2025 from $25 million for the three months ended June 30, 2024. Expressed as a percentage of revenue, distribution expense decreased to 1% for the three months ended June 30, 2025 from 2% for the three months ended June 30, 2024. 32 Reconciliation of Net Income Attributable to Warner Music Group Corp. and Operating Income to Consolidated Adjusted OIBDA As previously described, we use Adjusted OIBDA as our primary measure of financial performance. The following table reconciles operating income to Adjusted OIBDA, and further provides the components from net income attributable to Warner Music Group Corp. to operating income for purposes of the discussion that follows (in millions): For the Three Months Ended June 30, 2025 vs. 2024 2025 2024 $ Change % Change Net (loss) income attributable to Warner Music Group Corp. $ (16) $ 139 $ (155) — % Income attributable to noncontrolling interest — 2 (2) (100) % Net (loss) income (16) 141 (157) — % Income tax expense 5 30 (25) (83) % Net (loss) income before income taxes (11) 171 (182) — % Other expense (income) 137 (4) 141 — % Interest expense, net 43 40 3 8 % Operating income 169 207 (38) (18) % Amortization expense 67 55 12 22 % Depreciation expense 29 25 4 16 % Restructuring and impairments 69 1 68 — % Transformation initiative costs 19 18 1 6 % Executive transition costs 4 — 4 (100) % Net gain on divestitures — (1) 1 — % Non-cash stock-based compensation and other related costs 16 11 5 45 % Adjusted OIBDA $ 373 $ 316 $ 57 18 % Adjusted OIBDA Adjusted OIBDA increased by $57 million to $373 million for the three months ended June 30, 2025 from $316 million for the three months ended June 30, 2024, driven by the impact of the Copyright Settlement of $9 million in Recorded Music in the current quarter and the $12 million impact of the DSP True-Up Payments in the prior-year quarter, as well as revenue mix, the impact of acquisitions, and savings from the 2024 Strategic Restructuring Plan, partially offset by the reinvestment of these savings in the Company’s business including $7 million of incremental investment in technology for the three months ended June 30, 2025. Expressed as a percentage of total revenue, Adjusted OIBDA margin increased to 22% for the three months ended June 30, 2025 from 20% for the three months ended June 30, 2024. Non-cash stock-based compensation and other related costs Our non-cash stock-based compensation and other related costs increased by $5 million to $16 million for the three months ended June 30, 2025 from $11 million for the three months ended June 30, 2024, primarily due to $5 million of costs related to the departure of our former CFO in the current year. Net gain on divestitures There was no net gain on divestitures during the three months ended June 30, 2025. Net gain on divestitures during the three months ended June 30, 2024 includes a pre-tax gain of $1 million in connection with the divestiture of certain non-core owned and operated media properties. 33 Executive transition costs Executive transition costs were $4 million during the three months ended June 30, 2025, which consisted of severance costs associated with the departure of our former CFO in the current year. Transformation initiative costs Our transformation initiative costs which include costs associated with our finance transformation increased by $1 million to $19 million for the three months ended June 30, 2025 from $18 million for the three months ended June 30, 2024. Restructuring and Impairments Our restructuring and impairment charges increased to $69 million for the three months ended June 30, 2025 from $1 million for the three months ended June 30, 2024. The three months ended June 30, 2025 includes an impairment charge of $70 million for long-lived assets associated with certain of the Company’s non-core e-tailer operations. Depreciation expense Our depreciation expense increased by $4 million to $29 million for the three months ended June 30, 2025 from $25 million for the three months ended June 30, 2024. The increase is primarily driven by the core financials component of our new technology platform being placed into service. Amortization expense Our amortization expense increased by $12 million, to $67 million for the three months ended June 30, 2025 from $55 million for the three months ended June 30, 2024. The increase is driven by incremental amortization related to acquisitions of music-related assets, partially offset by certain intangible assets becoming fully