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10-Q – 2026-02-09 – wmg-20251231.htm
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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 February 4, 2026, there were 146,965,855 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 MONTHS ENDED DECEMBER 31, 2025 TABLE OF CONTENTS Page Number Part I. Financial Information Item 1. Financial Statements (Unaudited) 1 Condensed Consolidated Balance Sheets as of December 3 1 , 2025 and September 30, 20 25 1 Condensed Consolidated Statements of Operations for the Three Months Ended December 3 1 , 2025 and December 3 1 , 2024 2 Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended December 3 1 , 202 5 and December 3 1 , 2024 3 Condensed Consolidated Statements of Cash Flows for the Three Months Ended December 3 1 , 2025 and December 3 1 , 2024 4 Condensed Consolidated Statements of Equity for the Three Months Ended December 3 1 , 2025 and December 3 1 , 2024 5 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 21 Item 3. Quantitative and Qualitative Disclosures About Market Risk 43 Item 4. Controls and Procedures 44 Part II. Other Information Item 1. Legal Proceedings 46 Item 1A. Risk Factors 46 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 46 Item 3. Defaults Upon Senior Securities 47 Item 4. Mine Safety Disclosures 47 Item 5. Other Information 47 Item 6. Exhibits 48 Signatures 49 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) December 31, 2025 September 30, 2025 Assets Current assets: Cash and equivalents $ 751 $ 532 Accounts receivable, net of allowances of $ 28 million and $ 27 million 1,374 1,340 Inventories 60 62 Royalty advances expected to be recouped within one year 584 581 Assets held for sale 80 89 Prepaid and other current assets 169 166 Total current assets 3,018 2,770 Royalty advances expected to be recouped after one year 1,082 1,079 Property, plant and equipment, net of accumulated depreciation of $ 718 million and $ 701 million 418 441 Operating lease right-of-use assets, net 179 189 Goodwill 2,063 2,061 Intangible assets subject to amortization, net 2,690 2,725 Intangible assets not subject to amortization 154 154 Deferred tax assets, net 90 111 Other assets 317 299 Total assets $ 10,011 $ 9,829 Liabilities, Redeemable Noncontrolling Interest and Equity Current liabilities: Accounts payable $ 201 $ 257 Accrued royalties 2,938 2,740 Accrued liabilities 667 666 Accrued interest 39 31 Operating lease liabilities, current 47 43 Deferred revenue 246 286 Liabilities held for sale 48 49 Other current liabilities 124 129 Total current liabilities 4,310 4,201 Acquisition Corp. long-term debt 4,064 4,063 Other long-term debt 307 302 Operating lease liabilities, noncurrent 188 200 Deferred tax liabilities, net 169 164 Other noncurrent liabilities 144 142 Total liabilities $ 9,182 $ 9,072 Redeemable noncontrolling interest 5 — Equity: Class A common stock, $ 0.001 par value; 1,000,000 shares authorized, 146,146 and 146,906 shares issued and outstanding as of December 31, 2025 and September 30, 2025, respectively $ — $ — Class B common stock, $ 0.001 par value; 1,000,000 shares authorized, 375,380 issued and outstanding as of December 31, 2025 and September 30, 2025, respectively 1 1 Additional paid-in capital 2,154 2,166 Accumulated deficit ( 1,255 ) ( 1,331 ) Accumulated other comprehensive loss, net ( 180 ) ( 189 ) Total Warner Music Group Corp. equity 720 647 Noncontrolling interest 104 110 Total equity 824 757 Total liabilities, redeemable noncontrolling interest and equity $ 10,011 $ 9,829 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 December 31, 2025 2024 Revenue $ 1,840 $ 1,666 Costs and expenses: Cost of revenue ( 987 ) ( 894 ) Selling, general and administrative expenses (a) ( 458 ) ( 474 ) Restructuring and impairments ( 34 ) ( 27 ) Amortization expense ( 68 ) ( 57 ) Total costs and expenses ( 1,547 ) ( 1,452 ) Net loss on divestitures ( 5 ) — Operating income 288 214 Interest expense, net ( 45 ) ( 37 ) Other income 3 153 Income before income taxes 246 330 Income tax expense ( 71 ) ( 89 ) Net income 175 241 Less: (Income) loss attributable to noncontrolling interest 1 ( 5 ) Net income attributable to Warner Music Group Corp. $ 176 $ 236 Net income per share attributable to common stockholders: Class A – Basic and Diluted $ 0.33 $ 0.45 Class B – Basic and Diluted $ 0.33 $ 0.45 Weighted average common shares: Class A – Basic and Diluted 146,755 143,053 Class B – Basic and Diluted 375,380 375,380 (a) Includes depreciation expense: $ ( 31 ) $ ( 29 ) See accompanying notes 2 Warner Music Group Corp. Condensed Consolidated Statements of Comprehensive Income (In millions) (Unaudited) Three Months Ended December 31, 2025 2024 Net income $ 175 $ 241 Other comprehensive income (loss), net of tax: Foreign currency adjustment 9 ( 129 ) Other comprehensive income (loss), net of tax 9 ( 129 ) Total comprehensive income 184 112 Less: (Income) loss attributable to noncontrolling interest 1 ( 5 ) Comprehensive income attributable to Warner Music Group Corp. $ 185 $ 107 See accompanying notes 3 Warner Music Group Corp. Condensed Consolidated Statements of Cash Flows (In millions) (Unaudited) Three Months Ended December 31, 2025 2024 Cash flows from operating activities Net income $ 175 $ 241 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 99 86 Unrealized losses and remeasurement of foreign-denominated loans and foreign currency forward exchange contracts 3 ( 120 ) Deferred income taxes 25 23 Net gain on investments 1 ( 28 ) Net loss on divestitures 5 — Non-cash interest expense 1 2 Non-cash stock-based compensation expense 19 13 Non-cash impairments 9 26 Changes in operating assets and liabilities: Accounts receivable, net ( 33 ) 24 Inventories 12 10 Royalty advances ( 7 ) ( 42 ) Other noncurrent assets 7 3 Accounts payable and accrued liabilities ( 34 ) ( 183 ) Royalty payables 195 173 Accrued interest 8 24 Operating lease liabilities 2 ( 2 ) Deferred revenue ( 44 ) 66 Other balance sheet changes, net ( 3 ) 16 Net cash provided by operating activities 440 332 Cash flows from investing activities Acquisition of music publishing rights and music catalogs ( 30 ) ( 41 ) Capital expenditures ( 20 ) ( 36 ) Investments and acquisitions of businesses, net of cash received ( 12 ) ( 40 ) Proceeds from the sale of investments — 36 Proceeds from divestitures 10 — Net cash used in investing activities ( 52 ) ( 81 ) Cash flows from financing activities Proceeds from Beethoven Credit Agreement 4 — Deferred financing costs paid ( 8 ) — Distribution to noncontrolling interest holders ( 4 ) ( 7 ) Contributions from redeemable noncontrolling interest holder 5 — Dividends paid ( 100 ) ( 94 ) Payment of deferred consideration ( 25 ) ( 17 ) Taxes paid related to net share settlement of restricted stock units and common stock ( 5 ) ( 2 ) Common stock repurchased and retired ( 26 ) ( 2 ) Other financing activity — ( 5 ) Net cash used in financing activities ( 159 ) ( 127 ) Effect of exchange rate changes on cash and equivalents 3 ( 16 ) Cash balances classified as assets held for sale ( 16 ) — Net increase in cash and equivalents 216 108 Cash and equivalents at beginning of period 535 694 Cash and equivalents at end of period $ 751 $ 802 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) Three Months Ended December 31, 2025 Class A Common Stock Class B Common Stock Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Loss Total Warner Music Group Corp. Equity Non-controlling Interest Total Equity Redeemable Non-controlling Interest Shares Value Shares Value Balance at September 30, 2025 146,906 $ — 375,380 $ 1 $ 2,166 $ ( 1,331 ) $ ( 189 ) $ 647 $ 110 $ 757 $ — Net income — — — — — 176 — 176 ( 1 ) 175 — Other comprehensive income, net of tax — — — — — — 9 9 — 9 — Dividends ($ 0.19 per share) — — — — — ( 100 ) — ( 100 ) — ( 100 ) — Stock-based compensation — — — — 19 — — 19 — 19 — Distribution to noncontrolling interest holders — — — — — — — — ( 5 ) ( 5 ) — Vesting of restricted stock units, net of shares withheld for employee taxes 160 — — — ( 5 ) — — ( 5 ) — ( 5 ) — Common shares repurchased and retired ( 920 ) — — — ( 26 ) — — ( 26 ) — ( 26 ) — Contributions from redeemable non-controlling interest holders — — — — — — — — — — 5 Balance at December 31, 2025 146,146 $ — 375,380 $ 1 $ 2,154 $ ( 1,255 ) $ ( 180 ) $ 720 $ 104 $ 824 $ 5 Three Months Ended December 31, 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 Redeemable Non-controlling Interest Shares Value Shares Value Balance at September 30, 2024 142,559 $ — 375,380 $ 1 $ 2,077 $ ( 1,313 ) $ ( 247 ) $ 518 $ 157 $ 675 $ — Net income — — — — — 236 — 236 5 241 — Other comprehensive loss, net of tax — — — — — — ( 129 ) ( 129 ) — ( 129 ) — Dividends ($ 0.18 per share) — — — — — ( 94 ) — ( 94 ) — ( 94 ) — Stock-based compensation — — — — 20 — — 20 — 20 — Distribution to noncontrolling interest holders — — — — — — — — ( 8 ) ( 8 ) — Vesting of restricted stock units, net of shares withheld 64 — — — ( 2 ) — — ( 2 ) — ( 2 ) — Shares issued under the Plan 1,738 — — — — — — — — — — Common shares repurchased and retired ( 60 ) — — — ( 2 ) — — ( 2 ) — ( 2 ) — Other — — — — ( 2 ) — — ( 2 ) ( 2 ) ( 4 ) — Balance at December 31, 2024 144,301 $ — 375,380 $ 1 $ 2,091 $ ( 1,171 ) $ ( 376 ) $ 545 $ 152 $ 697 $ — See accompanying notes 5 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 months ended December 31, 2025 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2026. The consolidated balance sheet at September 30, 2025 has been derived from the audited consolidated financial statements at that date but does not include all the information and notes required by U.S. GAAP for complete financial statements. For further information, refer to the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2025 (File No. 001-32502). Basis of Consolidation The accompanying financial statements present the consolidated accounts of all entities in which the Company has a controlling financial interest required to be consolidated in accordance with U.S. GAAP. All intercompany balances and transactions have been eliminated. As of December 31, 2025 and September 30, 2025, there were approximately $ 59 million and $ 65 million of assets, respectively, related to variable interest entities (“VIEs”) included in our condensed consolidated balance sheets. As of December 31, 2025 and September 30, 2025, there were approximately $ 2 million and $ 2 million of liabilities, respectively, 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. 6 Noncontrolling Interests Interests held by third parties in consolidated subsidiaries are presented as noncontrolling interests, which represents the noncontrolling shareholders’ interests in the underlying net assets of the Company’s consolidated subsidiaries. Noncontrolling interests that are not redeemable are reported in the equity section of the Consolidated Balance Sheets. Noncontrolling interests, where the Company may be required to redeem the noncontrolling interest under contractual redemption requirements that are not solely within the control of Company, are reported in the Consolidated Balance Sheets between liabilities and equity, as redeemable noncontrolling interests. The Company adjusts the redeemable noncontrolling interests to the higher of the current redemption value or the carrying value of the interests, the capital contributed by the third party adjusted for the noncontrolling interest’s share of net income (loss) and distributions, on each balance sheet date with changes in redemption value recognized as an adjustment to retained earnings attributable to common shareholders. Income Taxes The Company uses the estimated annual effective tax rate method in computing its interim tax provision. Certain items, including those deemed to be unusual and infrequent are excluded from the estimated annual effective tax rate. In such cases, the actual tax expense or benefit is reported in the same period as the related item. Certain tax effects are also not reflected in the estimated annual effective tax rate, primarily certain changes in the realizability of deferred tax assets and uncertain tax positions, and are recorded in the period in which the change occurs. Global Intangible Low-Taxed Income (“GILTI”) imposes U.S. taxes on the excess of a deemed return on tangible assets of certain foreign subsidiaries. The Company made an election to recognize GILTI tax in the specific period in which it occurs. New Accounting Pronouncements Accounting Pronouncements Not Yet Adopted In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures . The amendment enhances income tax disclosure requirements, by requiring enhanced disclosures on the income tax rate reconciliation and income taxes paid. The amendments in this ASU are effective for fiscal years beginning after December 15, 2024. The Company will include the required disclosures in its Annual Report on Form 10-K for the fiscal year ending September 30, 2026. In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The amendment requires new financial statement disclosures to provide disaggregated information for certain types of expenses, including purchases of inventory, employee compensation, depreciation, and amortization in commonly presented expense captions such as cost of revenue and selling, general and administrative expenses. The amendments in this ASU are effective for our fiscal year ending September 30, 2028, and interim periods within our fiscal year ending September 30, 2029. The Company is in the process of evaluating the effect that the adoption of these standards will have on its consolidated financial statements. In September 2025, the FASB issued ASU 2025-06, Internal-Use Software (Subtopic 350-40) : Targeted Improvements to the Accounting for Internal-Use Software . The amendment aligns internal use software capitalization practices with agile development methodologies and an external use software model by introducing updated capitalization criteria and removing existing project staging guidance. The amendments in this ASU are effective for our fiscal year ending September 30, 2029. The Company is in the process of evaluating the effect that the adoption of these standards will have on its consolidated financial statements. 3. Earnings per Share The Company utilizes the two-class method to report earnings per share. Basic earnings per share is computed by dividing net income available to each class of stock, less earnings available to participating securities, divided by the weighted average number of outstanding common shares for each class of stock. Diluted earnings per share is computed by dividing net income available to each class of stock, less earnings available to participating securities, divided by the weighted average number of outstanding common shares, plus 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 months ended December 31, 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 months ended December 31, 2025 and 2024 (in millions, except share amounts, which are reflected in thousands, and per share data): 7 Three Months Ended December 31, 2025 2024 Class A Class B Class A Class B Basic and Diluted EPS: Numerator Net income (loss) attributable to Warner Music Group Corp. $ 51 $ 125 $ 67 $ 169 Less: Net loss attributable to participating securities (a) ( 2 ) — ( 3 ) — Net income (loss) attributable to common stockholders $ 49 $ 125 $ 64 $ 169 Denominator Weighted average shares outstanding 146,755 375,380 143,053 375,380 Basic and Diluted Earnings Per Share (b) $ 0.33 $ 0.33 $ 0.45 $ 0.45 ______________________________________ (a) Participating securities include unvested restricted stock units, which include the right to receive non-forfeitable dividend equivalents. Participating securities are not contractually obligated to share in losses. (b) For the three months ended December 31, 2025, the weighted average shares outstanding for Diluted EPS includes the dilutive effect of approximately 2,750 shares. As the resulting Diluted EPS rounds to the same reported amount as Basic EPS, both Basic and Diluted EPS for the three months ended December 31, 2025 are presented as $ 0.33 per share. There were no dilutive potentially issuable shares for the three months ended December 31, 2024. 