Warner Music Group Corp (WMG) 2024 Q2 法說會逐字稿

Welcome to Warner Music Group's Second Quarter Earnings Call for the period ended March 31, 2024. At the request of Warner Music Group, today's call is being recorded for replay purposes and if you object, you may disconnect at any time. Now I would like to turn the call over to your host, Mr. Kareem Chin. Head of Investor Relations. Please, you may begin.

歡迎參加華納音樂集團截至2024 年3 月31 日的第二季財報電話會議。 。現在我想將電話轉給主持人 Kareem Chin 先生。投資者關係主管。請您開始吧。

Good morning, everyone, and welcome to Warner Music Group's Fiscal Second Quarter Earnings Conference Call. Please note that our earnings press release, earnings snapshot and Form 10-Q are available on our website. On today's call, we have our CEO, Robert Kyncl; and our CFO, Bryan Castellani, who will take you through our results, and then we will answer your questions.

大家早安，歡迎參加華納音樂集團第二季財報電話會議。請注意，我們的收益新聞稿、收益快照和 10-Q 表格可在我們的網站上取得。出席今天的電話會議的有我們的執行長 Robert Kyncl；我們的財務長 Bryan Castellani 將向您介紹我們的結果，然後我們將回答您的問題。

Before our prepared remarks, I'd like to refer you to the second slide of the earnings snapshot to remind you that this communication involves forward-looking statements that reflect the current views of Warner Music Group about future events and financial performance. We plan to present certain non-GAAP results during this conference call and in our earnings snapshot slides and have provided schedules reconciling these results to our GAAP results in our earnings press release. All of these materials are posted on our website.

在我們準備好的發言之前，我想向您推薦收益快照的第二張幻燈片，以提醒您本通訊涉及前瞻性陳述，反映了華納音樂集團當前對未來事件和財務業績的看法。我們計劃在本次電話會議和收益快照幻燈片中展示某些非 GAAP 業績，並在收益新聞稿中提供將這些結果與 GAAP 業績進行協調的時間表。所有這些資料都發佈在我們的網站上。

Also, please note that all revenue figures and comparisons discussed today will be presented in constant currency, unless otherwise noted. Our references to normalized revenue and adjusted OIBDA are adjusted for items that impact comparability. The details of these can be found in our filings. All forward-looking statements are made as of today, and we disclaim any duty to update such statements. Our expectations, beliefs and projections are expressed in good faith, and we believe there is a reasonable basis for them. However, there can be no assurance that management's expectations, beliefs and projections will result or be achieved.

另請注意，除非另有說明，今天討論的所有收入數據和比較都將以固定匯率表示。我們對標準化收入和調整後 OIBDA 的引用針對影響可比性的項目進行了調整。這些細節可以在我們的文件中找到。所有前瞻性陳述均截至今日作出，我們不承擔更新此類陳述的義務。我們的期望、信念和預測是真誠表達的，我們相信它們有合理的基礎。然而，不能保證管理層的期望、信念和預測將會實現或實現。

Investors should not rely on forward-looking statements because they are subject to a variety of risks, uncertainties and other factors that can cause actual results that differ materially from our expectations. Information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained in our filings with the SEC. And with that, I'll turn it over to Robert.

投資者不應依賴前瞻性陳述，因為它們受到各種風險、不確定性和其他因素的影響，這些因素可能導致實際結果與我們的預期有重大差異。有關可能導致實際結果與前瞻性陳述中的結果有重大差異的因素的資訊包含在我們向 SEC 提交的文件中。有了這個，我會把它交給羅伯特。

Thanks, Kareem. Good morning, everyone, and thank you for joining us. I am pleased with everything our global team is doing to deliver for our artists and songwriters and drive our business forward.

謝謝，卡里姆。大家早安，感謝您加入我們。我對我們的全球團隊為我們的藝術家和詞曲作者所做的一切以及推動我們的業務發展所做的一切感到高興。

In Q2, total revenue increased 7% with Recorded Music and Music Publishing increasing 4% and 19%, respectively. On a normalized basis, total revenue grew 9% with Recorded Music up 7%. The Recorded Music streaming revenue increased 11%, led by subscription streaming growth of 13.5%. This was driven by stronger music performance as well as subscriber growth and subscription price increases.

第二季度，總收入成長 7%，其中錄製音樂和音樂出版收入分別成長 4% 和 19%。在標準化基礎上，總收入成長 9%，其中錄製音樂成長 7%。在訂閱串流媒體成長 13.5% 的帶動下，錄製音樂串流收入成長了 11%。這是由更強勁的音樂表現以及訂戶成長和訂閱價格上漲所推動的。

Total adjusted OIBDA increased 9% or 10% on a normalized basis. In Recorded Music, we continue to break new artists, build global careers and mine our extraordinary catalog. This quarter, we saw massive hits from artists across different genres in all stages of development, exactly the kind of mix we want. Benson Boone and Teddy Swims are standout audit development stories of the year. They are also both signed to Warner Records as recording artists as well as to Warner Chappell as songwriters.