amortized. Operating income Our operating income decreased by $38 million to $169 million for the three months ended June 30, 2025 from $207 million for the three months ended June 30, 2024. In addition to the factors impacting Adjusted OIBDA described above, the decrease in operating income was driven by an increase in restructuring and impairment charges of $68 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024, higher amortization expenses of $12 million, higher non-cash stock-based compensation and other related costs of $5 million, and the impact of a $1 million net gain on a divestiture in the prior-year quarter. Interest expense, net Our interest expense, net, increased to $43 million for the three months ended June 30, 2025 from $40 million for the three months ended June 30, 2024 due to incremental debt related to the Tempo Asset-Based Notes acquired in connection with the acquisition of Tempo. Other expense (income) Other expense for the three months ended June 30, 2025 primarily includes foreign currency losses on our Euro-denominated debt of $70 million, currency exchange losses on our intercompany loans of $63 million, and realized and unrealized losses on hedging activity of $8 million. This compares to foreign currency gains on our Euro-denominated debt of $7 million, currency exchange losses on our intercompany loans of $5 million, and realized and unrealized gains on hedging activity of $1 million for the three months ended June 30, 2024. Income tax expense Our income tax expense decreased by $25 million to $5 million for the three months ended June 30, 2025 from $30 million for the three months ended June 30, 2024. The decrease of $25 million in income tax expense is primarily due to the impact of pre-tax loss in the current period and benefit for updated allowable costs for reported foreign derived intangible income in the prior period. Net (loss) income Net (loss) income decreased by $157 million to net loss of $16 million for the three months ended June 30, 2025 from net income of $141 million for the three months ended June 30, 2024 as a result of the factors described above. 34 Noncontrolling interest There was no income attributable to noncontrolling interest during the three months ended June 30, 2025 compared to a loss of $2 million for the three months ended June 30, 2024. Business Segment Results Revenues, operating income (loss) and Adjusted OIBDA by business segment were as follows (in millions): For the Three Months Ended June 30, 2025 vs. 2024 2025 2024 $ Change % Change Recorded Music Revenues $ 1,354 $ 1,251 $ 103 8 % Operating income 201 230 (29) -13 % Adjusted OIBDA 321 281 40 14 % Music Publishing Revenues 336 305 31 10 % Operating income 60 53 7 13 % Adjusted OIBDA 96 79 17 22 % Corporate expenses and eliminations Revenue eliminations (1) (2) 1 -50 % Operating loss (92) (75) (17) 23 % Adjusted OIBDA loss (44) (44) — — % Total Revenues 1,689 1,554 135 9 % Operating income 169 207 (38) -18 % Adjusted OIBDA 373 316 57 18 % Recorded Music Revenues Recorded Music revenue increased by $103 million, or 8%, to $1,354 million for the three months ended June 30, 2025 from $1,251 million for the three months ended June 30, 2024. The overall increase in Recorded Music revenue was driven by higher revenue across digital, artist services and expanded-rights and licensing, partially offset by a decrease in physical revenue, as described in the “Total Revenues” and “Revenue by Geographical Location” sections above. Cost of revenues Recorded Music cost of revenues was composed of the following amounts (in millions): For the Three Months Ended June 30, 2025 vs. 2024 2025 2024 $ Change % Change Artist and repertoire costs $ 377 $ 354 $ 23 6 % Product costs 329 282 47 17 % Total cost of revenues $ 706 $ 636 $ 70 11 % Recorded Music cost of revenues increased by $70 million, to $706 million for the three months ended June 30, 2025 from $636 million for the three months ended June 30, 2024. Expressed as a percentage of Recorded Music revenue, Recorded Music artist and repertoire costs remained constant at 28% for each of the three months ended June 30, 2025 and June 30, 2024. Expressed as a percentage of Recorded Music revenue, Recorded Music product costs increased to 24% for the three months ended June 30, 2025 from 23% for the three months ended June 30, 2024, driven by revenue and deal mix. 35 Selling, general and administrative expense Recorded Music selling, general and administrative expenses were composed of the