8 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 December 31, 2025 2024 (in millions) Revenue by Type Digital $ 976 $ 873 Physical 152 166 Total digital and physical 1,128 1,039 Artist services and expanded-rights 231 196 Licensing 121 110 Total Recorded Music 1,480 1,345 Performance 64 56 Digital 215 207 Mechanical 18 14 Synchronization 60 39 Other 5 7 Total Music Publishing 362 323 Intersegment eliminations ( 2 ) ( 2 ) Total revenues $ 1,840 $ 1,666 Revenue by geographical location U.S. Recorded Music $ 577 $ 532 U.S. Music Publishing 190 173 Total U.S. 767 705 International Recorded Music 903 813 International Music Publishing 172 150 Total international 1,075 963 Intersegment eliminations ( 2 ) ( 2 ) Total revenues $ 1,840 $ 1,666 Sales Returns and Uncollectible Accounts Based on management’s analysis of sales returns, refund liabilities of $ 21 million and $ 17 million were established at December 31, 2025 and September 30, 2025, respectively. Based on management’s analysis of estimated credit losses, reserves of $ 28 million and $ 27 million were established at December 31, 2025 and September 30, 2025, respectively. Deferred Revenue Deferred revenue increased by $ 142 million during the three months ended December 31, 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 $ 127 million were recognized during the three months ended December 31, 2025 related to the balance of deferred revenue at September 30, 2025. There were no other significant changes to deferred revenue during the reporting period. Performance Obligations For the three months ended December 31, 2025 and December 31, 2024, the Company recognized revenue of $ 18 million and $ 40 million, respectively, from performance obligations satisfied in previous periods. 9 Revenues expected to be recognized in the future related to performance obligations that are unsatisfied at December 31, 2025 are as follows: Rest of FY26 FY27 FY28 Thereafter Total (in millions) Remaining performance obligations $ 298 $ 224 $ 129 $ 43 $ 694 Total $ 298 $ 224 $ 129 $ 43 $ 694 5. Comprehensive Income Comprehensive income, which is reported in the accompanying condensed consolidated statements of equity, consists of net income and other gains and losses affecting equity that, under U.S. GAAP, are excluded from net income. For the Company, the components of other comprehensive income primarily consist of foreign currency translation gains and losses, minimum pension liabilities, and deferred gains and losses on financial instruments designated as hedges under ASC 815, Derivatives and Hedging . The following summary sets forth the changes in the components of accumulated other comprehensive loss. Foreign Currency Translation Loss (a) Minimum Pension Liability Adjustment Accumulated Other Comprehensive Loss, net (in millions) Balances at September 30, 2024 $ ( 244 ) $ ( 3 ) $ ( 247 ) Other comprehensive loss ( 129 ) — ( 129 ) Balances at December 31, 2024 $ ( 373 ) $ ( 3 ) $ ( 376 ) Balances at September 30, 2025 $ ( 188 ) $ ( 1 ) $ ( 189 ) Other comprehensive income 9 — 9 Balances at December 31, 2025 $ ( 179 ) $ ( 1 ) $ ( 180 ) ______________________________________ (a) Includes historical foreign currency translation related to certain intra-entity transactions. 6. Goodwill and Intangible Assets Goodwill The following analysis details the changes in goodwill for each reportable segment: Recorded Music Music Publishing Total (in millions) Balances at September 30, 2025 $ 1,597 $ 464 $ 2,061 Acquisitions — — — Other adjustments (a) 2 — 2 Balances at December 31, 2025 $ 1,599 $ 464 $ 2,063 ______________________________________ (a) Other adjustments during the three months ended December 31, 2025 represent foreign currency movements. The Company performs its annual goodwill impairment test in accordance with ASC 350, Intangibles—Goodwill and Other, during the fourth quarter of each fiscal year as of July 1. The Company may conduct an earlier review if events or circumstances occur that would suggest the carrying value of the Company’s goodwill may not be recoverable. No indicators of impairment were identified during the current period that required the Company to perform an interim assessment or recoverability test. 10 Intangible Assets Intangible assets consist of the following: Weighted-Average Useful Life December 31, 2025 September 30, 2025 (in millions) Intangible assets subject to amortization: Recorded music catalog 12 years $ 1,810 $ 1,799 Music publishing copyrights 23 years 2,717 2,692 Artist and songwriter contracts 13 years 1,138 1,137 Trademarks 16 years 29 29 Other intangible assets 6 years 53 58 Total gross intangible assets subject to amortization 5,747 5,715 Accumulated amortization ( 3,057 ) ( 2,990 ) Total net intangible assets subject to amortization 2,690 2,725 Intangible assets not subject to amortization: Trademarks and tradenames Indefinite 154 154 Total net intangible assets $ 2,844 $ 2,879 7. Debt Debt Capitalization As of December 31, 2025, our long-term debt consists of the following: December 31, 2025 September 30, 2025 (in millions) Revolving Credit Facility (a) $ — $ — Senior Term Loan Facility due 2031 1,295 1,295 2.750 % Senior Secured Notes due 2028 382 381 3.750 % Senior Secured Notes due 2029 540 540 3.875 % Senior Secured Notes due 2030 535 535 2.250 % Senior Secured Notes due 2031 522 522 3.000 % Senior Secured Notes due 2031 800 800 Mortgage Term Loan due 2033 17 17 Total debt, including the current portion 4,091 4,090 Premium less unamortized discount and unamortized DFCs ( 27 ) ( 27 ) Total Acquisition Corp. long-term debt, including the current portion, net $ 4,064 $ 4,063 Beethoven Credit Agreement (b) 4 — Tempo Asset-Based Notes due 2050 (c) 311 311 Unamortized discount ( 8 ) ( 9 ) Total other long-term debt, including the current portion, net $ 307 $ 302 Total long-term debt, including the current portion, net $ 4,371 $ 4,365 ______________________________________ (a) Reflects $ 350 million of commitments under the Revolving Credit Facility with no letters of credit outstanding at December 31, 2025 and September 30, 2025. There were no loans outstanding under the Revolving Credit Facility as of December 31, 2025 and September 30, 2025. (b) Reflects $ 500 million of commitments under the Beethoven Credit Agreement. There were $ 4 million in loans outstanding under the Beethoven Credit Agreement at December 31, 2025. Loans outstanding under the Beethoven Credit Agreement are secured only by certain music rights owned by Beethoven JV 1, LLC, a Delaware limited liability company (“Beethoven”), and are nonrecourse to the Company and its subsidiaries, other than Beethoven. (c) The Tempo Asset-Based Notes due 2050 are secured only by certain music rights owned by Tempo Music Holdings, LLC (“Tempo Music”) and are nonrecourse to the Company and its subsidiaries, other than Tempo Music. 11 Acquisition Corp. Long-Term Debt The Company is the direct parent of Holdings, which is the direct parent of Acquisition Corp. Acquisition Corp. is party to and the borrower under a $ 1,295 million 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 December 31, 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 December 31, 2025 . Other Long-Term Debt The Company holds approximately $ 311 million of asset-based securities due November 2050 (“Asset-Based Notes”) issued by a subsidiary of Tempo Music secured only by certain music rights owned by Tempo Music and is nonrecourse to the Company and its subsidiaries, other than Tempo Music. These notes, which consist of multiple fixed rate tranches, will accrue at a fixed weighted average rate of 4.62 % until November 30, 2027, with higher interest rates thereafter. Principal and interest are payable in equal semi-annual installments. As of December 31, 2025, Tempo Music is in compliance with the covenants under the Asset-Based Notes. Additionally, WMG BC Holdco LLC (“WMGCo”), a wholly-owned indirect subsidiary of the Company, and BCSS W JV Investments (B), L.P. (“BainCo”), a wholly-owned indirect subsidiary of Bain Capital Special Situations, LP, operate Beethoven, which is party to a Credit and Security Agreement (the “Beethoven Credit Agreement”), dated as of June 29, 2025, with the Bank of New York Mellon, as administrative agent for the Lenders and as collateral agent for the Secured Parties (in each case, as defined in the Beethoven Credit Agreement) pursuant to which the Lenders have agreed to extend up to $ 500 million in commitment amounts to Beethoven Financing 1, LLC, a Delaware limited liability company and wholly-owned indirect subsidiary of Beethoven, as the initial borrower (the “Initial Borrower” and, together with each additional borrower from time to time party thereto, the “Borrowers”) (the “Beethoven Credit Facility”). The obligations of the Borrowers under the Beethoven Credit Agreement are (a) secured by the Borrowers with a first priority security interest in all of their respective assets and (b) guaranteed by Beethoven Holdings 1 LLC, a Delaware limited liability company and a wholly-owned direct subsidiary of Beethoven and the direct parent of the Initial Borrower, as the initial guarantor (together with the additional guarantors from time to time party thereto, the “Guarantors”) with a first priority security interest in all of the Guarantors’ respective assets. The advances under the Beethoven Credit Agreement shall bear interest at the rates described below under “—Interest Rates.” The Beethoven Credit Agreement contains customary affirmative and negative covenants for this type of facility, and the ability, subject to the consent of the Lenders, to increase the size of the facility to $ 700 million. There were $ 4 million of loans outstanding under the Beethoven Credit Agreement at December 31, 2025. As of December 31, 2025, the Initial Borrower is in compliance with the covenants under the Beethoven Credit Agreement. On February 4, 2026, WMGCo entered into an amendment (the “Amendment”) to a Master Operations and Economics Agreement, dated as of June 29, 2025 (as amended from time to time, the “Master Operations and Economics Agreement”), by and among WMGCo, BainCo, and certain affiliates of the foregoing parties. Pursuant to the Amendment, WMGCo and BainCo have committed to increase their respective initial equity commitment amounts by $ 100 million each. 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 12 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 1.83 x at December 31, 2025, the applicable margin for SOFR loans and risk-free rate loans would be 1.375 % instead of 1.875 % and the applicable margin for ABR loans would be 0.375 % instead of 0.875 % in the case of 2020 Revolving Loans. If there is a payment default at any time, then the interest rate applicable to overdue principal will be the rate otherwise applicable to such loan plus 2.0 % per annum. Default interest will also be payable on other overdue amounts at a rate of 2.0 % per annum above the amount that would apply to an alternative base rate loan. The loans under the Senior Term Loan Facility bear interest at Acquisition Corp.’s election at a rate equal to (i) the forward-looking term rate based on Term SOFR subject to a zero floor, plus 1.75 % per annum or (ii) the base rate, which is the highest of (x) the corporate base rate established by the administrative agent as its prime rate in effect at its principal office in New York City from time to time, (y) 0.50 % in excess of the overnight federal funds rate and (z) one-month Term SOFR, plus 1.00 % per annum, subject to a 1.00 % floor, plus, in each case, 1.00 % per annum. If there is a payment default at any time, then the interest rate applicable to overdue principal and interest will be the rate otherwise applicable to such loan plus 2.00 % per annum. Default interest will also be payable on other overdue amounts at a rate of 2.00 % per annum above the amount that would apply to an alternative base rate loan. The term loan entered into on January 27, 2023 (the “Term Loan Mortgage”) bears interest at a rate of 30-day SOFR plus the applicable margin of 1.40 %, subject to a zero floor. Interest on the Asset-Based Notes, which consist of multiple fixed rate tranches, will accrue at a fixed weighted average rate of 4.62 % until November 30, 2027. Following November 30, 2027, if the Asset-Based Notes remain outstanding, the interest rate on the outstanding Asset-Based Notes will increase by a per annum rate equal to the greater of: (i) 5.0 % and (ii) the amount, if any, by which the sum of the following exceeds the interest rate otherwise payable with respect to such Asset-Based Notes: (A) the yield to maturity (adjusted to a quarterly bond-equivalent basis) on November 30, 2027 of the U.S. treasury security having a term closest to seven years plus (B) 5.0 %, plus (C) with respect to class A notes, 3.53 % and, with respect to class B notes, 4.28 %. 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 December 31, 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 December 31, 2025, there are no scheduled maturities of notes until 2028, when $ 382 million is scheduled to mature. Thereafter, $ 2.397 billion is scheduled to mature. Maturity of Term Loan Mortgage The maturity date of the Term Loan Mortgage is January 27, 2033, subject to a call option exercisable by Truist Bank at any time after January 27, 2028 if certain criteria relating to the Company’s creditworthiness are met. Maturity of Tempo Asset-Based Notes The maturity date of the Asset-Based Notes is November 30, 2050. 13 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 $ 45 million and $ 37 million for the three months ended December 31, 2025 and 2024, respectively. Interest expense, net includes interest expense related to our outstanding indebtedness of $ 46 million and $ 43 million for the three months ended December 31, 2025 and 2024, respectively. The weighted-average interest rate of the Company’s total debt was 4.0 % at December 31, 2025, 4.1 % at September 30, 2025, and 4.2 % at December 31, 2024. 8. Restructuring and Impairments 2025 Restructuring Plan On July 1, 2025, the Company announced a strategic restructuring plan (the “2025 Restructuring Plan”) designed to free up funds to invest in music and to accelerate the Company’s long-term growth. The 2025 Restructuring Plan is expected to be fully implemented by the end of calendar year 2026. The Company expects to incur total charges of approximately $ 200 million on a pre-tax basis or approximately $ 150 million on an after-tax basis. Approximately $ 170 million of the charges will be for severance payments and other related termination costs and approximately $ 30 million of certain other charges. The Company anticipates that the Plan will result in cash expenditures of approximately $ 200 million, of which $ 170 million is expected to be paid by the end of fiscal year 2026. For the three months ended December 31, 2025, total severance and other termination costs recorded in connection with the 2025 Strategic Restructuring Plan were $ 25 million, of which $ 13 million of expense was recognized in our Recorded Music segment and $ 12 million was recognized in Corporate. As of December 31, 2025, total cumulative restructuring and impairment charges recognized in connection with the 2025 Strategic Restructuring Plan were $ 143 million with $ 93 million of costs recognized in our Recorded Music segment, $ 5 million of costs recognized in our Music Publishing segment, and $ 45 million recognized in Corporate. These costs are composed of $ 115 million of severance costs and $ 28 million of non-cash impairment charges primarily related to impairments of operating lease right-of-use assets that are no longer in use and royalty advances based on operational changes in the intended use of these assets. The following table sets forth the activity for the three months ended December 31, 2025 in the restructuring accrual associated with the 2025 Restructuring Plan included within accrued liabilities in the accompanying consolidated balance sheets: Severance Costs (in millions) Balance at September 30, 2025 $ 85 Restructuring charges 25 Cash payments ( 35 ) Balance at December 31, 2025 $ 75 2024 Strategic Restructuring Plan In 2024, the Company announced a strategic restructuring plan (the “2024 Strategic Restructuring Plan”) designed to free up additional funds to invest in music and accelerate the Company’s growth for the next decade. The 2024 Strategic Restructuring Plan is complete and the remaining associated cash payments are expected to be made by the end of fiscal year 2026. As of September 30, 2025, total cumulative restructuring and impairment charges recognized in connection with the 2024 Strategic Restructuring Plan were $ 216 million with $ 206 million of costs recognized in our Recorded Music segment and $ 10 million recognized in Corporate. These costs are composed of $ 134 million of severance and other contract termination costs, of which $ 7 million was non-cash, and $ 82 million of non-cash impairment charges. There were no restructuring costs recognized for the three months ended December 31, 2025 related to the 2024 Strategic Restructuring Plan. The below table sets forth the activity for the three months ended December 31, 2025 in the restructuring accrual associated with the 2024 Strategic Restructuring Plan included within accrued liabilities in the accompanying condensed consolidated balance sheets. 