調整後的 OIBDA 總額在標準化基礎上成長了 9% 或 10%。在錄製音樂領域，我們不斷發掘新的藝術家，建立全球職業生涯並挖掘我們非凡的目錄。本季度，我們看到了不同流派、處於各個發展階段的藝術家的大量熱門作品，這正是我們想要的那種組合。 Benson Boone 和 Teddy Swims 是年度傑出的審計發展故事。他們還作為唱片藝術家與華納唱片公司簽約，並作為詞曲作者與華納查普爾簽約。

During the quarter, Benson Boone reached #1 on Spotify global chart, while Teddy Swims and Megan Thee Stallion individually hit #1 on the U.S. Hot 100chart. Benson, Megan and Teddy all spend weeks in the Hot 100 top 10, alongside carryover hits from Jack Harlow and Zach Bryan. Around the world, we also had #1 from Myke Towers, Green Day, Jolie and [Blast].

本季度，Benson Boone 在 Spotify 全球排行榜上排名第一，而 Teddy Swims 和 Megan Thee Stallion 在美國熱門 100 排行榜上分別排名第一。本森(Benson)、梅根(Megan) 和泰迪(Teddy) 都在Hot 100 前十名中度過了數週時間，此外還有傑克·哈洛(Jack Harlow) 和扎克·布萊恩( Zach Bryan) 的經典歌曲。在世界各地，我們還獲得了排名第一的 Myke Towers、Green Day、Jolie 和 [Blast]。

We also continue to attract outstanding global talent with recent signings, including India-based Superstar, Nora Fatehi, top Ukrainian rock band, Okean Elzy and legendary multi-Grammy winning icon, Angélique Kidjo. It's encouraging to see our audits creating bodies of work with real staying power.

我們也透過最近的簽約繼續吸引全球傑出人才，包括印度超級明星 Nora Fatehi、烏克蘭頂級搖滾樂隊 Okean Elzy 和多次獲得格萊美獎的傳奇偶像 Angélique Kidjo。令人鼓舞的是，我們的審計創造了具有真正持久力的工作系統。

These new releases are our catalog of the future. Here are some great examples of how our so-called shallow catalog is contributing to revenue growth. Ed Sheeran's Divide released in 2017 and Dua Lipa's Future Nostalgia released in 2020 are both in our top earning albums for the quarter. Deep catalog releases that are more than 10 years old, also remains an important growth area with meaningful untapped opportunity.

這些新版本是我們未來的目錄。以下是一些很好的例子，說明我們所謂的淺目錄如何促進收入成長。 Ed Sheeran 於 2017 年發行的 Divide 和 Dua Lipa 於 2020 年發行的 Future Nostalgia 均名列我們本季收入最高的專輯中。已有 10 多年歷史的深度目錄發布仍然是一個重要的成長領域，具有有意義的未開發機會。

When we market catalog with the same ingenuity as new releases, they often have a significant impact. For example, at this year's Grammys, our recording artists, Tracy Chapman and Joni Mitchell both performed classic songs that saw a big boost in weekly audio streams of over 180%, respectively.

當我們以與新版本相同的獨創性來行銷目錄時，它們通常會產生重大影響。例如，在今年的格萊美頒獎典禮上，我們的唱片藝術家特雷西·查普曼(Tracy Chapman) 和喬尼·米切爾(Joni Mitchell) 都演唱了經典歌曲，每週音頻流的增幅分別超過180%。

Our Music Publishing division, Warner Chappell, continues to perform extremely well. Our songwriters contributed to a range of recent hits from Benson Boone's Beautiful Things, Teddy Swims' Lose Control and Jack Harlow's Lovin' On Me to Ariana Grande's We Can't Be Friends and Kanye West and Ty Dolla $ign's Carnival. Top-tier songwriters continue to recognize Warner Chappell's momentum. Recent signings include 5 Grammy nominee Coco Jones and Dua Lipa, who joins other superstars such as Cardi B, Zach Bryan, Madonna and Led Zeppelin, who are represented by our company for both recorded music and music publishing.

我們的音樂出版部門 Warner Chappell 繼續表現出色。我們的詞曲作者為一系列近期熱門歌曲做出了貢獻，包括Benson Boone 的Beautiful Things、Teddy Swims 的Lose Control 和Jack Harlow 的Lovin' On Me、Ariana Grande 的We Can't Be Friends 以及Kanye West 和Ty Dolla $ign 的Carnival。頂級詞曲作者繼續認可華納·查佩爾的勢頭。最近簽約的包括 5 名格萊美提名者 Coco Jones 和 Dua Lipa，他們與 Cardi B、Zach Bryan、Madonna 和 Led Zeppelin 等其他超級巨星一起，由我們公司代理錄製音樂和音樂出版。

As reported in music and copyright, we outpaced our peers in 2023, growing our global market share in Music Publishing. Simply said, we've executed well on expanding our [song guiding] roster, strengthening our services and finding innovative ways for songs to get heard. Impressively, this growth has largely been achieved organically, not through acquisitions at frothy multiples. Further evidence of our success in identifying world-class songwriters early.