following amounts (in millions): For the Three Months Ended June 30, 2025 vs. 2024 2025 2024 $ Change % Change General and administrative expense (1) $ 162 $ 161 $ 1 1 % Selling and marketing expense 161 167 (6) -4 % Distribution expense 22 25 (3) -12 % Total selling, general and administrative expense $ 345 $ 353 $ (8) -2 % ______________________________________ (1) Includes depreciation expense of $14 million and $13 million for the three months ended June 30, 2025 and June 30, 2024, respectively. Recorded Music selling, general and administrative expense decreased by $8 million, to $345 million for the three months ended June 30, 2025 from $353 million for the three months ended June 30, 2024. The increase in general and administrative expense was largely driven by the impact of acquisitions of $4 million, partially offset by lower non-cash stock-based compensation and other related costs of $2 million. The decrease in selling and marketing expense was driven by savings from the 2024 Strategic Restructuring Plan, a portion of which has been reinvested into the Company’s business. The decrease in distribution expense was primarily driven by revenue mix. Expressed as a percentage of Recorded Music revenue, Recorded Music selling, general and administrative expense decreased to 25% for the three months ended June 30, 2025 from 28% for the three months ended June 30, 2024. Operating Income and Adjusted OIBDA Recorded Music operating income decreased by $29 million to $201 million for the three months ended June 30, 2025 from $230 million for the three months ended June 30, 2024. In addition to the factors impacting Adjusted OIBDA described below, the decrease in operating income was driven by an increase in restructuring and impairment charges of $67 million compared to the prior-year quarter, which includes an impairment charge of $70 million for long-lived assets associated with certain of the Company’s non-core e-tailer operations, and higher amortization expenses of $3 million related to acquisitions of music-related assets. Recorded Music Adjusted OIBDA increased by $40 million to $321 million for the three months ended June 30, 2025 from $281 million for the three months ended June 30, 2024, largely driven by the impact of the Copyright Settlement of $9 million in the current quarter and the $12 million impact of the DSP True-Up Payments in the prior-year quarter, as well as savings from the 2024 Strategic Restructuring Plan, of which a portion has been reinvested in the Company’s business, and favorable movements in foreign currency exchange rates. Expressed as a percentage of Recorded Music revenue, Recorded Music Adjusted OIBDA margin increased to 24% for the three months ended June 30, 2025 from 22% for the three months ended June 30, 2024 due to the factors noted above. Music Publishing Revenues Music Publishing revenues increased by $31 million, or 10%, to $336 million for the three months ended June 30, 2025 from $305 million for the three months ended June 30, 2024. The overall increase in Music Publishing revenue was driven by growth in digital, performance, synchronization and mechanical revenues, as described in the “Total Revenues” and “Revenue by Geographical Location” sections above. Cost of revenues Music Publishing cost of revenues were composed of the following amounts (in millions): For the Three Months Ended June 30, 2025 vs. 2024 2025 2024 $ Change % Change Artist and repertoire costs $ 208 $ 196 $ 12 6 % Total cost of revenues $ 208 $ 196 $ 12 6 % Music Publishing cost of revenues increased by $12 million, or 6%, to $208 million for the three months ended June 30, 2025 from $196 million for the three months ended June 30, 2024. Expressed as a percentage of Music Publishing revenue, Music 36 Publishing cost of revenues decreased to 62% for the three months ended June 30, 2025 from 64% for the three months ended June 30, 2024, largely due to revenue mix. Selling, general and administrative expense Music Publishing selling, general and administrative expenses were composed of the following amounts (in millions): For the Three Months Ended June 30, 2025 vs. 2024 2025 2024 $ Change % Change General and administrative expense (1) $ 33 $ 30 $ 3 10 % Selling and marketing expense 1 1 — — % Total selling, general and administrative expense $ 34 $ 31 $ 3 10 % ______________________________________ (1) Includes depreciation expense of $1 million for the three months ended June 30, 2025. There was no depreciation