14 Severance Costs Contract Termination Costs Total (in millions) Balance at September 30, 2025 $ 23 $ 7 $ 30 Cash payments ( 10 ) ( 2 ) ( 12 ) Balance at December 31, 2025 $ 13 $ 5 $ 18 Other Impairments For the three months ended December 31, 2025, the Company recognized an impairment charge of $ 9 million within the Recorded Music segment for long-lived assets associated with EMP Merchandising (“EMP”), which was the result of remeasuring the carrying value to fair value as it has been classified as held for sale since September 30, 2025. Please refer to Note 15 for further discussion. 9. Commitments and Contingencies From time to time the Company is involved in claims and legal proceedings that arise in the ordinary course of business. The Company is currently subject to several such claims and legal proceedings. Based on currently available information, the Company does not believe that resolution of pending matters will have a material adverse effect on its financial condition, cash flows or results of operations. However, litigation is subject to inherent uncertainties, and there can be no assurances that the Company’s defenses will be successful or that any such lawsuit or claim would not have a material adverse impact on the Company’s business, financial condition, cash flows and results of operations in a particular period. Any claims or proceedings against the Company, whether meritorious or not, can have an adverse impact because of defense costs, diversion of management and operational resources, negative publicity and other factors. 10. Equity Stock-Based Compensation The Company’s stock-based compensation plans are described in Note 13, “Equity,” to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2025. Stock-based compensation consists primarily of common stock, restricted stock units (“RSUs”), deferred share units, stock options, and market-based performance share units (“PSUs”) granted to eligible employees and executives under the Omnibus Incentive Plan. The Company recognized $ 19 million and $ 13 million of non-cash stock-based compensation expense for the three months ended December 31, 2025 and 2024, respectively, which was recorded to additional paid-in capital. Common Stock During the three months ended December 31, 2025, the Company satisfied the vesting of PSUs and RSUs by issuing 159,580 shares of Class A Common Stock under the Omnibus Incentive Plan, which is net of shares used to settle employee income tax obligations. Share Repurchase Program On November 14, 2024, the Company’s board of directors authorized a new $ 100 million share repurchase program (the “Share Repurchase Program”), which is intended to offset dilution from the Omnibus Incentive Plan. Under this authorization, the Company may, from time to time, purchase shares of its Class A Common Stock through open market transactions, privately negotiated transactions, forward, derivative, or accelerated repurchase transactions, tender offers or otherwise, in accordance with all applicable securities laws and regulations, including Rule 10b-18 of the Exchange Act. The $ 100 million share repurchase authorization does not obligate the Company to purchase any shares and the Share Repurchase Program does not have a fixed expiration date. The Company may enter into a pre-arranged stock trading plan in accordance with the guidelines specified under Rule 10b5-1 to effectuate all or a portion of the Share Repurchase Program. The Company expects to finance any repurchases from a combination of cash on hand and cash provided by operating activities. The timing and method of any repurchases, which will depend on a variety of factors, including market conditions, are subject to our results of operations, financial condition, liquidity and other factors. The authorization for the Share Repurchase Program may be suspended, terminated, increased or decreased by the Company’s board of directors at any time. The following table summarizes our total share repurchases and retirement under the Share Repurchase Program during the three months ended December 31, 2025: 15 Three Months Ended December 31, 2025 Three Months Ended December 31, 2024 Share Repurchase Type Shares Amount (in millions) Shares Amount (in millions) Open Market Repurchases 920,000 $ 26 60,383 $ 2 11. Redeemable Noncontrolling Interest As of December 31, 2025, the redeemable noncontrolling interests (“RNCI”) consist of interests in Beethoven, a consolidated subsidiary. The Company consolidates Beethoven based on its controlling financial interest of the joint venture through the Company's majority representation on the board. The noncontrolling interest holder in Beethoven, which is BainCo as described in Note 7, has a 50 % ownership share and is entitled to receive 50 % of the required quarterly distributions made by the joint venture from available cash. For distributions resulting from a liquidity event, including the sale of the joint venture, an initial public offering, or other liquidity event as defined in the Master Operations and Economics Agreement, the noncontrolling interest holder is entitled to proceeds from such event until its contributed capital is returned with an annualized return of 8 %, after which the Company will receive distributions for an equal amount, with any additional amounts distributed equally. Beginning on the sixth anniversary of formation, the noncontrolling interest holder has an exit right, that upon providing notice, the Company has the option to acquire the noncontrolling interest holders interest for a price negotiated with noncontrolling interest holder or otherwise determined by an independent fair market valuation, if elected. If not acquired by the Company, the noncontrolling interest holder can initiate and complete a sale of Beethoven or an initial public offering that include the interests held by the Company. Beginning on the eighth anniversary, the Company will also have a similar exit right, that provides similar rights to negotiate the sale of the Company’s interests to the noncontrolling interest holder. Given the exit rights held by the noncontrolling interest holder may result in the interests being redeemed by the Company based on events that are not solely in its control, the noncontrolling interest is presented in the Consolidated Balance Sheets at the greater of the current estimated redemption value or carrying value of the interests including adjustments for the attribution of income to the noncontrolling interest holder. The Company adjusts the redeemable noncontrolling interest to the redemption at the end of each reporting period with changes recognized as adjustments to retained earnings. The Company recognized $ 5 million as the redeemable noncontrolling interest balance as of December 31, 2025. 12. Income Taxes For the three months ended December 31, 2025, the Company recorded an income tax expense of $ 71 million. The income tax expense for the three months ended December 31, 2025 is higher than the expected tax expense at the statutory rate of 21% primarily due to foreign income taxed at rates higher than in the United States, including withholding taxes, U.S. state and local taxes, the net impact of GILTI and foreign derived intangible income (“FDII”), and non-deductible executive compensation under IRC Section 162(m). For the three months ended December 31, 2024, the Company recorded an income tax expense of $ 89 million. The income tax expense for the three months ended December 31, 2024 is higher than the expected tax expense at the statutory rate of 21% primarily due to foreign income taxed at rates higher than the United States, including withholding taxes, and U.S. state and local taxes, unrecognized tax benefit related to uncertain tax positions, and non-deductible executive compensation under IRC Section 162(m). These charges were partially offset by tax benefits associated with R&D credits, and the net impact of GILTI and FDII. The Company has determined that it is reasonably possible that the gross unrecognized tax benefits as of December 31, 2025 could decrease by up to approximately $ 1 million related to various ongoing audits and settlement discussions in various jurisdictions during the next twelve months. The Organization Economic Co-operation and Development (“OECD”) introduced Base Erosion and Profit Shifting (“BEPS”) Pillar 2 rules that impose a global minimum tax rate of 15%. Numerous countries, including European Union member states, have enacted legislation as of January 1, 2025 and others are expected to enact legislation in the next few years. The Company has evaluated the potential impact of the rules based on the most recently available information. For the fiscal year ended September 30, 2026, the impact on the Company is expected to be immaterial. The Company will continue to monitor legislative developments to determine if there are significant changes to Pillar 2 rules that could lead to a material impact. On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act, which introduces a wide-ranging set of tax reform provisions. In fiscal year 2026, the Company is benefitting from the changes to the business interest expense deduction limitation, allowing for an accelerated deduction, and restored expensing for domestic research and development costs. 16 13. Derivative Financial Instruments The Company uses derivative financial instruments, primarily foreign currency forward exchange contracts, for the purposes of managing foreign currency exchange rate risk on expected future cash flows. As of December 31, 2025, the Company had outstanding foreign currency forward exchange contracts for the sale of $ 541 million and the purchase of $ 327 million of foreign currencies at fixed rates. As of September 30, 2025, the Company had outstanding foreign currency forward exchange contracts for the sale of $ 460 million and the purchase of $ 170 million of foreign currencies at fixed rates. The Company recorded no realized pre-tax gains and unrealized pre-tax losses of $ 1 million related to its foreign currency forward exchange contracts in the condensed consolidated statement of operations as other expense for the three months ended December 31, 2025. The Company recorded realized pre-tax gains of $ 3 million and unrealized pre-tax gains of $ 12 million related to its foreign currency forward exchange contracts in the condensed consolidated statement of operations as other expense for the three months ended December 31, 2024. The following is a summary of amounts recorded in the consolidated balance sheets pertaining to the Company’s derivative instruments at December 31, 2025 and September 30, 2025: December 31, 2025 September 30, 2025 (in millions) Other Current Assets: Foreign currency forward exchange contracts (a) $ — $ — Other Current Liabilities: Foreign currency forward exchange contracts (a) $ ( 1 ) $ ( 3 ) ______________________________________ (a) For December 31, 2025 includes $ 6 million and $ 7 million of foreign exchange derivative contracts in asset and liability positions, respectively, which net to $ 0 million of current assets and $ 1 million of current liabilities, respectively. For September 30, 2025 includes $ 3 million and $ 6 million of foreign exchange derivative contracts in asset and liability positions, respectively, which net to $ 0 million of current assets and $ 3 million of current liabilities, respectively. 14. Segment Information Based on the nature of its products and services, the Company classifies its business interests into two fundamental operations: Recorded Music and Music Publishing, which also represent the reportable segments of the Company. Information as to each of these operations and further description of these segments is set forth below and can be found in Note 1. The Company’s Chief Operating Decision Maker, which is our Chief Executive Officer, allocates resources and evaluates performance based on several factors, including operating income (loss) and other financial measures. The accounting policies of the Company’s business segments are the same as those described in Note 2, “Summary of Significant Accounting Policies,” to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2025. The Company accounts for intersegment sales at fair value as if the sales were to third parties. While intercompany transactions are treated like third-party transactions to determine segment performance, the revenues (and corresponding expenses recognized by the segment that is counterparty to the transaction) are eliminated in consolidation, and therefore, do not themselves impact consolidated results. 17 Recorded Music Music Publishing Corporate expenses and eliminations Total Three Months Ended (in millions) December 31, 2025 Revenues $ 1,480 $ 362 $ ( 2 ) $ 1,840 Cost of revenue 760 228 ( 1 ) 987 Selling and marketing expense 150 1 4 155 Distribution expense 31 — — 31 General and administrative expense 154 34 84 272 Restructuring & Impairment 22 — 12 34 Amortization expense 34 34 — 68 Net loss on divestitures — — ( 5 ) ( 5 ) Operating income (loss) $ 329 $ 65 $ ( 106 ) $ 288 Depreciation expense (a) 12 1 18 31 December 31, 2024 Revenues $ 1,345 $ 323 $ ( 2 ) $ 1,666 Cost of revenue 686 210 ( 2 ) 894 Selling and marketing expense 151 1 6 158 Distribution expense 32 — — 32 General and administrative expense 180 31 73 284 Restructuring & Impairment 28 — ( 1 ) 27 Amortization expense 30 26 1 57 Operating income (loss) $ 238 $ 55 $ ( 79 ) $ 214 Depreciation expense (a) 15 1 13 29 (a) Depreciation expense is a component of general and administrative expense 15. Additional Financial Information Supplemental Cash Flow Disclosures The Company made interest payments of approximately $ 38 million and $ 18 million during the three months ended December 31, 2025 and 2024, respectively. The Company paid approximately $ 68 million and $ 43 million of income and withholding taxes, net of refunds, for the three months ended December 31, 2025 and 2024, respectively. Non-cash investing activities were approximately $ 8 million related to the receipt of noncash consideration and the acquisition of music publishing rights and music catalogs during the three months ended December 31, 2025 and $ 18 million related to business combinations and the acquisition of music publishing rights and music catalogs during the three months ended December 31, 2024. Assets and Liabilities Held for Sale In the fourth quarter of fiscal year 2025, the Company signed a non-binding letter of intent to sell its EMP business within our Recorded Music segment and was classified as held for sale. The sale is expected to be completed in the second quarter of fiscal year 2026. Upon classification as held for sale, the business was measured at the lower of its carrying amount or its estimated fair value less costs to sell. For the three months ended December 31, 2025, the Company recognized an impairment charge of $ 9 million within the Recorded Music segment for long-lived assets associated with EMP, which was the result of remeasuring the carrying value to fair value as it has been classified as held for sale since September 30, 2025. The recoverable fair value was determined based on current market indicators. 