根據音樂和版權領域報道，我們在 2023 年超越了同行，增加了我們在音樂出版領域的全球市場份額。簡而言之，我們在擴大我們的[歌曲指導]名單、加強我們的服務以及尋找讓歌曲被聽到的創新方式方面做得很好。令人印象深刻的是，這種成長很大程度上是有機實現的，而不是透過泡沫倍數的收購實現的。進一步證明我們在早期發現世界級歌曲作者方面取得了成功。

A great example is the phenomenal success of British Singer-Songwriter Raye. She signed to Warner Chappell 9 years ago. In March, she matched records for the most nominations and wins in a single year at the Brit Awards. In addition to her solo work, she's written hit songs for the likes of Beyonce, Rihanna and John Legend.

英國歌手兼作曲家 Raye 的巨大成功就是一個很好的例子。 9年前她與華納查普爾簽約。三月，她追平了全英音樂獎單年提名和獲獎最多的紀錄。除了她的獨唱作品外，她還為碧昂絲、蕾哈娜和約翰傳奇等人創作了熱門歌曲。

Earlier this year, I laid out three strategic priorities: grow engagement with our music, increase the value of our music and evolve how we work together. We continue to make important progress on all these fronts. First, growing engagement with our music. This is primarily driven by signing and serving ever broadening spectrum of artists and songwriters. Identifying and investing in territories where local music is gaining global appeal and helping our talent break through the noise in a cluttered and fiercely competitive environment.

今年早些時候，我提出了三個策略重點：增加對音樂的參與、增加音樂的價值以及改善我們的合作方式。我們繼續在所有這些方面取得重要進展。首先，提高人們對音樂的參與。這主要是由簽約和服務不斷擴大的藝術家和詞曲作者的範圍所推動的。識別並投資當地音樂在全球範圍內具有吸引力的地區，幫助我們的人才在混亂且競爭激烈的環境中突破喧囂。

Unusual for a company of our scale, most of our biggest stars are homegrown talent who have been with us since the earliest days of their careers. Bruno Mars, Ed Sheeran, Cardi B and Dua Lipa among others. We're building on this legacy by nurturing original artists into the next generation of superstars. A great example is Warner Records who are the hottest label in the U.S. right now due to their focus on genuine talent and long-term artist development.

對於我們這樣規模的公司來說，不同尋常的是，我們的大多數明星都是本土人才，他們從職業生涯的早期就一直在我們身邊。布魯諾馬爾斯、艾德希蘭、卡迪B 和杜阿利帕等。我們正在繼承這項傳統，將原創藝術家培養成下一代超級巨星。華納唱片公司就是一個很好的例子，由於他們專注於真正的人才和長期的藝術家發展，它是目前美國最熱門的唱片公司。

In an industry where it's harder than ever to cut through, Warner Records has bucked the trend with success stories like Zach Bryan, Benson Boone and Teddy Swims, and their hot streak shows no sign of slowing down.

在一個比以往任何時候都更難突破的行業，華納唱片公司逆勢而上，推出了扎克·布萊恩、本森·布恩和泰迪·斯威姆斯等成功故事，而且他們的火爆勢頭絲毫沒有放緩的跡象。

Last September, we announced a joint venture with 10K projects, founded by Elliott Grainge. 10K operates as a stand-alone U.S. label, opening up a whole new channel through which we can bring quality talent to market. From the get-go, this has been a success -- this has been successful for Warner Music Group both commercially and creatively. 10K continues to deliver incredible hits with Artemas' latest single, I Like The Way You Kiss Me going #1 on Spotify global chart.

去年 9 月，我們宣布與 Elliott Grainge 創立的 10K 計畫成立合資企業。 10K 作為一個獨立的美國品牌運營，開闢了一條全新的管道，我們可以透過該管道將優質人才推向市場。從一開始，這就是一次成功——這對華納音樂集團來說無論是在商業上還是在創意上都是成功的。 10K 繼續帶來令人難以置信的熱門歌曲，Artemas 的最新單曲《I Like The Way You Kiss Me》在 Spotify 全球排行榜上排名第一。

As I've mentioned before, we continue to fuel our growth organically and via partnerships and acquisitions. As part of our mission to be a destination for artists and songwriters at every stage of development, we're expanding our lower touch services that many independent artists, labels and songwriters rely on. It's just one recent example. Last month, Warner Chappell partnered with BandLab the social music creation platform. We'll work together to identify and sign emerging songwriters, providing them with access to our comprehensive suite of offerings. We have a clear plan to develop this area of our ecosystem across the company, and we're building solutions in-house, while staying vigilant about our M&A opportunities, which could accelerate our capabilities.