expense for the three months ended June 30, 2024. Music Publishing selling, general and administrative expense increased by $3 million, or 10%, to $34 million for the three months ended June 30, 2025 from $31 million for the three months ended June 30, 2024, driven by higher overhead and the impact of acquisitions. Expressed as a percentage of Music Publishing revenue, Music Publishing selling, general and administrative expense remained constant at 10% for the three months ended June 30, 2025 and June 30, 2024. Operating Income and Adjusted OIBDA Music Publishing operating income increased by $7 million to $60 million for the three months ended June 30, 2025 from $53 million for the three months ended June 30, 2024, driven by the same factors affecting Adjusted OIBDA discussed below, partially offset by an increase in depreciation and amortization expense of $10 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024. Music Publishing Adjusted OIBDA increased by $17 million, or 22%, to $96 million for the three months ended June 30, 2025 from $79 million for the three months ended June 30, 2024, primarily driven by revenue mix. Expressed as a percentage of Music Publishing revenue, Music Publishing Adjusted OIBDA margin increased to 29% for the three months ended June 30, 2025 from 26% for the three months ended June 30, 2024. Corporate Expenses and Eliminations Our operating loss from corporate expenses and eliminations increased by $17 million for the three months ended June 30, 2025 to $92 million from $75 million for the three months ended June 30, 2024, driven by incremental investment in technology and higher depreciation expense of $2 million driven by the core financials component of our new technology platform being placed into service. Our Adjusted OIBDA loss from corporate expenses and eliminations remained constant at $44 million for each of the three months ended June 30, 2025 and June 30, 2024, primarily due to the operating loss factors noted above. 37 RESULTS OF OPERATIONS Nine Months Ended June 30, 2025 Compared with Nine Months Ended June 30, 2024 Consolidated Results Revenues Our revenues were composed of the following amounts (in millions): For the Nine Months Ended June 30, 2025 vs. 2024 2025 2024 $ Change % Change Revenue by Type Digital $ 2,643 $ 2,638 $ 5 — % Physical 397 385 12 3 % Total digital and physical 3,040 3,023 17 1 % Artist services and expanded-rights 508 489 19 4 % Licensing 326 373 (47) -13 % Total Recorded Music 3,874 3,885 (11) — % Performance 167 155 12 8 % Digital 599 577 22 4 % Mechanical 46 43 3 7 % Synchronization 142 129 13 10 % Other 15 11 4 36 % Total Music Publishing 969 915 54 6 % Intersegment eliminations (4) (4) — — % Total revenues $ 4,839 $ 4,796 $ 43 1 % Revenue by Geographical Location U.S. Recorded Music $ 1,565 $ 1,652 $ (87) -5 % U.S. Music Publishing 520 503 17 3 % Total U.S. 2,085 2,155 (70) -3 % International Recorded Music 2,309 2,233 76 3 % International Music Publishing 449 412 37 9 % Total international 2,758 2,645 113 4 % Intersegment eliminations (4) (4) — — % Total revenues $ 4,839 $ 4,796 $ 43 1 % Total Revenues Total revenues increased by $43 million, or 1%, to $4,839 million for the nine months ended June 30, 2025 from $4,796 million for the nine months ended June 30, 2024. Revenue growth was favorably impacted by $16 million of higher Recorded Music digital revenue from the Copyright Settlement and $4 million of higher Recorded Music digital revenue from the DSP True-Up Payments. The prior year included $75 million in Recorded Music licensing revenue from a licensing agreement extension for an artist’s catalog (the “Licensing Extension”), $43 million of incremental Recorded Music streaming revenue recognized from the DSP True-Up Payments, and $30 million of Recorded Music streaming revenue from a deal with one of the Company’s digital partners (the “Digital License Renewal”), which resulted in upfront revenue recognition for the nine months ended June 30, 2024. Revenue growth was also unfavorably impacted by the BMG Termination, which resulted in $64 million lower Recorded Music revenue compared to the nine months ended June 30, 2024, of which $24 million was in streaming revenue and $40 million was in physical revenue. Prior to intersegment eliminations, Recorded Music and Music Publishing revenues represented 80% and 20% of total revenues for the nine months ended June 30, 2025, respectively, and 81% and 19% of total revenues for the nine months ended June 30, 