18 The major classes of assets and liabilities of the business held for sale as of December 31, 2025 are as follows: December 31, 2025 September 30, 2025 (in millions) (in millions) Cash $ 16 $ 3 Inventories 40 50 Property, plant and equipment, net 13 20 Intangible assets subject to amortization, net 7 10 Other assets 4 6 Assets of business held for sale $ 80 $ 89 Accounts payable and accrued liabilities $ 29 $ 34 Other liabilities 19 15 Liabilities of business held for sale $ 48 $ 49 Net Gain (Loss) on Divestitures The Company recognized a pre-tax loss of $ 5 million during the three months ended December 31, 2025, in connection with the divestiture of certain assets which have been reflected as a net loss (gain) on divestiture in the accompanying condensed consolidated statement of operations. Net Gain on Sale of Investments The Company recognized a pre-tax realized net gain of $ 29 million during the three months ended December 31, 2024 in connection with the sale of an investment that has been presented within the Other income (expense) line of the accompanying condensed consolidated statement of operations. Dividends The Company’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 November 7, 2025, the Company’s board of directors declared a cash dividend of $ 0.19 per share on the Company’s Class A Common Stock and Class B Common Stock, as well as related payments under certain stock-based compensation plans, which was paid to stockholders on December 2, 2025. The Company paid an aggregate of approximately $ 100 million, or $ 0.19 per share, in cash dividends to stockholders and participating security holders for the three months ended December 31, 2025. On February 5, 2026, the Company’s board of directors declared a cash dividend of $ 0.19 per share on the Company’s Class A Common Stock and Class B Common Stock, as well as related payments under certain stock-based compensation plans, payable on March 3, 2026 to stockholders of record as of the close of business on February 18, 2026. 19 16. Fair Value Measurements The following tables show the fair value of the Company’s financial instruments that are required to be measured at fair value as of December 31, 2025 and September 30, 2025. Fair Value Measurements as of December 31, 2025 (Level 1) (Level 2) (Level 3) Total (in millions) Other Current Assets: Foreign currency forward exchange contracts (a) $ — $ — $ — $ — Other current liabilities: Foreign currency forward exchange contracts (a) $ — $ ( 1 ) $ — $ ( 1 ) Other noncurrent assets: Equity investments with readily determinable fair value (b) $ 6 $ — $ — $ 6 Fair Value Measurements as of September 30, 2025 (Level 1) (Level 2) (Level 3) Total (in millions) Other current liabilities: Foreign currency forward exchange contracts (a) $ — $ ( 3 ) $ — $ ( 3 ) Other noncurrent assets: Equity investment with readily determinable fair value (b) $ 8 $ — $ — $ 8 ______________________________________ (a) The fair value of foreign currency forward exchange contracts is based on dealer quotes of market forward rates and reflects the amount that the Company would receive or pay at their maturity dates for contracts involving the same currencies and maturity dates. (b) These represent equity investments with a readily determinable fair value. The Company has measured its investments to fair value in accordance with ASC 321, Investments—Equity Securities, based on quoted prices in active markets. The majority of the Company’s non-financial instruments, which include goodwill, intangible assets, inventories and property, plant and equipment, are not required to be re-measured to fair value on a recurring basis. These assets are evaluated for impairment if certain triggering events occur. If such evaluation indicates that impairment exists, the asset is written down to its fair value. In addition, an impairment analysis is performed at least annually for goodwill and indefinite-lived intangible assets. Furthermore, assets classified as held for sale are measured at the lower of their carrying amount or fair value less costs to sell. When the Company determines that the fair value of an asset group held for sale is less than its carrying value, a non-recurring fair value adjustment is recognized as a loss in the period the held-for-sale criteria are met. The Company estimated the fair value of the assets held for sale based on current market indicators. Equity Investments Without Readily Determinable Fair Value The Company evaluates its equity investments without readily determinable fair values for impairment if factors indicate that a significant decrease in value has occurred. The Company has elected to use the measurement alternative to fair value that will allow these investments to be recorded at cost, less impairment, and adjusted for subsequent observable price changes. The Company did not record any impairment charges on these investments during the three months ended December 31, 2025 and recorded approximately $ 1 million of impairment charges on these investments during the three months ended December 31, 2024. In addition, there were no observable price changes events that were completed during the three months ended December 31, 2025 and 2024. Fair Value of Debt Based on the level of interest rates prevailing at December 31, 2025, the fair value of the Company’s debt was $ 4.290 billion. Based on the level of interest rates prevailing at September 30, 2025, the fair value of the Company’s debt was $ 4.270 billion. The fair value of the Company’s debt instruments is determined using quoted market prices from less active markets or by using quoted market prices for instruments with identical terms and maturities; both approaches are considered a Level 2 measurement. 20 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 December 31, 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; 21 • significant fluctuations in our operations, cash flows and the trading price of our common stock from period to period; • our failure to attract and retain our executive officers and other key personnel; • a significant portion of our revenues are subject to rate regulation either by government entities or by local third-party collecting societies throughout the world and rates on other income streams may be set by governmental proceedings, which may limit our profitability; • risks associated with obtaining, maintaining, protecting and enforcing our intellectual property rights; • our involvement in intellectual property litigation; • threats to our business associated with digital piracy, including organized industrial piracy; • risks associated with the development and use of artificial intelligence; • an impairment in the carrying value of goodwill or other intangible and long-lived assets; • the impact of, and risks inherent in, acquisitions or other business combinations; • risks inherent to our outsourcing certain finance and accounting functions; • the fact that we have engaged in substantial restructuring activities in the past, and may need to implement further restructurings in the future and our restructuring efforts may not be successful or generate expected cost savings; • our and our service providers’ ability to maintain the security of information relating to our customers, employees and vendors and our music; • risks related to evolving laws and regulations concerning data privacy which might result in increased regulation and different industry standards; • new legislation that affects the terms of our contracts with recording artists and songwriters; • a potential loss of catalog if it is determined that recording artists have a right to recapture U.S. rights in their recordings under the U.S. Copyright Act; • the impact of our substantial leverage on our ability to raise additional capital to fund our operations, on our ability to react to changes in the economy or our industry and on our ability to meet our obligations under our indebtedness; • the ability to generate sufficient cash to service all of our indebtedness, and the risk that we may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful; • the fact that our debt agreements contain restrictions that may limit our flexibility in operating our business; • the significant amount of cash required to service our indebtedness and the ability to generate cash or refinance indebtedness as it becomes due depends on many factors, some of which are beyond our control; • our indebtedness levels, and the fact that we may be able to incur substantially more indebtedness, which may increase the risks created by our substantial indebtedness; • risks of downgrade, suspension or withdrawal of the rating assigned by a rating agency to us could impact our cost of capital; • the dual class structure of our common stock and Access’s existing ownership of our Class B Common Stock have the effect of concentrating control over our management and affairs and over matters requiring stockholder approval with Access; • the fact that we maintain certain cash deposits in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limits, which could have an adverse effect on liquidity and financial performance in the event of a bank failure or receivership; and • risks related to other factors discussed under “Risk Factors” of this Quarterly Report and in our Annual Report on Form 10-K for the fiscal year ended September 30, 2025. You should read this Quarterly Report completely and with the understanding that actual future results may be materially different from expectations. All forward-looking statements made in this Quarterly Report are qualified by these cautionary statements. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation, other than as may be required by law, to update or revise any forward-looking or cautionary statements to reflect changes in assumptions, the occurrence of events, unanticipated or otherwise, and changes in future operating results over time or otherwise. 22 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 months ended December 31, 2025 and December 31, 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 three months ended December 31, 2025 and December 31, 2024, as well as a discussion of our financial condition and liquidity as of December 31, 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 Adjusted OIBDA. We define Adjusted OIBDA as operating income (loss) adjusted to exclude the following items: (i) non-cash depreciation of tangible assets, (ii) non-cash amortization of intangible assets, (iii) non-cash stock-based compensation and other related expenses, (iv) gains or losses on divestitures, (v) expenses related to restructuring and transformation initiatives, which includes costs associated with the Company’s financial transformation initiative to design and implement new information technology and upgrade our finance infrastructure, and (vi) executive transition costs. Items excluded are not viewed to contribute directly to management’s evaluation of operating results. We consider Adjusted OIBDA to be an important indicator of the operational strengths and performance of our businesses. However, a limitation of the use of Adjusted OIBDA as a performance measure is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in our businesses. Accordingly, Adjusted OIBDA should be considered in addition to, not as a substitute for, operating income (loss), net income (loss) attributable to Warner Music Group Corp. and other measures of financial performance reported in accordance with United States generally accepted accounting principles (“U.S. GAAP”). In addition, our definition of Adjusted OIBDA may differ from similarly titled measures used by other companies. A reconciliation of consolidated Adjusted OIBDA to operating income (loss) and net income (loss) attributable to Warner Music Group Corp. is provided in our “Results of Operations.” Use of Constant Currency As exchange rates are an important factor in understanding period to period comparisons, we believe the presentation of revenue and Adjusted OIBDA on a constant-currency basis in addition to reported results helps improve the ability to understand our operating results and evaluate our performance in comparison to prior periods. Constant-currency information compares revenue and Adjusted OIBDA between periods as if exchange rates had remained constant period over period. We use revenue and Adjusted OIBDA on a constant-currency basis as one measure to evaluate our performance. We calculate constant-currency by calculating prior-year revenue and Adjusted OIBDA using current-year foreign currency exchange rates. We generally refer to such amounts calculated on a constant-currency basis as “excluding the impact of foreign currency exchange rates.” Revenue and Adjusted OIBDA 23 on a constant-currency basis should be considered in addition to, not as a substitute for, revenue and Adjusted OIBDA reported in accordance with U.S. GAAP. Revenue and Adjusted OIBDA on a constant-currency basis, as we present it, may not be comparable to similarly titled measures used by other companies and are not a measure of performance presented in accordance with U.S. GAAP. BUSINESS OVERVIEW We are one of the world’s leading music entertainment companies. Our renowned family of iconic record labels, including Atlantic Records, Warner Records, Elektra Records and Parlophone Records, is home to many of the world’s most popular and influential recording artists. In addition, Warner Chappell Music, our global music publishing business, boasts an extraordinary catalog that includes timeless standards and contemporary hits, representing works by over 190,000 songwriters and composers, with a global collection of more than one and a half million musical compositions. We classify our business interests into two fundamental operations: Recorded Music and Music Publishing. A brief description of each of those operations is presented below. Components of Our Operating Results Recorded Music Operations 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. Our Recorded Music business also includes Rhino Entertainment, a division that specializes in marketing our recorded music catalog through compilations, reissuances of previously released music and video titles and releasing previously unreleased material from our vault. We also conduct our Recorded Music business through a collection of additional record labels including Asylum, Big Beat, Canvasback, East West, Erato, FFRR, Nonesuch, Parlophone, Reprise, Sire, Spinnin’ Records, TenThousand Projects, Warner Classics and Warner Records Nashville. Outside the United States, our Recorded Music business is conducted through various subsidiaries, affiliates and non-affiliated licensees. Internationally, we engage in the same activities as in the United States: discovering and signing artists and distributing, selling, marketing and promoting their music. In most cases, we also market, promote, distribute and sell the music of those recording artists for whom our domestic record labels have international rights. In certain smaller markets, we license the right to distribute and sell our music to non-affiliated third-party record labels. Our Recorded Music business’s operations include WMX, a next generation services division that connects artists with fans and amplifies brands in creative, immersive, and engaging ways. This division includes a rebranded WEA commercial services and marketing network (formerly Warner-Elektra-Atlantic Corporation, or WEA Corp.), which markets, distributes and sells music and video products to retailers and