正如我之前提到的，我們繼續透過合作夥伴關係和收購來推動我們的有機成長。作為我們成為各個發展階段藝術家和詞曲作者目的地的使命的一部分，我們正在擴展許多獨立藝術家、唱片公司和詞曲作者所依賴的低接觸服務。這只是最近的一個例子。上個月，Warner Chappell 與社群音樂創作平台 BandLab 合作。我們將共同努力尋找並簽約新興歌曲作者，為他們提供使用我們全面的產品套件的機會。我們有一個明確的計劃來發展整個公司生態系統的這一領域，我們正在內部建立解決方案，同時對我們的併購機會保持警惕，這可以提高我們的能力。

At the same time, we're expanding our presence in dynamic recorded music markets. We've seen impressive results this past year. In Argentina, the fastest-growing market in 2023, we doubled our year-over-year revenue organically. In Sub-Saharan Africa, the fastest-growing region in 2022 and 2023, we were the only major music company to grow share last year. In India, already the 14th largest market [in climbing pass], we were again the only major to grow share, in 2023. We continue to find ways to turbocharge our growth and strengthen our global platform for local talent.

同時，我們正在擴大我們在充滿活力的錄製音樂市場的影響力。去年我們看到了令人印象深刻的成果。在 2023 年成長最快的市場阿根廷，我們的營收年增率有機成長了一倍。在撒哈拉以南非洲地區（2022 年和 2023 年成長最快的地區），我們是去年唯一一家份額成長的大型音樂公司。在印度，這個已經是第14 大市場（攀岩市場）的市場，到2023 年，我們再次成為唯一一家份額成長的主要市場。全球平台。

Last month, we launched Warner Music South Asia to address a region with 400 million people across Bangladesh, Nepal, Pakistan and Sri Lanka. Turning to our next strategic priority, growing the value of our music.

上個月，我們推出了華納音樂南亞，以面向孟加拉、尼泊爾、巴基斯坦和斯里蘭卡等擁有 4 億人口的地區。轉向我們的下一個策略重點，提高我們音樂的價值。

There are two aspects to achieving this, growing the pie and growing our participation in the pie. Over the past year, there have been some initial steps in the right direction to growing the pie, including the first price increases at all major DSPs. We will continue to advocate for further increases, as well as more sophisticated price optimization, especially as DSPs improve their offerings to bring in more subscribers.

實現這一目標有兩個面向：做大蛋糕和提高我們對蛋糕的參與度。在過去的一年裡，我們在正確的方向上採取了一些初步措施來擴大蛋糕，包括所有主要 DSP 的首次漲價。我們將繼續提倡進一步提高價格以及更複雜的價格優化，特別是在 DSP 改進其產品以吸引更多訂戶的情況下。

We've also seen encouraging early signs in the evolution of royalty models, but are aligning economics with premium content, thus growing our participation in the pie. It's important to note that these shifts to more artist-centric models take time to fully implement, and we don't expect immediate impact on our results. We're making every effort to build alignment with our partners, and it's the best way to ensure that the value that music provides to these platforms is properly recognized.

我們也看到了版稅模式演變中令人鼓舞的早期跡象，但正在將經濟性與優質內容結合起來，從而增加我們在這塊蛋糕中的參與度。值得注意的是，這些向以藝術家為中心的模式的轉變需要時間才能完全實施，我們預計不會立即對我們的結果產生影響。我們正在盡一切努力與我們的合作夥伴建立聯盟，這是確保音樂為這些平台提供的價值得到適當認可的最佳方式。

Another area where we see great potential to grow the value of music is AI. And like I said before, there are three constituents which play critical roles in the evolution of AI, platforms, models and governments. The concepts of control, monetization, attribution and prominence are the core of our discussions with all parties in order to protect artists, songwriters and right holders.

我們認為音樂價值成長潛力巨大的另一個領域是人工智慧。正如我之前所說，三個要素在人工智慧的發展中扮演關鍵角色：平台、模型和政府。控制、貨幣化、歸屬和突出的概念是我們與各方討論的核心，以保護藝術家、歌曲作者和權利人。

Last Tuesday, I testified on the promise and perils of generative AI before the U.S. Senate Judiciary Subcommittee on intellectual property, voicing the shared concerns of the creative community. I urge Congress to act this year and pass a federal law that addresses deep fakes. My central message was that the use of people's likeness and voice requires consent and must be subject to free market negotiations. We should not abide by the appropriation of people's identities and the theft of artist livelihoods.

上週二，我在美國參議院司法智慧財產權小組委員會就生成式人工智慧的前景和危險作證，表達了創意界的共同擔憂。我敦促國會今年採取行動，通過一項解決深度造假問題的聯邦法律。我的中心思想是，使用人們的肖像和聲音需要同意，並且必須接受自由市場談判。我們不應該容忍盜用人們的身分和偷竊藝術家的生計。

I'll briefly highlight one amazing example of the power of AI when done right. Since 2013, Randy Travis had aphasia, a condition that limits its ability to speak and sing. Last week, the Legendary Grammy award-winning country music Hall of Famer was able to release new music for the first time in over a decade, thanks to AI. We played his new song, where that came from on our pre-call hold music, and you should add it to your playlist right now.