2024, respectively. Prior to intersegment eliminations, U.S. and international revenues represented 43% and 57% for the nine months ended June 30, 2025, respectively, and 45% and 55% for the nine months ended June 30, 2024, respectively. Total digital revenues after intersegment eliminations increased by $27 million, or 1%, to $3,241 million for the nine months ended June 30, 2025 from $3,214 million for the nine months ended June 30, 2024. Total streaming revenue increased 1% primarily driven by an increase in streaming revenue at Music Publishing. Total digital revenues remained constant at 67% of consolidated revenues for each of the nine months ended June 30, 2025 and June 30, 2024. Prior to intersegment eliminations, total digital revenues 38 for the nine months ended June 30, 2025 were composed of U.S. revenues of $1,533 million and international revenues of $1,709 million, or 47% and 53% of total digital revenues, respectively. Prior to intersegment eliminations, total digital revenues for the nine months ended June 30, 2024 were composed of U.S. revenues of $1,551 million and international revenues of $1,664 million, or 48% and 52% of total digital revenues, respectively. Recorded Music revenues decreased by $11 million to $3,874 million for the nine months ended June 30, 2025 compared to $3,885 million for the nine months ended June 30, 2024, which includes $17 million of unfavorable currency exchange fluctuations. U.S. Recorded Music revenues were $1,565 million and $1,652 million, or 40% and 43% of consolidated Recorded Music revenues, for the nine months ended June 30, 2025 and June 30, 2024, respectively. International Recorded Music revenues were $2,309 million and $2,233 million, or 60% and 57% of consolidated Recorded Music revenues for the nine months ended June 30, 2025 and June 30, 2024, respectively. The overall decrease in Recorded Music revenue was driven by a decrease in licensing offset by increases in artist services and expanded-rights and physical revenues. Digital revenue increased by $5 million for the nine months ended June 30, 2025 compared to the nine months ended June 30, 2024, which includes an unfavorable impact of currency exchange fluctuations of $20 million, and reflects the impacts of the Copyright Settlement of $16 million and DSP True-Up Payments of $4 million in the current year and $43 million in the prior year, as well as the Digital License Renewal of $30 million and the BMG Termination of $24 million in the prior year. Revenue from streaming services decreased $4 million to $2,574 million for the nine months ended June 30, 2025 compared to $2,578 million for the nine months ended June 30, 2024, which includes the unfavorable impact of foreign currency exchange rates of $20 million, and reflects the impacts of the DSP True-Up Payments of $4 million in the current year and $43 million in the prior year, as well as the Digital License Renewal of $30 million and the BMG Termination of $24 million in the prior year. Download and other digital revenues increased by $9 million, or 15%, to $69 million for the nine months ended June 30, 2025 from $60 million for the nine months ended June 30, 2024 primarily due to the impact of the Copyright Settlement of $16 million, partially offset by the continued shift to streaming services. Licensing revenue decreased by $47 million, or 13%, primarily driven by $75 million from the Licensing Extension in the prior year. Artist services and expanded-rights revenue increased by $19 million, or 4%, attributable to higher concert promotion revenue in Europe. Physical revenue increased by $12 million, or 3%, driven by strong U.S. and international releases, including in Japan and Korea, and includes a favorable impact of foreign currency exchange rates of $2 million, partially offset by the unfavorable impact of the BMG Termination of $40 million. Top sellers for the nine months ended June 30, 2025 included ROSÉ, Bruno Mars, Teddy Swims, Linkin Park, Charli XCX, and Benson Boone. Music Publishing revenues increased by $54 million, or 6%, to $969 million for the nine months ended June 30, 2025 from $915 million for the nine months ended June 30, 2024. U.S. Music Publishing revenues were $520 million and $503 million, or 54% and 55% of consolidated Music Publishing revenues, for the nine months ended June 30, 2025 and June 30, 2024, respectively. International Music Publishing revenues were $449 million and $412 million, or 46% and 45% of Music Publishing