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Class A shares of Warner Music Group (NASDAQ:WMG) on Wednesday rose more than 6% in extended trading, after the record label conglomerate announced plans to cut jobs in order to free up more funds to invest in music.
WMG stock was last up 6.4% to $38.50 after hours.
The media company anticipates a reduction in its headcount of about 600 employees or 10%, Warner Music (WMG) said in a regulatory filing. A majority of the layoffs will be related to the winding down of its in-house ad sales business O&O Media Properties.
The layoffs will be part of a larger strategic restructuring plan that is expected to generate pre-tax cost savings of about $200M on an annualized run-rate basis by the end of fiscal year 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 be letting go of hundreds of employees in the coming weeks.
Separately, Warner Music (WMG) reported FQ1 2024 results. The company posted earnings of 30 cents per share, which missed estimates by 12 cents. Revenue rose 17.4% Y/Y to $1.75B, beating expectations by $80M.
WMG’s quarterly operating income increased 34% Y/Y to $354M, while its adjusted operating income before depreciation and amortization climbed 35% to $451M.
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 increasing revenue growth,” Warner Music (WMG) finance chief Bryan Castellani said in a statement.
WMG’s bigger segment, recorded music, saw quarterly revenue rise 17% Y/Y to $1.45B, while its music publishing segment posted a 22% gain in revenue to $304M.
Artists that were major sellers for Warner Music (WMG) in the quarter were American singer-songwriters Zach Bryan and Bruno Mars, and English celebrity Ed Sheeran. The soundtrack album to 2023’s highest grossing film, Barbie, was a major seller as well.
The core of Warner Music’s (WMG) business is its four iconic record labels: Atlantic, Elektra, Parlophone and Warner Records.