我將簡要介紹一個令人驚奇的例子，展示人工智慧在正確使用時的力量。自 2013 年以來，蘭迪·特拉維斯 (Randy Travis) 患有失語症，這種疾病限制了其說話和唱歌的能力。上週，這位傳奇葛萊美獎得主鄉村音樂名人堂十多年來首次在人工智慧的幫助下發布了新音樂。我們播放了他的新歌，該歌曲來自我們的呼叫前等待音樂，您應該立即將其添加到您的播放清單中。

Moving on to my third priority, evolving how we work. On our last earnings call, we announced a restructuring plan, which will enable us to increase our investment in music, technology and new skill sets. We are on track, although the full savings will not be realized until the end of fiscal '25, the majority of the changes have already been implemented. This includes centralizing certain functions and exiting our owned and operated media businesses. Since we last spoke, we have sold the entertainment of websites, UPROXX and HipHopDX.

繼續我的第三個優先事項，改進我們的工作方式。在上次財報電話會議上，我們宣布了一項重組計劃，這將使我們能夠增加對音樂、技術和新技能的投資。我們正在步入正軌，儘管要到 25 財年末才能實現全部節省，但大部分變革已經實施。這包括集中某些職能並退出我們擁有和經營的媒體業務。自從我們上次談話以來，我們已經出售了 UPROXX 和 HipHopDX 網站的娛樂內容。

We're allowing a strong foundation to accelerate our progress and yield greater value over time. As part of this, we continue to develop our tech capabilities. I'll give you a few examples of some of our projects. We've made improvements to our royalty systems and the tools used to identify unclaimed revenue. We've overhauled our global supply chain, unlocking our ability to scale our third-party distribution business, and we've transformed our proprietary tools that identify fan trends, while building new ways to engage with superfans.

我們正在為加速我們的進步並隨著時間的推移產生更大的價值奠定堅實的基礎。作為其中的一部分，我們將繼續發展我們的技術能力。我將為您提供一些我們的一些項目的示例。我們改進了版稅系統和用於識別無人認領收入的工具。我們徹底改革了我們的全球供應鏈，釋放了我們擴大第三方分銷業務的能力，我們也改變了我們識別粉絲趨勢的專有工具，同時建立了與超級粉絲互動的新方式。

Our second half includes eagerly anticipated music from Dua Lipa, who dropped her new album Radical Optimism last Friday. And we're excited about our new releases from Twenty One Pilots, Sia, [Gaana], Megan Thee Stallion, David Guetta, Fred Again, Charlie Puth and Maria Bechara. This is an exciting and transformative period for our company and for the music industry. We're looking forward to building incredible careers and creating dynamic new opportunities in the months and years ahead. And with that, I'll turn it over to Bryan.

我們的後半部包括杜阿·利帕 (Dua Lipa) 備受期待的音樂，她上週五發布了她的新專輯《激進樂觀》(Radical Optimism)。我們對二十一名飛行員、Sia、[Gaana]、Megan Thee Stallion、David Guetta、Fred Again、Charlie Puth 和 Maria Bechara 的新作品感到非常興奮。對於我們公司和音樂產業來說，這是一個令人興奮和變革的時期。我們期待在未來的歲月裡建立令人難以置信的職業生涯並創造充滿活力的新機會。有了這個，我會把它交給布萊恩。

Thank you, Robert, and good morning, everyone. Before I get into details of our Q2 results, I want to remind everyone that growth rate comparisons will be in constant currency.

謝謝羅伯特，大家早安。在詳細介紹第二季業績之前，我想提醒大家，成長率比較將以固定匯率計算。

The items affecting recorded music streaming revenue, comparability, include the BMG digital revenue roll-off, which was $22 million unfavorable in the quarter. Additionally, the renewal with one of our international digital partners that resulted in upfront incremental revenue recognition of $27 million last quarter, resulted in an unfavorable impact of $4 million this quarter and will have a similar impact in Q3 and Q4. Details relating to these items can be found in our earnings press release.

影響錄製音樂串流收入和可比性的項目包括 BMG 數位收入下滑，本季不利的 2,200 萬美元。此外，與我們的國際數位合作夥伴之一的續約導致上季預確認增量收入2,700 萬美元，導致本季產生400 萬美元的不利影響，並將在第三季和第四季產生類似的影響。與這些項目相關的詳細資訊可以在我們的收益新聞稿中找到。

In Q2, total revenue grew 7% and adjusted OIBDA increased 9% with a margin of 20.9% and an increase of 40 basis points over the prior year quarter. On a normalized basis, total revenue grew 9%, and adjusted OIBDA increased 10%.

