- Price
- $31.40
- Fair value
- $40.00
- Discount
- 21.5%
- Uncertainty
- Medium
- LSEG rating
- 1.90
- Moat
- Narrow
- Next earnings
- 2026-11-05
- Next earnings is estimate
- Yes
- Company name
- Warner Music Group
- Sector
- Recorded music & publishing
- About
- Warner Music Group has two businesses. Recorded Music finds, records and markets artists, and earns money from streaming, physical sales, licensing and artist services. Its labels include Atlantic, Elektra, Parlophone and Warner Records. Music Publishing, through Warner Chappell Music, owns and administers the rights to songs and earns money from streaming, performance, mechanical and synchronization use. Its fiscal year ends on September 30. Revenue was $1,864 million in the quarter to June 30, 2026. Robert Kyncl is CEO.
- Thesis
- The market prices Warner Music for the risk that streaming growth will slow and that AI-generated music will take listening time and lower the value of its catalog. The company also has net debt of $4.09 billion, and its CFO and COO left on July 31, 2026, with an acting CFO in his place. Results are strong now: in the quarter to June 30, 2026, revenue rose 10%, adjusted OIBDA rose 16% to $433 million and recorded music subscription streaming revenue rose 12%, helped by contractual increases in per-subscriber minimums with streaming services. For the gap to close, three things must be true. Subscription streaming revenue must keep double-digit growth as streaming services raise prices. The adjusted OIBDA margin must reach the high end of the target of 150 to 200 basis points of expansion for fiscal 2026 and keep growing in fiscal 2027. Free cash flow must keep growing, so that the company can pay its dividend and reduce net debt. The fiscal 2026 report, estimated for about November 5, 2026, gives the first test, and the appointment of a permanent CFO is another check. If these checks pass, the gap can close over the next four to six quarters. The main reason it may not close is a slowdown in streaming subscriptions or a shift of listening to AI music.
- Risks
- Most revenue comes from streaming. Slower subscriber growth, lower prices at streaming services or more listening to AI-generated music can reduce revenue growth and the value of the catalog.
Total debt was $4.71 billion at June 30, 2026, and part of it is in euros. Interest costs and currency moves can reduce net income.
Senior management changed in 2026: the CFO and COO left in July, and the Co-Chair and COO of Warner Chappell Music stepped down in September. A long search for a new CFO can slow decisions.
Recorded Music revenue lost distribution revenue after the end of the distribution agreement with BMG, which reduced digital revenue by $10 million in the quarter to June 30, 2026.
- Balance sheet
- Cash: $618M
Debt: $4.7B
Net debt: $4.1B
Interest cover: 6.3×
Warner Music funds its business with senior notes and term loans. At June 30, 2026, total debt was $4.71 billion and cash was $618 million, so net debt was $4.09 billion. Interest cover is operating income divided by interest expense for the nine months to June 30, 2026. Part of the debt is in euros, so currency moves change net income: the euro debt gave a $3 million gain in the quarter to June 30, 2026, after a $70 million loss a year earlier. Free cash flow was $633 million for the nine months, up 88%.
As of 2026-06-30.
- Checkpoints
- Nov 5, 2026 (estimate): Fiscal 2026 results and fiscal 2027 outlook. Pending. Watch: Adjusted OIBDA margin expansion at the high end of the 150 to 200 basis points target and continued double-digit subscription streaming growth pass; slower subscription growth or a smaller margin gain fails.
Feb 2027 (estimate): Q1 fiscal 2027 results. Pending. Watch: Revenue and adjusted OIBDA growth with a permanent CFO in place pass; a fall in streaming growth or no permanent CFO fails.
- Recent events
- 2026-09-24: Warner Music hired Valentin Blavatnik, a member of its board, as Managing Director, Warner Recorded Music, North America and UK, and Corporate Development, from September 25, 2026.
2026-09-21: Warner Music said that Carianne Marshall will step down as Co-Chair and Chief Operating Officer of Warner Chappell Music on September 30, 2026.
2026-08-05: Warner Music reported results for the quarter to June 30, 2026. Revenue rose 10% to $1,864 million, operating income rose 80% to $305 million and adjusted OIBDA rose 16% to $433 million. Net income was $200 million. The board declared a quarterly dividend of $0.20 per share.
2026-07-31: Armin Zerza stepped down for personal reasons as CFO and COO. Louis Dickler, Senior Vice President, Global Controller and Chief Accounting Officer, became Acting CFO, and the company started a search for a new CFO.