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Warner Music reported revenue of $1.9 billion for Q3 FY2026, up 10.4% from $1.7 billion a year earlier. Adjusted earnings per share were $0.38, matching the consensus estimate of $0.38. Diluted earnings per share were $0.38, compared with −$0.03 a year earlier.
The company’s filing attributed Recorded Music revenue growth to digital, artist services and expanded-rights, and physical sales. Streaming grew as subscription and ad-supported services expanded, while concert promotion in Japan and merchandise contributed to artist services growth. Music Publishing revenue also increased, with streaming, synchronization, mechanical and performance revenue all rising.
Warner reported a gross margin of 45.8%, compared with 45.9% a year earlier, while operating margin rose to 16.4% from 10.0%. The filing attributed the increase in operating income in part to lower restructuring and impairment charges, alongside the factors that lifted adjusted OIBDA. Free cash flow was $114.0 million, compared with $7.0 million in the prior-year quarter.
| Q3 FY2026 | Q3 FY2025 | Change | |
|---|---|---|---|
| Revenue | $1.9 billion | $1.7 billion | 10.4% |
| Diluted EPS | $0.38 | −$0.03 | — |
| Gross margin | 45.8% | 45.9% | −0.1 percentage points |
| Operating margin | 16.4% | 10.0% | 6.4 percentage points |
| Free cash flow | $114.0 million | $7.0 million | 1,528.6% |
| Against the consensus | Reported | Consensus | Result |
|---|---|---|---|
| Adjusted EPS | $0.38 | $0.38 | In line |
Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.
What management said on the call
CEO Robert Kyncl said Warner’s renewed Apple agreement completed alignment across its major digital service partners around contractual wholesale price increases. He said the agreements gave Warner better visibility into its outlook.
Acting CFO Lou Dickler said subscription streaming growth reflected higher subscriber numbers, pricing and market share. In response to a question about the components of growth, he described a shift from volume-led growth to growth from both volume and pricing. He said ad-supported streaming benefited from improved deal economics and World Cup advertising, but expected growth to normalize in the following quarter as that advertising benefit passed.
Asked about market share, Kyncl said Warner looks at global metrics and longer-term trends rather than a single quarter. He attributed progress to capital allocation, artist and repertoire pipeline management, catalog optimization and distribution infrastructure. He said the gains had been largely organic, adding that Warner could also use acquisitions to accelerate them.
On margins, Dickler said restructuring savings, catalog growth and a focus on profitable growth were contributing to expansion. He described catalog as a higher-margin business, while distribution was lower-margin. Warner was taking a measured approach to distribution, he said, rather than pursuing low-margin deals to gain share.
Kyncl said Warner was using proprietary artificial intelligence tools to identify opportunities in its catalog and create marketing content. He said AI licensing deals were expected to contribute materially to subscription streaming growth in the next fiscal year, and that Suno’s planned transition to a licensed model remained on schedule.
Kyncl also said Lou Dickler would serve as acting CFO while Warner searches for a successor to Armin Zerza. Dickler said Warner was not providing a quantified streaming forecast, but expected contractual price increases to continue flowing through in the following quarter, including the Apple agreement.
Guidance
Acting CFO Lou Dickler said Warner was not providing streaming guidance, although he expressed confidence in continued growth. He expected contractual wholesale price increases to continue flowing through in the following quarter, including the impact of the Apple agreement.