第二季度，總營收成長 7%，調整後的 OIBDA 成長 9%，利潤率為 20.9%，比去年同期成長 40 個基點。在標準化基礎上，總營收成長 9%，調整後的 OIBDA 成長 10%。

Recorded Music revenue grew 4% and 7% on a normalized basis. Streaming revenue grew 11% on a comparable basis with subscription streaming growth accelerating to 13.5%, while ad supported revenue increased 5%. The improvement in subscription growth was driven by stronger DSP sub performance, along with price increases, partially offset by a deceleration in ad supported revenue, driven by platform mix.

錄製音樂收入在正常情況下分別成長 4% 和 7%。串流媒體收入年增 11%，訂閱串流媒體成長加速至 13.5%，廣告支援收入成長 5%。訂閱成長的改善是由 DSP 子性能增強以及價格上漲推動的，但部分被平台組合推動的廣告支援收入減速所抵消。

Physical revenue decreased 7%, driven by the timing of releases. Artist services and expanded rights revenue decreased 3% due to lower merchandising revenue, partially offset by higher concert promotion revenue in France and Japan. Licensing revenue grew 5%, primarily due to the timing of legal settlements. Recorded music adjusted OIBDA increased 9% with a margin of 22.9%, an increase of 110 basis points. On a normalized basis, adjusted OIBDA increased 10%.

由於發佈時間的影響，實體收入下降了 7%。由於商品銷售收入減少，藝人服務和擴大版權收入下降了 3%，但部分被法國和日本音樂會推廣收入增加所抵消。授權收入成長了 5%，主要是由於法律和解的時機。錄製音樂調整後的 OIBDA 成長 9%，利潤率為 22.9%，成長 110 個基點。在標準化基礎上，調整後的 OIBDA 成長了 10%。

Music Publishing continues to deliver impressive results with revenue growth of 19%, driven by streaming and performance revenue. Digital and streaming revenue increased by 27% and 29%, respectively, reflecting the continued growth in streaming and the impact of digital deal renewals. We also benefited from the continued investment in and expansion of our publishing catalog.

在串流媒體和演出收入的推動下，音樂出版持續取得令人矚目的業績，營收成長 19%。數位和串流媒體收入分別成長 27% 和 29%，反映出串流媒體的持續成長和數位交易續約的影響。我們也受惠於對出版目錄的持續投資和擴展。

Performance revenue increased by 18% due to strong artist touring activity in Europe, while sync revenue increased 2%, driven by timing of legal settlements. Mechanical revenue decreased 6% due to lower physical sales. Music Publishing adjusted OIBDA grew 8% with a margin of 26.8%, a decrease of 270 basis points due to revenue mix.

由於歐洲藝術家巡迴活動強勁，演出收入增長了 18%，而同步收入則因法律和解時機的推動而增長了 2%。由於實體銷量下降，機械收入下降 6%。音樂出版調整後的 OIBDA 成長 8%，利潤率為 26.8%，由於收入組合下降了 270 個基點。

Turning to CapEx, we saw a $9 million decrease from the prior year quarter to $26 million due to the timing of tech investment. Operating cash flow decreased to a use of $31 million from a use of $6 million in the prior year quarter, due to increased ANR investment and timing of working capital items. Free cash flow decreased to a use of $57 million from a use of $41 million in the prior year quarter. Our goal continues to be to deliver operating cash flow conversion of 50% to 60% over a multiyear period, which we expect to achieve for full year 2024.

談到資本支出，由於技術投資時機的原因，我們發現與去年同期相比減少了 900 萬美元，至 2,600 萬美元。由於 ANR 投資和營運資金項目的時間表增加，營運現金流從去年同期的 600 萬美元減少至 3,100 萬美元。自由現金流從去年同期的 4,100 萬美元減少至 5,700 萬美元。我們的目標仍然是在多年時間內實現營運現金流轉換 50% 至 60%，我們預計在 2024 年全年實現這一目標。

As of March 31, we had a cash balance of $587 million, total debt of $4 billion and net debt of $3.4 billion. Our weighted average cost of debt was 4.5% and our nearest maturity date remains 2028. In February, we announced a plan to deliver $200 million of annualized run rate cost savings by the end of fiscal 2025. The plan is proceeding according to schedule. We achieved modest cost savings in the quarter, the majority of which were reinvested into tech.

截至 3 月 31 日，我們的現金餘額為 5.87 億美元，總債務為 40 億美元，淨債務為 34 億美元。我們的加權平均債務成本為4.5%，最近的到期日仍然是2028 年。進行。我們在本季度實現了適度的成本節約，其中大部分重新投資於技術。

Regarding BMG, we estimate the revenue impact to be in the range of $25 million to $30 million in both Q3 and Q4, eventually rolling off completely in fiscal 2025. As a reminder, BMG's physical distribution will roll off in fiscal 2025. As we look ahead, Q3 is off to a solid start. As Robert mentioned, we are excited about our upcoming releases. The momentum in music in the business is strong, and we continue to position ourselves for long-term success, including to deliver on our goals of healthy top line growth, margin expansion and strong cash flow conversion on a consistent basis. Thank you to everyone for joining us today. We'll now open the call for questions.