revenues, for the nine months ended June 30, 2025 and June 30, 2024, respectively. The overall increase in Music Publishing revenue was attributable to increases in digital revenue of $22 million, or 4%, performance revenue of $12 million, or 8%, synchronization revenue of $13 million, or 8%, mechanical revenue of $3 million, or 7%, and other publishing revenue of $4 million. The increase in digital revenue was primarily driven by continued growth in streaming revenue. Revenue from streaming services grew by $22 million, or 4%, to $592 million for the nine months ended June 30, 2025 from $570 million for the nine months ended June 30, 2024, reflecting the impact of deal renewals, primarily in the U.S., partially offset by an unfavorable impact of foreign currency exchange rates of $2 million. The growth in performance revenue is attributable to growth from concerts, radio and live events in Europe, and the growth in synchronization revenue is attributable to the timing of other copyright infringement settlements, higher television and commercial licensing activity, and the $5 million impact of our acquisition of Tempo. Revenue by Geographical Location U.S. revenue decreased by $70 million, or 3%, to $2,085 million for the nine months ended June 30, 2025 from $2,155 million for the nine months ended June 30, 2024. U.S. Recorded Music revenue decreased by $87 million, or 5%, primarily driven by a decrease in licensing revenue of $67 million largely attributable to $75 million from the Licensing Extension in the prior year. The decrease in U.S. Recorded Music revenue was also attributable to lower digital and expanded-rights revenues, partially offset by growth in U.S. Recorded Music physical revenue. U.S. Recorded Music digital revenue decreased by $20 million, or 2%, which reflects lower streaming revenue of $33 million, or 3%, partially offset by higher download and other digital revenue of $13 million, or 42%. The decrease in streaming revenue is largely attributable to the impacts of the DSP True-Up Payments in both the current and prior years, as well as the BMG Termination in the prior year. The increase in download and other digital revenue is due to the impact of the Copyright Settlement of $16 million in the current year. U.S Recorded Music physical revenue increased by $4 million, or 2%, driven by strong releases in the current year as well as catalog and carryover success, partially offset by the impact of the BMG Termination. U.S. Recorded Music artist services and expanded-rights revenue decreased by $4 million, or 3%, driven by a decrease in revenue related to the exit of the Company’s non-core owned and operated media properties in the prior year in connection with the 39 2024 Strategic Restructuring Plan, partially offset by the impact of acquisitions. U.S. Music Publishing revenue increased by $17 million, or 3%, to $520 million for the nine months ended June 30, 2025 from $503 million for the nine months ended June 30, 2024. U.S. Music Publishing digital revenue increased by $2 million, attributable to higher streaming revenue of $2 million, or 1%, while download and other digital revenue remained constant. U.S. Music Publishing mechanical revenue increased by $2 million, or 25%. U.S. Music Publishing synchronization revenue increased by $13 million, or 17%, driven by timing of other copyright infringement settlements, higher television and commercial licensing activity and the impact of acquisitions. U.S. Music Publishing performance revenue remained constant for the nine months ended June 30, 2025 compared to the nine months ended June 30, 2024. International revenue increased by $113 million, or 4%, to $2,758 million for the nine months ended June 30, 2025 from $2,645 million for the nine months ended June 30, 2024. Excluding the unfavorable impact of foreign currency exchange rates of $22 million, International revenue increased by $135 million, or 5%. International Recorded Music revenue increased by $76 million, driven by increases in digital revenue of $25 million, artist services and expanded-rights revenue of $23 million, licensing revenue of $20 million and physical revenue of $8 million. International Recorded Music digital revenue increased by $25 million, attributable to higher streaming revenue of $29 million which includes the impact of certain DSP True-Up Payments, the Digital License Renewal and the BMG Termination in the prior year, and a favorable impact of foreign currency exchange rates of $20 