wholesale distributors, and enhances relationships with fans by creating artist merchandise, which we operate, market and sell across various channels, including e-commerce and retail. and through touring. Our business’s distribution operations also include Alternative Distribution Alliance (“ADA”), which markets, distributes and sells the products of independent labels to retail and wholesale distributors; and various distribution centers and ventures operated internationally. In addition to our music being sold in physical retail outlets, our music is also sold in physical form to online physical retailers, such as amazon.com, barnesandnoble.com and bestbuy.com, and distributed in digital form to an expanded universe of digital partners, including streaming services such as those of Amazon, Apple, Deezer, SoundCloud, Spotify, Tencent Music and YouTube, radio services such as iHeart Radio and SiriusXM and other download services. We have integrated the marketing of digital content into all aspects of our business, including artists and repertoire (“A&R”) and distribution. Our business development executives work closely with A&R departments to ensure that while music is being produced, digital assets are also created with all distribution channels in mind, including streaming services, social networking sites, online portals and music-centered destinations. We also work side-by-side with our online and mobile partners to test new concepts. We believe existing and new digital businesses will be a significant source of growth and will provide new opportunities to successfully monetize our assets and create new revenue streams. The proportion of digital revenues attributable to each distribution channel varies by region and proportions may change as the introduction of new technologies continues. As one of the world’s largest music entertainment companies, we believe we are well positioned to take advantage of growth in digital distribution and emerging technologies to maximize the value of our assets. We have diversified our revenues beyond our traditional businesses by entering into expanded-rights deals with recording artists in order to partner with such artists in other aspects of their careers. Under these agreements, we provide services to and 24 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, through various subsidiaries, affiliates, and non-affiliated licensees and sub-publishers. We own or control rights to more than two million musical compositions, including numerous pop hits, American standards, folk songs and motion picture and theatrical compositions. Assembled over decades, our award-winning catalog includes over 190,000 songwriters and composers and a diverse range of genres including pop, rock, jazz, classical, country, R&B, hip-hop, rap, reggae, Latin, folk, blues, symphonic, soul, Broadway, electronic, alternative and gospel. Warner Chappell Music also administers the music and soundtracks of several third-party television and film producers and studios. We have an extensive production music catalog collectively branded as Warner Chappell Production Music. Music Publishing revenues are derived from five main sources: • Digital : the rightsholder receives revenues with respect to musical compositions embodied in recordings distributed in streaming services, download services, digital performance and other digital music services; • Performance : the rightsholder receives revenues if the musical composition is performed publicly through broadcast of music on television, radio and cable and in retail locations (e.g., bars and restaurants), live performance at a concert or other venue ( e.g. , arena concerts and nightclubs), and performance of music in staged theatrical productions; 25 • Mechanical : the rightsholder receives revenues with respect to musical compositions embodied in recordings sold in any physical format or configuration such as vinyl, CDs and DVDs; • Synchronization : the rightsholder receives revenues for the right to use the musical composition in combination with visual images such as in films or television programs, television commercials and video games as well as from other uses such as in toys or novelty items and merchandise; and • Other : the rightsholder receives revenues for use in sheet music and other uses. The principal costs associated with our Music Publishing business are as follows: • A&R costs : the costs associated with (i) paying royalties to songwriters, co-publishers and other copyright holders in connection with income generated from the uses of their works and (ii) signing and developing songwriters; and • Selling and marketing, general overhead and other administrative expenses : the costs associated with selling and marketing, general overhead and other administrative expenses. Recent Events and Factors Affecting Results of Operations and Comparability 2025 Restructuring Plan On July 1, 2025, the Company announced a strategic restructuring plan (the “2025 Restructuring Plan”) designed to free up funds to invest in music and to accelerate the Company’s long-term growth. The Company expects the 2025 Restructuring Plan to generate pre-tax cost savings of approximately $300 million on an annualized run-rate basis by the end of the fiscal year 2027 and expects the majority of the cost savings under the 2025 Restructuring Plan to be accretive to Adjusted OIBDA. The 2025 Restructuring Plan is expected to be fully implemented by the end of calendar year 2026. The Company expects to incur total charges of approximately $200 million on a pre-tax basis or approximately $150 million on an after-tax basis. Approximately $170 million of the charges will be for severance payments and other related termination costs and approximately $30 million of certain other charges. The Company anticipates that the Plan will result in cash expenditures of approximately $200 million of which $170 million is expected to be paid by the end of fiscal year 2026. For the three months ended December 31, 2025, total severance and other termination costs recorded in connection with the 2025 Strategic Restructuring Plan were $25 million, of which $13 million of expense was recognized in our Recorded Music segment and $12 million was recognized in Corporate. As of December 31, 2025, total cumulative restructuring and impairment charges recognized in connection with the 2025 Strategic Restructuring Plan were $143 million with $93 million of costs recognized in our Recorded Music segment, $5 million of costs recognized in our Music Publishing segment, and $45 million recognized at Corporate. These costs are composed of $115 million of severance costs and $28 million of non-cash impairment charges primarily related to impairments of operating lease right-of-use assets that are no longer in use and royalty advances based on operational changes in the intended use of these assets. 2024 Strategic Restructuring Plan In 2024, the Company announced a strategic restructuring plan (the “2024 Strategic Restructuring Plan”) designed to free up additional funds to invest in music and accelerate the Company’s growth for the next decade. The 2024 Strategic Restructuring Plan is complete and the remaining associated cash payments are expected to be made by the end of fiscal year 2026. 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 allocated a majority of the costs savings to increase investment in the Company’s core Recorded Music and Music Publishing businesses, new skill sets and tech capabilities. As of September 30, 2025, total cumulative restructuring and impairment charges recognized in connection with the 2024 Strategic Restructuring Plan were $216 million with $206 million of costs recognized in our Recorded Music segment and $10 million recognized at Corporate. These costs are composed of $134 million of severance and other contract termination costs, of which $7 million was non-cash, and $82 million of non-cash impairment charges. There were no restructuring costs recognized for the three months ended December 31, 2025 related to the 2024 Strategic Restructuring Plan. 26 Other Impairments For the three months ended December 31, 2025, the Company recognized an impairment charge of $9 million within the Recorded Music segment for long-lived assets associated with EMP, which was the result of remeasuring the carrying value to fair value as it has been classified as held for sale since September 30, 2025. BMG Termination In September 2023, the Company terminated its distribution agreement with BMG as BMG began to bring digital distribution in-house and license directly with digital service partners in fiscal 2024 while also licensing its physical distribution with a different provider (the “BMG Termination”). Alternative Distribution Alliance (“ADA”), which is part of our Recorded Music business, had previously been distributing BMG’s recorded music catalog and revenues are reported within our Recorded Music segment. The shift to digital direct deals by BMG was a phased in-sourcing of distribution during the prior fiscal year with BMG rolled off at the end of the prior fiscal year. 27 RESULTS OF OPERATIONS Three Months Ended December 31, 2025 Compared with Three Months Ended December 31, 2024 Consolidated Results Revenues Our revenues were composed of the following amounts (in millions): For the Three Months Ended December 31, 2025 vs. 2024 2025 2024 $ Change % Change Revenue by Type Digital $ 976 $ 873 $ 103 12 % Physical 152 166 (14) -8 % Total digital and physical 1,128 1,039 89 9 % Artist services and expanded-rights 231 196 35 18 % Licensing 121 110 11 10 % Total Recorded Music 1,480 1,345 135 10 % Performance 64 56 8 14 % Digital 215 207 8 4 % Mechanical 18 14 4 29 % Synchronization 60 39 21 54 % Other 5 7 (2) -29 % Total Music Publishing 362 323 39 12 % Intersegment eliminations (2) (2) — — % Total revenues $ 1,840 $ 1,666 $ 174 10 % Revenue by Geographical Location U.S. Recorded Music $ 577 $ 532 $ 45 8 % U.S. Music Publishing 190 173 17 10 % Total U.S. 767 705 62 9 % International Recorded Music 903 813 90 11 % International Music Publishing 172 150 22 15 % Total international 1,075 963 112 12 % Intersegment eliminations (2) (2) — — % Total revenues $ 1,840 $ 1,666 $ 174 10 % Total Revenues Total revenues increased by $174 million, or 10%, to $1,840 million for the three months ended December 31, 2025 from $1,666 million for the three months ended December 31, 2024. Revenue growth was impacted by a digital revenue settlement of $12 million in the quarter and a $7 million downward revenue true-up in the prior-year quarter (the “DSP True-Up and Settlement Payments”). Recorded Music revenue growth was also unfavorably impacted by the BMG Termination, which resulted in $6 million less Recorded Music digital revenue compared to the prior-year quarter. Music Publishing revenue was impacted by $17 million of revenue in the prior-year quarter recognized in connection with historical matched royalties that were processed to date by the Mechanical Licensing Collective (the “MLC Historical Matched Royalties”). Adjusted for these items, total revenues increased by $178 million, or 11%, which includes $52 million of favorable currency exchange fluctuations. Prior to intersegment eliminations, Recorded Music and Music Publishing revenues represented 80% and 20% of total revenue for the three months ended December 31, 2025, respectively, and 81% and 19% of total revenue for the three months ended December 31, 2024, respectively. Prior to intersegment eliminations, U.S. and international revenues represented 42% and 58% of total revenues for each of the three months ended December 31, 2025 and December 31, 2024. 28 Total digital revenues after intersegment eliminations increased by $108 million, or 10%, to $1,190 million for the three months ended December 31, 2025 from $1,082 million for the three months ended December 31, 2024. Total streaming revenue increased by $113 million, driven by growth in Recorded Music and Music Publishing. Total streaming revenue includes $30 million of favorable currency exchange fluctuations. Prior to intersegment eliminations, total digital revenues for the three months ended December 31, 2025 were composed of U.S. revenues of $534 million and international revenues of $657 million, or 45% and 55% of total digital revenues, respectively. Prior to intersegment eliminations, total digital revenues for the three months ended December 31, 2024 were composed of U.S. revenues of $508 million and international revenues of $572 million, or 47% and 53% of total digital revenues, respectively. Recorded Music revenues increased by $135 million, or 10%, to $1,480 million for the three months ended December 31, 2025 from $1,345 million for the three months ended December 31, 2024. The increase includes $43 million of favorable currency exchange fluctuations. U.S. Recorded Music revenues were $577 million and $532 million, or 39% and 40% of consolidated Recorded Music revenues for each of the three months ended December 31, 2025 and December 31, 2024, respectively. International Recorded Music revenues were $903 million and $813 million, or 61% and 60%, of consolidated Recorded Music revenues for each of the three months ended December 31, 2025 and December 31, 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 $103 million, or 12%, which includes a favorable impact of currency exchange fluctuations of $26 million, primarily due to growth in streaming revenue as a result of the continued growth in streaming services, including growth in subscription and ad-supported revenues. Revenue from streaming services increased by $106 million, or 12%, to $960 million for the three months ended December 31, 2025 from $854 million for the three months ended December 31, 2024. Adjusted for the impacts of the DSP True-Up and Settlement Payments in the current and prior-year quarters and the BMG Termination in the prior-year quarter, Recorded Music streaming revenue increased $93 million, or 11%, to $948 million for the three months ended December 31, 2025 from $855 million for the three months ended December 31, 2024. Download and other digital revenues decreased by $3 million, or 16%, to $16 million for the three months ended December 31, 2025 from $19 million for the three months ended December 31, 2024. Artist services and expanded-rights revenue increased by $35 million, or 18%, due to higher concert promotion revenue primarily in France, and a favorable impact of foreign currency exchange rates of $9 million. Licensing revenue increased by $11 million, or 10%, driven by higher licensing activity, a $2 million increase in copyright infringement settlements in the quarter, and a favorable impact of foreign currency exchange rates of $3 million. Physical revenue, which includes a favorable impact of foreign currency exchange rates of $5 million, decreased by $14 million, or 8%, primarily driven by strong releases in Japan and Korea in the prior-year quarter. Top sellers in the quarter included Alex Warren, sombr, Cardi B, Ed Sheeran, and Teddy Swims. Music Publishing revenues increased by $39 million, or 12%, to $362 million for the three months ended December 31, 2025 from $323 million for the three months ended December 31, 2024. U.S. Music Publishing revenues were $190 million and $173 million, or 52% and 54% of consolidated Music Publishing revenues, for the three months ended December 31, 2025 and December 31, 2024, respectively. International Music Publishing revenues were $172 million and $150 million, or 48% and 46% of consolidated Music Publishing revenues, for the three months ended December 31, 2025 and December 31, 2024, respectively. The overall increase in Music Publishing revenue was driven by increases in digital, synchronization, performance, and mechanical revenues. Digital revenue increased by $8 million, or 4%, driven by an increase in streaming revenue. Revenue from streaming services grew by $7 million, or 3%, to $212 million for the three months ended December 31, 2025 from $205 million for the three months ended December 31, 2024, driven by the impact of new deals and renewals and a favorable impact of foreign currency exchange rates of $4 million, partially offset by the $17 million impact of the MLC Historical Matched Royalties in the prior-year quarter. Adjusted for this item, Music Publishing streaming revenue increased $24 million, or 13%, to $212 million for the three months ended December 31, 2025 from $188 million for the three months ended December 31, 2024. Synchronization revenue increased by $21 million, or 54%, attributable to higher television and commercial licensing activity, a $3 million increase in copyright infringement settlements in the quarter, and the $3 million impact of our acquisition of Tempo Music. Performance revenue increased by $8 million, or 14%, driven by growth from concerts, radio and live events, and a favorable impact of foreign currency exchange rates of $2 million. Mechanical revenue increased by $4 million, or 29%, driven by the timing of distributions and includes a favorable impact of foreign currency exchange rates of $1 million. 