關於 BMG，我們估計第三季和第四季的營收影響將在 2,500 萬美元至 3,000 萬美元之間，最終在 2025 財年完全結束。未來，第三季已經有了一個好的開始。正如羅伯特所提到的，我們對即將發布的版本感到興奮。音樂業務的勢頭強勁，我們將繼續為長期成功做好準備，包括持續實現健康的營收成長、利潤擴張和強勁的現金流轉換的目標。感謝大家今天加入我們。我們現在開始提問。

(Operator Instructions) Our first question comes from the line of Benjamin Black of Deutsche Bank.

（操作員指示）我們的第一個問題來自德意志銀行的班傑明·布萊克（Benjamin Black）。

I have two. So Robert, last quarter, you're obviously contemplating a bid, formal bid for [Believe]. You've obviously since withdrawn your interest. So I'd be curious to hear sort of why that deal fell apart. And also it would be good to hear sort of where strategic M&A fits into your capital allocation hierarchy right now?

我有兩個。羅伯特，上個季度，您顯然正在考慮對 [Believe] 進行正式投標。顯然你已經撤回了你的興趣。所以我很想知道為什麼這筆交易失敗了。另外，很高興聽到策略併購適合您現在的資本配置層次結構？

And then secondly, there appears to be quite a few developments on the pricing front. Spotify is currently in the early innings of introducing a tiered structure, with what at least appears to us, to be a potential surcharge for audio books. So I guess the question is, will Warner potentially benefit from that incremental surcharge? Or is it more of a carve-out? And relatedly, with their bundled offering, by your knowledge, at least qualify for lower mechanical rates as dictated by the CRB in the U.S.?

其次，定價方面似乎有了相當多的進展。 Spotify 目前正處於引入分層結構的早期階段，至少在我們看來，這可能是有聲書的潛在附加費。所以我想問題是，華納是否會從增加的附加費中受益？或者這更像是一種剝離？與此相關的是，據您所知，他們的捆綁產品至少有資格享受美國 CRB 規定的較低機械費率？

All right. Thank you. So on Believe. As I've mentioned on, I think, several earnings calls, we have a clear strategy in expanding our offerings to serve more audits across wider array of their careers. And obviously, we are building against that. So we have our team working really hard, building all the right features that we need.

好的。謝謝。所以相信。正如我在幾次財報電話會議中提到的那樣，我們有一個明確的策略，即擴大我們的產品範圍，為更廣泛的職業生涯提供更多審計服務。顯然，我們正在反對這一點。因此，我們的團隊非常努力地工作，建立我們需要的所有正確功能。

But as any other steward of our business, we always look at ways to accelerate and because all of this work takes time. And anytime there's an option in the market that allows us to accelerate our road maps we will look at it. We pursue that with belief. This was a very unique situation because the timing was out of our control, the public nature of it with part of our control, and the extremely short time frame for diligence was out of our control.

但與我們業務的任何其他管理者一樣，我們總是尋找加速的方法，因為所有這些工作都需要時間。只要市場上有一個選項可以讓我們加快路線圖，我們就會考慮它。我們懷著信念追求這個目標。這是一個非常獨特的情況，因為時間安排是我們無法控制的，它的公共性質是我們可以控制的，而且盡職調查的時間極短，也是我們無法控制的。

So obviously, played out publicly. We decided to -- not to pursue it for a variety of reasons, that I really can't go into. And -- but our strategy is to continue to look for opportunities that can augment our built strategy, and we continue to do that.

很明顯，是公開進行的。由於各種原因，我們決定不再追求它，我真的無法深入探討。而且 - 但我們的策略是繼續尋找可以增強我們既定策略的機會，並且我們將繼續這樣做。

On pricing and evolution of evolution of pricing and especially as it relates to bundling. So first, what I would say is that bundling is generally good for subscription business because it achieves two things. One, it tends to lower subscriber acquisition cost and it tends to lower churn rate. So for platforms, it becomes a strong growth driver. And we've obviously had 50 years of very healthy television market through bundling, and if you look at many different sectors, you can see that.

關於定價和定價演變的演變，特別是與捆綁相關的定價。首先，我想說的是，捆綁通常有利於訂閱業務，因為它實現了兩件事。第一，它往往會降低訂戶獲取成本，並且會降低客戶流失率。所以對於平台來說，它成為強勁的成長動力。顯然，我們透過捆綁銷售已經擁有了 50 年非常健康的電視市場，如果你觀察許多不同的行業，你就可以看到這一點。

The job of wholesalers like the music companies like ourselves is to ensure that the sanctity of our pricing across the different services, whether individual subscriptions, stand-alone subscriptions or bundled offerings are in line with each other. So you can expect us to pursue that strategy.