million, partially offset by lower download and other digital revenue of $4 million. International Recorded Music artist services and expanded-rights revenue increased by $23 million, primarily due to higher concert promotion revenue. International Recorded Music licensing revenue increased by $20 million, driven by higher licensing activity primarily in the U.K. and Japan, the timing of other copyright infringement settlements, and favorable foreign currency exchange rates of $1 million. International Recorded Music physical revenue increased by $8 million, driven by strength of new releases primarily in Japan, and a favorable impact of foreign currency exchange rates of $2 million, partially offset by the unfavorable impact of the BMG Termination in the prior year. International Music Publishing revenue increased by $37 million, or 9%, to $449 million for the nine months ended June 30, 2025 from $412 million for the nine months ended June 30, 2024. This was driven by increases in digital revenue of $20 million, performance revenue of $12 million driven by higher touring revenue, mechanical revenue of $1 million, and other publishing revenue of $4 million. Synchronization revenue remained constant for the nine months ended June 30, 2025 compared to the nine months ended June 30, 2024. International Music Publishing digital growth is primarily driven by streaming revenue growth of $20 million, or 9%. Cost of revenues Our cost of revenues was composed of the following amounts (in millions): For the Nine Months Ended June 30, 2025 vs. 2024 2025 2024 $ Change % Change Artist and repertoire costs $ 1,689 $ 1,627 $ 62 4 % Product costs 909 874 35 4 % Total cost of revenues $ 2,598 $ 2,501 $ 97 4 % Artist and repertoire costs increased by $62 million, to $1,689 million for the nine months ended June 30, 2025 from $1,627 million for the nine months ended June 30, 2024. Artist and repertoire costs as a percentage of revenue increased to 35% for the nine months ended June 30, 2025 from 34% for the nine months ended June 30, 2024, primarily due to revenue mix compared to the nine months ended June 30, 2024, which included items with upfront revenue recognition without associated artist and repertoire costs, partially offset by favorable movements in currency exchange rates. Product costs increased by $35 million, to $909 million for the nine months ended June 30, 2025 from $874 million for the nine months ended June 30, 2024. Product costs as a percentage of revenue increased to 19% for the nine months ended June 30, 2025 from 18% for the nine months ended June 30, 2024, primarily due to the impact of the Licensing Extension, revenue mix and the BMG Termination. 40 Selling, general and administrative expenses Our selling, general and administrative expenses were composed of the following amounts (in millions): For the Nine Months Ended June 30, 2025 vs. 2024 2025 2024 $ Change % Change General and administrative expense (1) $ 842 $ 791 $ 51 6 % Selling and marketing expense 482 518 (36) -7 % Distribution expense 71 75 (4) -5 % Total selling, general and administrative expense $ 1,395 $ 1,384 $ 11 1 % ______________________________________ (1) Includes depreciation expense of $86 million and $77 million for the nine months ended June 30, 2025 and June 30, 2024, respectively. Total selling, general and administrative expense increased by $11 million, to $1,395 million for the nine months ended June 30, 2025 from $1,384 million for the nine months ended June 30, 2024. Expressed as a percentage of revenue, total selling, general and administrative expense remained constant at 29% for each of the nine months ended June 30, 2025 and June 30, 2024 due to the factors noted below. General and administrative expense increased by $51 million to $842 million for the nine months ended June 30, 2025 from $791 million for the nine months ended June 30, 2024. The increase in general and administrative expense was driven by incremental investment in technology of $20 million, higher non-cash stock-based compensation expense of $14 million, the impact of acquisitions of $7 million, and higher depreciation expense of $9 million related to technology assets being placed into service, including the core financials component of our new technology platform, partially offset by lower expenses related to transformation initiatives and related costs of $2 million, and savings from the 2024 Strategic Restructuring Plan, of which a portion has been reinvested into the Company’s