29 Revenue by Geographical Location U.S. revenue increased by $62 million, or 9%, to $767 million for the three months ended December 31, 2025 from $705 million for the three months ended December 31, 2024. U.S. Recorded Music revenue increased by $45 million, or 8%. U.S. Recorded Music digital revenue increased by $36 million, or 9%, driven by higher streaming revenue of $36 million, or 10%, including the impacts of the DSP True-Up and Settlement Payments in the current and prior-year quarters, and the BMG Termination in the prior-year quarter. U.S. Recorded Music licensing revenue increased by $7 million, or 20%, driven by higher copyright infringement settlements. U.S. Recorded Music physical revenue increased $2 million, or 3%, driven by strong releases in the quarter and carryover success. US. Recorded Music artist services and expanded-rights revenues remained constant for the three months ended December 31, 2025 compared to the three months ended December 31, 2024. U.S. Music Publishing revenue increased by $17 million, or 10%, to $190 million for the three months ended December 31, 2025 from $173 million for the three months ended December 31, 2024. U.S. Music Publishing digital revenue decreased by $10 million, or 8%, attributable to lower streaming revenue of $10 million, or 8%, which includes the impact of the MLC Historical Matched Royalties in the prior-year quarter. U.S. Music Publishing synchronization revenue increased by $21 million, or 95%, driven by timing of certain copyright infringement settlements, higher television and commercial licensing activity and the impact of acquisitions. U.S. Music Publishing performance increased by $4 million, or 21%, due to radio activity, and mechanical revenue increased by $2 million driven by the timing of distributions. International revenue increased by $112 million, or 12%, to $1,075 million for the three months ended December 31, 2025 from $963 million for the three months ended December 31, 2024. Excluding the favorable impact of foreign currency exchange rates of $51 million, International revenue increased by $61 million, or 6%. International Recorded Music revenue increased by $90 million, which includes a favorable impact of foreign currency exchange rates of $43 million, driven by growth across digital, artist services and expanded rights and licensing revenues, partially offset by a decrease in physical revenue. International Recorded Music digital revenue increased by $67 million, attributable to higher streaming revenue of $70 million, or 14%, which includes the impacts of the DSP True-Up and Settlement Payments in the current and prior-year quarters, and the BMG Termination in the prior-year quarter, and reflects a favorable impact of foreign currency exchange rates of $26 million. International Recorded Music artist services and expanded-rights revenue increased by $35 million, or 24%, driven by higher concert promotion revenue primarily in France, and the favorable impact of foreign currency exchange rates of $9 million. International Recorded Music licensing revenue increased by $4 million, or 5%, primarily driven by favorable movements in foreign currency exchange rates of $3 million. These increases were partially offset by a decrease in physical revenue of $16 million driven by strong releases in Japan and Korea in the prior-year quarter, partially offset by the favorable impact of foreign currency exchange rates of $5 million. International Music Publishing revenue increased by $22 million, or 15%, to $172 million for the three months ended December 31, 2025 from $150 million for the three months ended December 31, 2024. International Music Publishing revenue growth was driven by increases in digital revenue of $18 million due to growth in streaming, performance revenue of $4 million due to growth from concerts and live events primarily in Europe, and mechanical revenue of $2 million driven by the timing of distributions. Synchronization revenue remained constant for the three months ended December 31, 2025 compared to the three months ended December 31, 2024. Cost of revenues Our cost of revenues was composed of the following amounts (in millions): For the Three Months Ended December 31, 2025 vs. 2024 2025 2024 $ Change % Change Artist and repertoire costs $ 644 $ 574 $ 70 12 % Product costs 343 320 23 7 % Total cost of revenues $ 987 $ 894 $ 93 10 % Artist and repertoire costs increased by $70 million, to $644 million for the three months ended December 31, 2025 from $574 million for the three months ended December 31, 2024. Artist and repertoire costs as a percentage of revenue increased to 35% for the three months ended December 31, 2025 from 34% for the three months ended December 31, 2024, primarily due to revenue mix. Product costs increased by $23 million, to $343 million for the three months ended December 31, 2025 from $320 million for the three months ended December 31, 2024. Product costs as a percentage of revenue remained constant at 19% for each of the three months ended December 31, 2025 and December 31, 2024. 30 Selling, general and administrative expenses Our selling, general and administrative expenses were composed of the following amounts (in millions): For the Three Months Ended December 31, 2025 vs. 2024 2025 2024 $ Change % Change General and administrative expense (1) $ 272 $ 284 $ (12) -4 % Selling and marketing expense 155 158 (3) -2 % Distribution expense 31 32 (1) -3 % Total selling, general and administrative expense $ 458 $ 474 $ (16) -3 % ______________________________________ (1) Includes depreciation expense of $31 million and $29 million for the three months ended December 31, 2025 and December 31, 2024, respectively. Total selling, general and administrative expense decreased by $16 million, to $458 million for the three months ended December 31, 2025 from $474 million for the three months ended December 31, 2024. Expressed as a percentage of revenue, total selling, general and administrative expense decreased to 25% for the three months ended December 31, 2025 from 28% for the three months ended December 31, 2024 due to the factors noted below. General and administrative expense decreased by $12 million to $272 million for the three months ended December 31, 2025 from $284 million for the three months ended December 31, 2024. The decrease in general and administrative expense was primarily driven by cost savings from the Company’s restructuring plans, of which a portion has been reinvested in the Company’s business, partially offset by higher depreciation expense of $2 million due to the core financials component of our new technology platform being placed into service, and the impact of acquisitions of $2 million. Expressed as a percentage of revenue, general and administrative expense decreased to 15% for the three months ended December 31, 2025 compared to 17% for the three months ended December 31, 2024. Selling and marketing expense decreased by $3 million, or 2%, to $155 million for the three months ended December 31, 2025 from $158 million for the three months ended December 31, 2024. Expressed as a percentage of revenue, selling and marketing expense decreased to 8% for the three months ended December 31, 2025 from 9% for the three months ended December 31, 2024 due to savings from the Company’s restructuring plans, of which a portion has been reinvested in the Company’s business. Distribution expense decreased by $1 million to $31 million for the three months ended December 31, 2025 from $32 million for the three months ended December 31, 2024. Expressed as a percentage of revenue, distribution expense remained constant at 2% for each of the three months ended December 31, 2025 and December 31, 2024. 31 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 December 31, 2025 vs. 2024 2025 2024 $ Change % Change Net income attributable to Warner Music Group Corp. $ 176 $ 236 $ (60) (25) % Income attributable to noncontrolling interest (1) 5 (6) — % Net income 175 241 (66) (27) % Income tax expense 71 89 (18) (20) % Net income before income taxes 246 330 (84) (25) % Other income (3) (153) 150 (98) % Interest expense, net 45 37 8 22 % Operating income 288 214 74 35 % Amortization expense 68 57 11 19 % Depreciation expense 31 29 2 7 % Restructuring and impairments 34 27 7 26 % Transformation initiative costs 17 17 — — % Net loss on divestitures 5 — 5 — % Non-cash stock-based compensation and other related costs 20 19 1 5 % Adjusted OIBDA $ 463 $ 363 $ 100 28 % Adjusted OIBDA Adjusted OIBDA increased by $100 million to $463 million for the three months ended December 31, 2025 from $363 million for the three months ended December 31, 2024, driven by the impact of the DSP True-Up and Settlement Payments of $7 million in the quarter and $4 million in the prior-year quarter, and the MLC Historical Matched Royalties of $4 million in the prior-year quarter, as well as revenue mix, savings from the Company’s restructuring plans, a portion of which has been reinvested in the Company’s business, and favorable movements in currency exchange rates of approximately $25 million compared to the prior-year quarter. Expressed as a percentage of total revenue, Adjusted OIBDA margin increased to 25% for the three months ended December 31, 2025 from 22% for the three months ended December 31, 2024. Non-cash stock-based compensation and other related costs Our non-cash stock-based compensation and other related costs increased by $1 million to $20 million for the three months ended December 31, 2025 from $19 million for the three months ended December 31, 2024. Net loss on divestitures Net loss on divestitures during the three months ended December 31, 2025 includes a pre-tax loss of $5 million in connection with the divestiture of certain assets. There was no net loss on divestitures during the three months ended December 31, 2024. Transformation initiative costs Our transformation initiative costs, which include costs associated with our finance transformation, remained constant at $17 million for each of the three months ended December 31, 2025 and December 31, 2024. Restructuring and Impairments Our restructuring and impairment charges increased to $34 million for the three months ended December 31, 2025 from $27 million for the three months ended December 31, 2024. The three months ended December 31, 2025 includes an impairment charge of 32 $9 million for long-lived assets associated with EMP, which was the result of remeasuring the carrying value to fair value as it has been classified as held for sale since September 30, 2025. Depreciation expense Our depreciation expense increased by $2 million to $31 million for the three months ended December 31, 2025 from $29 million for the three months ended December 31, 2024. The increase is primarily driven by the core financials and global revenue solution components of our new technology platform being placed into service. Amortization expense Our amortization expense increased by $11 million, to $68 million for the three months ended December 31, 2025 from $57 million for the three months ended December 31, 2024. The increase is driven by incremental amortization related to acquisitions of music-related assets, partially offset by EMP intangible assets, which have been classified as held for sale. Operating income Our operating income increased by $74 million to $288 million for the three months ended December 31, 2025 from $214 million for the three months ended December 31, 2024, primarily due to the factors impacting Adjusted OIBDA described above. The increase in operating income was partially offset by higher amortization expenses of $11 million, an increase in restructuring and impairment charges of $7 million, and the impact of a $5 million net loss on divestitures for the three months ended December 31, 2025 compared to the three months ended December 31, 2024. Interest expense, net Our interest expense, net, increased to $45 million for the three months ended December 31, 2025 from $37 million for the three months ended December 31, 2024 due to incremental debt related to the Tempo Asset-Based Notes acquired in connection with the acquisition of Tempo Music in the prior year, partially offset by lower interest rates on variable rate debt in the quarter. Other income Other income for the three months ended December 31, 2025 primarily includes income earned on equity method investments of $2 million and a currency exchange gain on our intercompany loans of $1 million, partially offset by a foreign currency loss on our Euro-denominated debt of $1 million, and a realized and unrealized loss on hedging activity of $1 million. This compares to foreign currency gains on our Euro-denominated debt of $61 million, currency exchange gains on our intercompany loans of $46 million, and realized and unrealized gains on hedging activity of $15 million for the three months ended December 31, 2024. Income tax expense Our income tax expense decreased by $18 million to $71 million for the three months ended December 31, 2025 from $89 million for the three months ended December 31, 2024. The decrease of $18 million in income tax expense is primarily due to a decrease in pre-tax income in the quarter. Net income Net income decreased by $66 million to $175 million for the three months ended December 31, 2025 from $241 million for the three months ended December 31, 2024 as a result of the factors described above. Noncontrolling interest There was a loss attributable to noncontrolling interest of $1 million during the three months ended December 31, 2025 compared to income of $5 million for the three months ended December 31, 2024. 33 Business Segment Results Revenues, operating income (loss) and Adjusted OIBDA by business segment were as follows (in millions): For the Three Months Ended December 31, 2025 vs. 2024 2025 2024 $ Change % Change Recorded Music Revenues $ 1,480 $ 1,345 $ 135 10 % Operating income 329 238 91 38 % Adjusted OIBDA 403 323 80 25 % Music Publishing Revenues 362 323 39 12 % Operating income 65 55 10 18 % Adjusted OIBDA 102 83 19 23 % Corporate expenses and eliminations Revenue eliminations (2) (2) — — % Operating loss (106) (79) (27) 34 % Adjusted OIBDA loss (42) (43) 1 -2 % Total Revenues 1,840 1,666 174 10 % Operating income 288 214 74 35 % Adjusted OIBDA 463 363 100 28 % Recorded Music Revenues Recorded Music revenue increased by $135 million, or 10%, to $1,480 million for the three months ended December 31, 2025 from $1,345 million for the three months ended December 31, 2024. U.S. Recorded Music revenues were $577 million and $532 million, or 39% and 40% of consolidated Recorded Music revenues, for the three months ended December 31, 2025 and December 31, 2024, respectively. International Recorded Music revenues were $903 million and $813 million, or 61% and 60% of consolidated Recorded Music revenues, for the three months ended December 31, 2025 and December 31, 2024, respectively. 