top of page

Warner Music Inflates Profit $113 Million With New Methodology

Music firm instantly adds 1,000 basis points to non-GAAP profitability with new calculation method.

February 8, 2024

Warner Music Group (WMG), a developer of recording artists and music distributor, is changing how it calculates its preferred non-GAAP segment profit metric.. Rather than OIBDA— Operating Income Before Depreciation and Amortization— Warner Music will exclude additional expenses in a new measure it calls Adjusted OIBDA to gauge segment profitability from now on:

“..the Company believes that Adjusted OIBDA represents the most relevant measure of segment profit and loss.”

Warner revised the prior three years in its latest quarterly filing and will revise other prior quarterly and year-to-date periods for fiscal year 2023 when they are subsequently reported in later filings.

The revisions show the new metric inflates Warners preferred metric in each of the past three years as such:

— Increased Adjusted OIBDA $113 million, or 10.07% in 2023
— Increased Adjusted OIBDA $96 million, or 9.11% in 2022
— Increased Adjusted OIBDA $103 million, or 11.25% in 2021

In addition to D&A, according to our analysis, Warner also now excludes the following expenses inn calculating Adjusted OIBDA:

—Transformation initiatives and other related costs
—Executive transition costs
—Net gain on divestitures
—COVID-19 related costs
—Stock-based-compensation and other related costs

Become a DuDil Insider

Get our due diligence alerts before they're released publicly & be first to know.

bottom of page