business. Expressed as a percentage of revenue, general and administrative expense increased to 17% for the nine months ended June 30, 2025 from 16% for the nine months ended June 30, 2024 due to the factors noted above. Selling and marketing expense decreased by $36 million, or 7%, to $482 million for the nine months ended June 30, 2025 from $518 million for the nine months ended June 30, 2024. Expressed as a percentage of revenue, selling and marketing expense decreased to 10% for the nine months ended June 30, 2025, from 11% for the nine months ended June 30, 2024 due to lower variable marketing spend and savings from the 2024 Strategic Restructuring Plan, of which a portion has been reinvested in the Company’s business. Distribution expense decreased by $4 million to $71 million for the nine months ended June 30, 2025 from $75 million for the nine months ended June 30, 2024. Expressed as a percentage of revenue, distribution expense decreased to 1% for the nine months ended June 30, 2025 from 2% for the nine months ended June 30, 2024. 41 Reconciliation of Net Income Attributable to Warner Music Group Corp. and Operating Income to Consolidated Adjusted OIBDA As previously described, we use Adjusted OIBDA as our primary measure of financial performance. The following table reconciles operating income to Adjusted OIBDA, and further provides the components from net income attributable to Warner Music Group Corp. to operating income for purposes of the discussion that follows (in millions): For the Nine Months Ended June 30, 2025 vs. 2024 2025 2024 $ Change % Change Net income attributable to Warner Music Group Corp. $ 256 $ 394 $ (138) -35 % Income attributable to noncontrolling interest 5 36 (31) -86 % Net income 261 430 (169) -39 % Income tax expense 123 120 3 3 % Income before income taxes 384 550 (166) -30 % Other expense 48 9 39 — % Interest expense, net 119 121 (2) -2 % Operating income 551 680 (129) -19 % Amortization expense 186 167 19 11 % Depreciation expense 86 77 9 12 % Restructuring and impairments 109 96 13 14 % Transformation initiatives and other related costs 54 56 (2) -4 % Executive transition costs 4 — 4 — % Net gain on divestitures — (32) 32 -100 % Non-cash stock-based compensation and other related costs 49 35 14 40 % Adjusted OIBDA $ 1,039 $ 1,079 $ (40) -4 % Adjusted OIBDA Adjusted OIBDA decreased by $40 million to $1,039 million for the nine months ended June 30, 2025 as compared to $1,079 million for the nine months ended June 30, 2024, largely attributable to the impact of the Copyright Settlement of $9 million in Recorded Music and the $3 million impact of the DSP True-Up Payments in the current year, and the $74 million impact of the Licensing Extension, the $23 million impact of the DSP True-Up Payments, the $12 million impact of the Digital License Renewal, and the $1 million impact of the BMG Termination in the prior year, as well as revenue mix, partially offset by savings from the 2024 Strategic Restructuring Plan, a portion of which has been reinvested in the Company’s business, and favorable movements in currency exchange rates. Expressed as a percentage of total revenue, Adjusted OIBDA margin decreased to 21% for the nine months ended June 30, 2025 from 23% for the nine months ended June 30, 2024. Non-cash stock-based compensation and other related costs Our non-cash stock-based compensation and other related costs increased by $14 million to $49 million for the nine months ended June 30, 2025 from $35 million for the nine months ended June 30, 2024, primarily related to issuance of additional restricted stock units and market-based performance stock units and the departure of our former CFO in the current year of $5 million. Net gain on divestitures There was no net gain on divestitures during the nine months ended June 30, 2025. During the nine months ended June 30, 2024, the Company recognized a pre-tax gain of $32 million in connection with the divestiture of certain sound recording and publishing rights. Executive transition costs Executive transition costs were $4 million during the nine months ended June 30, 2025, which consisted of severance costs associated with the departure of our former CFO in the current year. 42 Transformation initiatives and other related costs Our transformation initiatives and other related costs decreased by $2 million to $54 million for the nine months ended June 30, 2025 from $56 million for the nine months ended June 30, 2024. Restructuring and Impairments