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 December 31, 2025 vs. 2024 2025 2024 $ Change % Change Artist and repertoire costs $ 417 $ 366 $ 51 14 % Product costs 343 320 23 7 % Total cost of revenues $ 760 $ 686 $ 74 11 % Recorded Music cost of revenues increased by $74 million, to $760 million for the three months ended December 31, 2025 from $686 million for the three months ended December 31, 2024. Expressed as a percentage of Recorded Music revenue, Recorded Music artist and repertoire costs increased to 28% for the three months ended December 31, 2025 from 27% for the three months ended December 31, 2024 primarily due to revenue mix. Expressed as a percentage of Recorded Music revenue, Recorded Music product costs decreased to 23% for the three months ended December 31, 2025 from 24% for the three months ended December 31, 2024, driven by revenue and deal mix. 34 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 December 31, 2025 vs. 2024 2025 2024 $ Change % Change General and administrative expense (1) $ 154 $ 180 $ (26) -14 % Selling and marketing expense 150 151 (1) -1 % Distribution expense 31 32 (1) -3 % Total selling, general and administrative expense $ 335 $ 363 $ (28) -8 % ______________________________________ (1) Includes depreciation expense of $12 million and $15 million for the three months ended December 31, 2025 and December 31, 2024, respectively. Recorded Music selling, general and administrative expense decreased by $28 million, to $335 million for the three months ended December 31, 2025 from $363 million for the three months ended December 31, 2024. The decrease in general and administrative expense was largely driven by cost savings from the Company’s restructuring plans, a portion of which has been reinvested into the Company’s business. The decrease in selling and marketing expense was also driven by savings from the Company’s restructuring plans, as well as lower variable marketing spend. 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 23% for the three months ended December 31, 2025 from 27% for the three months ended December 31, 2024. Operating Income and Adjusted OIBDA Recorded Music operating income increased by $91 million to $329 million for the three months ended December 31, 2025 from $238 million for the three months ended December 31, 2024. In addition to the factors impacting Adjusted OIBDA described below, the increase in operating income was driven by decreases in restructuring and impairment charges of $6 million and depreciation expense of $3 million compared to the prior-year quarter, partially offset by higher amortization expenses of $4 million related to acquisitions of music-related assets. Recorded Music Adjusted OIBDA increased by $80 million to $403 million for the three months ended December 31, 2025 from $323 million for the three months ended December 31, 2024, largely driven by the impact of the DSP True-Up and Settlement Payments of $7 million in the quarter and $4 million in the prior-year quarter, as well as savings from the Company’s restructuring plans, of which a portion has been reinvested in the Company’s business, and favorable movements in foreign currency exchange rates of approximately $18 million. Expressed as a percentage of Recorded Music revenue, Recorded Music Adjusted OIBDA margin increased to 27% for the three months ended December 31, 2025 from 24% for the three months ended December 31, 2024 due to the factors noted above. Music Publishing Revenues Music Publishing revenues increased by $39 million, or 12%, to $362 million for the three months ended December 31, 2025 from $323 million for the three months ended December 31, 2024. U.S. Music Publishing revenues were $190 million and $173 million, or 52% and 54% of consolidated Music Publishing revenues, for the three months ended December 31, 2025 and December 31, 2024, respectively. International Music Publishing revenues were $172 million and $150 million, or 48% and 46% of consolidated Music Publishing revenues, for the three months ended December 31, 2025 and December 31, 2024, respectively. The overall increase in Music Publishing revenue was driven by growth in digital, synchronization, performance, and mechanical revenues, as described in the “Total Revenues” and “Revenue by Geographical Location” sections above. 35 Cost of revenues Music Publishing cost of revenues were composed of the following amounts (in millions): For the Three Months Ended December 31, 2025 vs. 2024 2025 2024 $ Change % Change Artist and repertoire costs $ 228 $ 210 $ 18 9 % Total cost of revenues $ 228 $ 210 $ 18 9 % Music Publishing cost of revenues increased by $18 million, or 9%, to $228 million for the three months ended December 31, 2025 from $210 million for the three months ended December 31, 2024. Expressed as a percentage of Music Publishing revenue, Music Publishing cost of revenues decreased to 63% for the three months ended December 31, 2025 from 65% for the three months ended December 31, 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 December 31, 2025 vs. 2024 2025 2024 $ Change % Change General and administrative expense (1) $ 34 $ 31 $ 3 10 % Selling and marketing expense 1 1 — — % Total selling, general and administrative expense $ 35 $ 32 $ 3 9 % ______________________________________ (1) Includes depreciation expense of $1 million for each of the three months ended December 31, 2025 and December 31, 2024. Music Publishing selling, general and administrative expense increased by $3 million, or 9%, to $35 million for the three months ended December 31, 2025 from $32 million for the three months ended December 31, 2024, which includes the impact of our acquisition of Tempo Music in the prior year. Expressed as a percentage of Music Publishing revenue, Music Publishing selling, general and administrative expense remained constant at 10% for each of the three months ended December 31, 2025 and December 31, 2024. Operating Income and Adjusted OIBDA Music Publishing operating income increased by $10 million to $65 million for the three months ended December 31, 2025 from $55 million for the three months ended December 31, 2024, driven by the same factors affecting Adjusted OIBDA discussed below, partially offset by an increase in amortization expense of $8 million related to the impact of acquisitions for the three months ended December 31, 2025 compared to the three months ended December 31, 2024. Music Publishing Adjusted OIBDA increased by $19 million, or 23%, to $102 million for the three months ended December 31, 2025 from $83 million for the three months ended December 31, 2024, primarily driven by revenue mix, the $4 million impact of the MLC Historical Matched Royalties in the prior-year quarter, and favorable movements in foreign exchange rates of approximately $7 million. Expressed as a percentage of Music Publishing revenue, Music Publishing Adjusted OIBDA margin increased to 28% for the three months ended December 31, 2025 from 26% for the three months ended December 31, 2024. Corporate Expenses and Eliminations Our operating loss from corporate expenses and eliminations increased by $27 million for the three months ended December 31, 2025 to $106 million from $79 million for the three months ended December 31, 2024, driven by an increase in restructuring and impairment costs of $13 million, an increase in non-cash stock-based compensation and other related expenses of $6 million, higher depreciation expense of $5 million driven by the core financials and global revenue solution components of our new technology platform being placed into service, and a net loss on divestitures of $5 million in the quarter. Our Adjusted OIBDA loss from corporate expenses and eliminations decreased by $1 million to $42 million for the three months ended December 31, 2025 from $43 million for the three months ended December 31, 2024, primarily due to the factors discussed above, as well as savings from the Company’s restructuring plans, of which a portion has been reinvested into the Company’s business. 36 FINANCIAL CONDITION AND LIQUIDITY Financial Condition at December 31, 2025 At December 31, 2025, we had $4.371 billion of debt (which is net of $35 million of premiums, discounts and deferred financing costs), $751 million of cash and equivalents (net debt of $3.620 billion, defined as total debt, less cash and equivalents and premiums, discounts and deferred financing costs) and $720 million of Warner Music Group Corp. equity. This compares to $4.365 billion of debt (which is net of $36 million of premiums, discounts and deferred financing costs), $532 million of cash and equivalents (net debt of $3.833 billion) and $647 million of Warner Music Group Corp. equity at September 30, 2025. Cash Flows The following table summarizes our historical cash flows (in millions). The financial data for the three months ended December 31, 2025 and December 31, 2024 are unaudited and have been derived from our condensed consolidated interim financial statements included elsewhere herein. Three Months Ended December 31, 2025 2024 Cash provided by (used in): Operating activities $ 440 $ 332 Investing activities (52) (81) Financing activities (159) (127) Operating Activities Cash provided by operating activities was $440 million for the three months ended December 31, 2025 as compared with cash provided by operating activities of $332 million for the three months ended December 31, 2024. The $108 million increase in cash provided by operating activities was largely a result of operating performance. Investing Activities Cash used in investing activities was $52 million for the three months ended December 31, 2025 as compared with cash used in investing activities of $81 million for the three months ended December 31, 2024. The $52 million of cash used in investing activities in the three months ended December 31, 2025 consisted of $12 million relating to investments and acquisitions of businesses, $30 million to acquire music-related assets and $20 million relating to capital expenditures, partially offset by $10 million of proceeds from net divestitures. The $81 million of cash used in investing activities in the three months ended December 31, 2024 consisted of $40 million relating to investments and acquisitions of businesses, $41 million to acquire music-related assets, and $36 million relating to capital expenditures, partially offset by $36 million of proceeds from the sale of investments. Financing Activities Cash used in financing activities was $159 million for the three months ended December 31, 2025 as compared with cash used in financing activities of $127 million for the three months ended December 31, 2024. The $159 million of cash used in financing activities for the three months ended December 31, 2025 consisted of dividends paid of $100 million, payment of deferred consideration of $25 million, distributions to noncontrolling interest holders of $4 million, taxes paid related to net share settlement of restricted stock units and common stock of $5 million, common stock repurchased and retired of $26 million, deferred financing costs paid of $8 million, partially offset by proceeds from the Beethoven Credit Agreement of $4 million and contributions from redeemable noncontrolling interest holder of $5 million. The $127 million of cash used in financing activities for the three months ended December 31, 2024 consisted of dividends paid of $94 million, payment of deferred consideration of $17 million, distributions to noncontrolling interest holders of $7 million, taxes paid related to net share settlement of restricted stock units and common stock of $2 million, common stock repurchased and retired of $2 million and other financing activity of $5 million. Liquidity Our primary sources of liquidity are the cash flows generated from our subsidiaries’ operations, available cash and equivalents and funds available for drawing under our Revolving Credit Facility. These sources of liquidity are needed to fund our debt service requirements, working capital requirements, capital expenditure requirements, strategic acquisitions and investments, and dividends, prepayments of debt, repurchases or retirement of our outstanding debt or notes or repurchases of our outstanding equity securities in open market purchases, privately negotiated purchases or otherwise, we may elect to pay or make in the future. We maintain our cash in various banks and other financial institutions around the world, and in some cases those cash deposits are in 37 excess of FDIC or other deposit insurance. In the event of a bank failure or receivership, we may not have access to those cash deposits in excess of the relevant deposit insurance, which could have an adverse effect on our liquidity and financial performance. We believe that our primary sources of liquidity will be sufficient to support our existing operations over the next twelve months. Debt Capital Structure Since Access acquired us in 2011, we have sought to extend the maturity dates on our outstanding indebtedness, reduce interest expense and improve our debt ratings. For example, our S&P corporate credit rating improved from B in 2017 to BBB- in August 2024 with a stable outlook, and our Moody’s corporate family rating improved from B1 in 2016 to Ba1 in March 2025. In September 2025, Fitch assigned us a BBB- long-term credit rating with a stable outlook. In addition, our weighted-average interest rate on our outstanding indebtedness has decreased from 10.5% in 2011 to 4.0% as of December 31, 2025. Our nearest-term maturity date is in 2028. Subject to market conditions, we continue to take opportunistic steps to extend our maturity dates, reduce related interest expense and make other changes. From time to time, we may incur additional indebtedness for, among other things, working capital, repurchasing, redeeming or tendering for existing indebtedness and acquisitions or other strategic transactions. Repurchase Program On November 14, 2024, the Company’s board of directors authorized a new $100 million share repurchase program (the “Share Repurchase Program”), which is intended to offset dilution from the Omnibus Incentive Plan. The $100 million share repurchase authorization does not obligate the Company to purchase any shares and the Share Repurchase Program does not have a fixed expiration date. The Company repurchased and retired 920,000 shares for $26 million during the three months ended December 31, 2025. As of December 31, 2025, approximately $58 million of the $100 million share repurchase authorization remained available. Existing Debt as of December 31, 2025 As of December 31, 2025, our long-term debt was as follows (in millions): Revolving Credit Facility (a) $ — Senior Term Loan Facility due 2031 1,295 2.750% Senior Secured Notes due 2028 382 3.750% Senior Secured Notes due 2029 540 3.875% Senior Secured Notes due 2030 535 2.250% Senior Secured Notes due 2031 522 3.000% Senior Secured Notes due 2031 800 Mortgage Term Loan due 2033 17 Total debt, including the current portion 4,091 Premium less unamortized discount and unamortized deferred financing costs (27) Total Acquisition Corp. long-term debt, including the current portion, net $ 4,064 Beethoven Credit Agreement (b) 4 Tempo Asset-Based Notes due 2050 (c) 311 Unamortized discount (8) Total other long-term debt, including the current portion, net $ 307 Total long-term debt, including the current portion, net $ 4,371 ______________________________________ (a) Reflects $350 million of commitments under the Revolving Credit Facility with no letters of credit outstanding at December 31, 2025. There were no loan outstanding under the Revolving Credit Facility at December 31, 2025. (b) Reflects $500 million of commitments under the Beethoven Credit Agreement. There were $4 million in loans outstanding under the Beethoven Credit Agreement at December 31, 2025. Loans outstanding under the Beethoven Credit Agreement are secured only by certain music rights owned by Beethoven and are nonrecourse to the Company and its subsidiaries, other than Beethoven. (c) The Asset-Based Notes are secured only by certain music rights owned by Tempo Music and are nonrecourse to the Company and its subsidiaries, other than Tempo Music. 