Warner Music Group (WMG): Q4 Earnings Report

Financial Highlights:

* Revenue: $1.67 billion, in line with estimates
* EPS (GAAP): $0.45, exceeding estimates by 34%
* Adjusted EBITDA: $363 million, missing estimates by 4.3%
* Operating Margin: 12.8%, down 7.5% year-over-year
* Free Cash Flow Margin: 17.8%, up 2.7 percentage points year-over-year

Business Overview:

Warner Music Group (WMG) is a global entertainment company managing a diverse portfolio of artists, recordings, and music publishing services.

Sales Growth:

* Five-year compounded annual growth rate of 7%
* Annualized revenue growth of 4.6% over the last two years

Revenue Breakdown:

* Recorded Music (new music production): 3.3% year-over-year growth
* Music Publishing (royalties from catalog music): 12.3% year-over-year growth

Q4 Revenue:

* 4.7% year-over-year decline, in line with estimates
* Analysts anticipate 5% revenue growth in the next 12 months

Cash Profitability:

* Free cash flow margin of 10.3% over the last two years
* Free cash flow of $296 million in Q4, with a 17.8% margin

Q4 Key Takeaways:

* EPS significantly exceeded expectations
* Recorded Music revenue missed estimates
* EBITDA fell short of estimates
* Mixed quarter with stock price declining post-earnings

Investment Consideration:

The full research report provides a comprehensive analysis of Warner Music Group's long-term business quality and valuation to determine its investment potential.