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Warner Music Group Class A Shares (NASDAQ: WMG) on Wednesday increased by more than 6% in extended business, after the record label conglomerate announced plans to cut jobs to free up more funds to invest in music.
WMG stock was last up by 6.4% at $38.50 after hours.
The media company expects to reduce its headcount by about 600 employees or 10%, Warner Music (WMG) said in a regulatory filing. Most of the layoffs will be linked to the closure of its internal ad sales business O&O Media Properties.
The layoffs will be part of a broader strategic restructuring plan that is expected to generate pre-tax cost savings of approximately $200 million on an annualized basis by the end of fiscal 2025, WMG added.
Warner Music’s (WMG) layoff plans come just a week after rival Universal Music Group (OTCPK:UMGNF) – which is the world’s largest record company – said it would lay off hundreds of employees in the coming weeks.
Separately, Warner Music (WMG) reported first-quarter 2024 results. The company reported earnings of 30 cents per share, below estimates of 12 cents. Revenue rose 17.4% y/y to $1.75 billion, beating expectations by $80 million.
WMG’s quarterly operating profit rose 34% y/y to $354 million, while its adjusted operating profit before depreciation and amortization rose 35% to $451 million.
The quarter was “highlighted by an acceleration in recorded music streaming growth and continued momentum in music publishing, which saw its fifth consecutive quarter of growing revenue growth,” the finance chief said in a statement of Warner Music (WMG), Bryan Castellani.
WMG’s largest segment, recorded music, saw quarterly revenue increase 17% y/y to $1.45 billion, while its music publishing segment saw revenue increase 22% to $304. Millions of dollars.
The top-selling artists for Warner Music (WMG) in the quarter were American singer-songwriters Zach Bryan and Bruno Mars and English celebrity Ed Sheeran. The soundtrack album of the highest-grossing film of 2023, Barbieit was also a great seller.
The core of Warner Music’s (WMG) business are its four iconic record labels: Atlantic, Elektra, Parlophone and Warner Records.