38 Pursuant to the Amendment, WMGCo and BainCo have committed to increase their respective initial equity commitment amounts by $100 million each. For further discussion of our debt agreements, see “Liquidity” in the “Financial Condition and Liquidity” section of our Annual Report on Form 10-K for the fiscal year ended September 30, 2025. Dividends The Company’s ability to pay dividends may be restricted by covenants in the credit agreement for the Revolving Credit Facility which are currently suspended but which will be reinstated if Acquisition Corp.’s Total Indebtedness to EBITDA Ratio increases above 3.50:1.00 and the term loans do not achieve an investment grade rating. The Company intends to pay quarterly cash dividends to holders of its Class A Common Stock and Class B Common Stock. The declaration of each dividend will continue to be at the discretion of the Company’s board of directors and will depend on the Company’s financial condition, earnings, liquidity and capital requirements, level of indebtedness, contractual restrictions with respect to payment of dividends, restrictions imposed by Delaware law, general business conditions and any other factors that the Company’s board of directors deems relevant in making such a determination. Therefore, there can be no assurance that the Company will pay any dividends to holders of the Company’s common stock, or as to the amount of any such dividends. On November 7, 2025, the Company’s board of directors declared a cash dividend of $0.19 per share on the Company’s Class A Common Stock and Class B Common Stock, as well as related payments under certain stock-based compensation plans, which was paid to stockholders on December 2, 2025. The Company paid an aggregate of approximately $100 million, or $0.19 per share, in cash dividends to stockholders and participating security holders for the three months ended December 31, 2025. On February 5, 2026, the Company’s board of directors declared a cash dividend of $0.19 per share on the Company’s Class A Common Stock and Class B Common Stock, as well as related payments under certain stock-based compensation plans, payable on March 3, 2026 to stockholders of record as of the close of business on February 18, 2026. Covenant Compliance The Company was in compliance with its covenants under its outstanding notes, the Revolving Credit Facility, Senior Term Loan Facility and the Asset-Based Notes as of December 31, 2025. On January 18, 2019, we delivered a notice to the trustee under the 2012 Secured Indenture and 2014 Unsecured Indenture changing the Fixed GAAP Date, as defined under the indentures, to October 1, 2018. Under the Senior Term Loan Facility, the Revolving Credit Facility and the Secured Notes Indenture, the Fixed GAAP Date is set for April 3, 2020, other than in respect of capital leases, which are frozen at November 1, 2012. The Revolving Credit Facility contains a springing leverage ratio that is tied to a ratio based on EBITDA, which is defined under the Revolving Credit Agreement. Our ability to borrow funds under the Revolving Credit Facility may depend upon our ability to meet the leverage ratio test at the end of a fiscal quarter to the extent we have drawn a certain amount of revolving loans. On May 4, 2021, certain covenants set forth in our Revolving Credit Facility were suspended, including the restriction on incurring certain additional indebtedness, based on the determination that the total indebtedness to EBITDA ratio is below the required threshold specified therein. EBITDA as defined in the Revolving Credit Facility is based on Consolidated Net Income (as defined in the Revolving Credit Facility), both of which terms differ from the terms “EBITDA” and “net income” as they are commonly used. For example, the calculation of EBITDA under the Revolving Credit Facility, in addition to adjusting net income to exclude interest expense, income taxes and depreciation and amortization, also adjusts net income by excluding items or expenses such as, among other items, (1) the amount of any restructuring charges or reserves; (2) any non-cash charges (including any impairment charges); (3) any net loss resulting from hedging currency exchange risks; (4) the amount of management, monitoring, consulting and advisory fees paid to Access; (5) business optimization expenses (including consolidation initiatives, severance costs and other costs relating to initiatives aimed at profitability improvement); (6) transaction expenses; (7) equity-based compensation expense; and (8) certain extraordinary, unusual or non-recurring items. The definition of EBITDA under the Revolving Credit Facility also includes adjustments for the pro forma impact of certain projected cost savings, operating expense reductions and synergies and any quality of earnings analysis prepared by independent certified public accountants in connection with an acquisition, merger, consolidation or other investment. The Senior Term Loan Facility and the Secured Notes Indenture use financial measures called “Consolidated EBITDA” or “EBITDA” and “Consolidated Net Income” that have substantially the same definitions to EBITDA and Consolidated Net Income, each as defined under the Revolving Credit Agreement. 39 EBITDA as defined in the Revolving Credit Facility (referred to in this section as “Adjusted EBITDA”) is presented herein because it is a material component of the leverage ratio contained in the Revolving Credit Agreement. Non-compliance with the leverage ratio could result in the inability to use the Revolving Credit Facility, which could have a material adverse effect on our results of operations, financial position and cash flow. Adjusted EBITDA does not represent net income or cash from operating activities as those terms are defined by U.S. GAAP and does not necessarily indicate whether cash flows will be sufficient to fund cash needs. While Adjusted EBITDA and similar measures are frequently used as measures of operations and the ability to meet debt service requirements, these terms are not necessarily comparable to other similarly titled captions of other companies due to the potential inconsistencies in the method of calculation. Adjusted EBITDA does not reflect the impact of earnings or charges resulting from matters that we may consider not to be indicative of our ongoing operations. In particular, the definition of Adjusted EBITDA in the Revolving Credit Agreement allows us to add back certain non-cash, extraordinary, unusual or non-recurring charges that are deducted in calculating net income. However, these are expenses that may recur, vary greatly and are difficult to predict. Adjusted EBITDA as presented below should not be used by investors as an indicator of performance for any future period. Further, our debt instruments require that it be calculated for the most recent four fiscal quarters. As a result, the measure can be disproportionately affected by a particularly strong or weak quarter. Further, it may not be comparable to the measure for any subsequent four-quarter period or any complete fiscal year. In addition, our debt instruments require that the leverage ratio be calculated on a pro forma basis for certain transactions including acquisitions as if such transactions had occurred on the first date of the measurement period and may include expected cost savings and synergies resulting from or related to any such transaction. There can be no assurances that any such cost savings or synergies will be achieved in full. In addition, Adjusted EBITDA is a key measure used by our management to understand and evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. Some of those limitations include: (1) it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenue for our business; (2) it does not reflect the significant interest expense or cash requirements necessary to service interest or principal payments on our indebtedness; and (3) it does not reflect every cash expenditure, future requirements for capital expenditures or contractual commitments. In particular, this measure adds back certain non-cash, extraordinary, unusual or non-recurring charges that are deducted in calculating net income; however, these are expenses that may recur, vary greatly and are difficult to predict. In addition, Adjusted EBITDA is not the same as net income or cash flow provided by operating activities as those terms are defined by U.S. GAAP and does not necessarily indicate whether cash flows will be sufficient to fund cash needs. Accordingly, Adjusted EBITDA should be considered in addition to, not as a substitute for, net income (loss) and other measures of financial performance reported in accordance with U.S. GAAP. 40 The following is a reconciliation of net income (loss), which is a U.S. GAAP measure of our operating results, to Adjusted EBITDA as defined, for the most recently ended four fiscal quarters, or the twelve months ended December 31, 2025, for the twelve months ended December 31, 2024 and for the three months ended December 31, 2025 and December 31, 2024. In addition, the reconciliation includes the calculation of the Senior Secured Indebtedness to Adjusted EBITDA ratio, which we refer to as the Leverage Ratio, under the Revolving Credit Agreement for the most recently ended four fiscal quarters, or the twelve months ended December 31, 2025. The terms and related calculations are defined in the Revolving Credit Agreement. All amounts in the reconciliation below reflect Acquisition Corp. (in millions, except ratios): Twelve Months Ended December 31, Three Months Ended December 31, 2025 2024 2025 2024 Net Income $ 304 $ 526 $ 175 $ 241 Income tax expense 102 140 71 89 Interest expense, net 170 159 45 37 Depreciation and amortization 389 332 99 86 Net losses (gains) on divestitures and sale of securities 4 (47) 5 (29) Restructuring costs (a) 129 132 25 3 Net foreign exchange losses (gains) (b) 204 (103) 1 (123) Transaction costs 4 7 — — Business optimization expenses (c) 84 104 20 25 Non-cash stock-based compensation expense (d) 61 56 19 12 Other non-cash charges (e) 126 76 10 26 Unrestricted subsidiary (losses) (f) (23) — (7) — Pro forma impact of cost savings initiatives and specified transactions (g) 257 137 39 16 Adjusted EBITDA $ 1,811 $ 1,519 $ 502 $ 383 Senior Secured Indebtedness (f, h) $ 3,314 Leverage Ratio (i) 1.83x ______________________________________ (a) Reflects severance costs and other restructuring related expenses, including those related to the Company’s restructuring plans. (b) Reflects unrealized losses (gains) due to foreign exchange on our Euro-denominated debt, losses (gains) from foreign currency forward exchange contracts and intercompany transactions. (c) Reflects costs associated with our transformation initiatives and technology system updates, which includes costs of $17 million and $67 million related to our finance transformation for the three and twelve months ended December 31, 2025, respectively, as well as $17 million and $74 million for the three and twelve months ended December 31, 2024, respectively. (d) Reflects non-cash stock-based compensation expense related to the Omnibus Incentive Plan. (e) Reflects non-cash activity, including the unrealized losses (gains) on the mark-to-market adjustment of equity investments, investment losses (gains) and non-cash impairment losses resulting from the Company’s restructuring plans as well as an additional impairment charge of $9 million in the quarter for long-lived assets associated with EMP, which was the result of remeasuring the carrying value to fair value as it has been classified as held for sale since September 30, 2025. (f) In connection with the acquisition of Tempo Music, the acquired entity was designated as an unrestricted subsidiary, and therefore net income and Adjusted EBITDA do not include the results of Tempo Music, and the Asset-Based Notes issued by a subsidiary of Tempo Music are not included in our indebtedness for purposes of calculating the Leverage Ratio. Similarly, Beethoven was also designated as an unrestricted subsidiary, and therefore its results are not included in net income and Adjusted EBITDA, and the Beethoven Credit Facility is not included in our indebtedness for purposes of calculating the Leverage Ratio. (g) Reflects expected savings resulting from transformation initiatives, including the 2025 Restructuring Plan, the 2024 Strategic Restructuring Plan, and the 2023 Restructuring Plan, as well as the pro forma impact of certain specified transactions for the three and twelve months ended December 31, 2025. Certain of these cost savings initiatives and transactions impacted quarters prior to the quarter during which they were identified within the last twelve-month period. The pro forma impact of these specified transactions and initiatives resulted in a $65 million increase in the twelve months ended December 31, 2025 Adjusted EBITDA. (h) Reflects the balance of senior secured debt at Acquisition Corp. of approximately $4.064 billion less cash of $750 million, which excludes cash and debt held at Tempo Music and Beethoven, which are unrestricted subsidiaries. (i) Reflects the ratio of Senior Secured Indebtedness, including Revolving Credit Agreement Indebtedness, to Adjusted EBITDA. This is calculated net of cash and equivalents of the Company as of December 31, 2025 not exceeding $750 million 41 in accordance with the Sixth Revolving Credit Agreement Amendment. If the outstanding aggregate principal amount of borrowings and drawings under letters of credit which have not been reimbursed under our Revolving Credit Facility is greater than $140 million at the end of a fiscal quarter, the maximum leverage ratio permitted under the Revolving Credit Facility is 5.00:1.00. The Company’s Revolving Credit Facility does not impose any “leverage ratio” maintenance requirement on the Company when the aggregate principal amount of borrowings and drawings under letters of credit, which have not been reimbursed under the Revolving Credit Facility, is less than or equal to $140 million at the end of a fiscal quarter. On May 4, 2021, certain covenants set forth in our Revolving Credit Facility were suspended, including the restriction on incurring certain additional indebtedness, based on the determination that the total indebtedness to EBITDA ratio is below the required threshold specified therein. Summary Management believes that funds generated from our operations and borrowings under the Revolving Credit Facility and available cash and equivalents will be sufficient to fund our debt service requirements, working capital requirements and capital expenditure requirements for the foreseeable future. We also have additional borrowing capacity under our indentures and the Senior Term Loan Facility. However, our ability to continue to fund these items and to reduce debt may be affected by general economic, financial, competitive, legislative and regulatory factors, as well as other industry-specific factors such as the ability to control music piracy and the continued transition from physical to digital formats in the recorded music and music publishing industries. It could also be affected by the severity and duration of geopolitical conflicts or natural or man-made disasters, including pandemics. We and our affiliates continue to evaluate opportunities to, from time to time, depending on market conditions and prices, contractual restrictions, our financial liquidity and other factors, seek to pay dividends or prepay outstanding debt or repurchase or retire Acquisition Corp.’s outstanding debt or debt securities or repurchase our outstanding equity securities in open market purchases, privately negotiated purchases or otherwise. The amounts involved in any such transactions, individually or in the aggregate, may be material and may be funded from available cash or from additional borrowings. In addition, from time to time, depending on market conditions and prices, contractual restrictions, our financial liquidity and other factors, we may seek to refinance the Senior Credit Facilities or our outstanding debt or debt securities with existing cash and/or with funds provided from additional borrowings. 42