像我們這樣的音樂公司這樣的批發商的工作是確保我們在不同服務中定價的神聖性，無論是個人訂閱、獨立訂閱還是捆綁產品都相互一致。因此，您可以期待我們奉行這項策略。

As it relates to what you were referring to, the CRB, which is a U.S. specific issue. I don't see it as something that will persist in the long term. I believe in sort of global solutions. We're in a global business, all of us and sort of individual carve-outs in any markets. I don't think play out well amongst parties that are tied at the hip and partners for the future. So I have a confident point of view on that.

因為它與你所指的 CRB 有關，這是美國特有的問題。我不認為它會長期持續下去。我相信某種全球解決方案。我們是一家全球性企業，我們所有人都在任何市場中進行個人剝離。我認為那些緊密相連的政黨和未來的合作夥伴之間的關係不會很好。所以我對此有一個自信的觀點。

And Ben, it's Bryan. And just to echo what Robert said on the capital allocation hierarchy, there's really no change there as we've articulated before, and we've walked you through our cascade. We continue to see plenty of runway on organic investment, which you continue to see in our artist signings and ANR investment as well as we continue to expand our publishing and catalog rights. Last year, we acquired 10K, which was a smaller inorganic acquisition. And of course, we also continue to return capital via the dividend to shareholders.

本，是布萊恩。為了呼應羅伯特在資本配置層次結構上所說的話，正如我們之前闡明的那樣，那裡實際上沒有任何變化，並且我們已經向您介紹了我們的級聯。我們繼續看到大量的有機投資，您可以在我們的藝術家簽約和 ANR 投資以及我們繼續擴大我們的出版和目錄權中繼續看到這一點。去年，我們收購了 10K，這是一項規模較小的無機收購。當然，我們也繼續透過向股東分紅來返還資本。

As Robert said, it's our job to survey the market. And if there's inorganic opportunities that will accelerate our initiatives, we'll take those. But I think we've always demonstrated to be good stewards financially, and we will continue to do that. And I think our interest in Believe was well founded in looking through our capital allocation hierarchy, if it could accelerate it. But again, the unique nature of it led to the outcome. But no change there on capital allocation.

正如羅伯特所說，調查市場是我們的工作。如果存在著能夠加速我們舉措的無機機會，我們就會抓住這些機會。但我認為我們一直在財務上表現得很好，而且我們將繼續這樣做。我認為我們對 Believe 的興趣是建立在審視我們的資本配置層次結構上的，如果它能加速它的話。但同樣，它的獨特性導致了結果。但資本配置沒有變動。

Our next question comes from the line of Ben Swinburne of Morgan Stanley.

我們的下一個問題來自摩根士丹利的本‧斯溫伯恩 (Ben Swinburne)。

This is Cameron on for Ben. You guys have previously described this year as a second half weighted year from a release slate perspective. Is that still your expectation as we look through the remainder of the year? And does that translate into accelerating organic streaming growth over the next couple of quarters?

這是卡梅倫為本代言的。你們之前曾將今年從發布日期的角度描述為下半年加權的一年。當我們展望今年剩餘時間時，這仍然是您的期望嗎？這是否會轉化為未來幾季串流媒體有機成長的加速？

And then another one, if I can. What, to the extent you can share with us, drove the (inaudible) sale and add an emerging platform organic growth from last quarter to this quarter? I know you called out platform mix, but anything in addition to that, that you could provide would be helpful.

如果可以的話，然後再來一張。您可以與我們分享一下，從上個季度到本季度，是什麼推動了（聽不清楚）銷售並增加了新興平台的自然成長？我知道您提出了平台組合，但除此之外，您可以提供的任何內容都會有所幫助。

All right. I'll take the first, and Bryan will take the second. Thank you, Ben. So we remain excited about our new music. We have lots of great content coming from the likes of Dua Lipa. She just released her album. Twenty One Pilots, Sia, Gaana and so on and on and on. At the same time, we're also having a great real-time success, which is amazing to see with Teddy Swim, Benson Boone and Artemas.

好的。我將選擇第一個，布萊恩將選擇第二個。謝謝你，本。所以我們對我們的新音樂仍然感到興奮。我們有很多來自 Dua Lipa 等人的精彩內容。她剛發行了她的專輯。 《二十一名飛行員》、Sia、Gaana 等等。同時，我們也取得了巨大的即時成功，Teddy Swim、Benson Boone 和 Artemas 的表現令人驚嘆。

So that's -- so we've been doing well on new music. The one thing that you should keep in mind is that we've now seen the full impact of the Spotify price increases in our results. And in the second half, we'll be lapping last year's price increases with the other DSPs, namely Apple and YouTube. So -- but we're continually encouraged by the subscriber growth as well.

所以我們在新音樂方面做得很好。您應該記住的一件事是，我們現在已經在我們的結果中看到了 Spotify 價格上漲的全面影響。下半年，我們將向其他 DSP（即 Apple 和 YouTube）追隨去年的價格上漲。所以——但我們也不斷受到訂閱者成長的鼓舞。

Cameron, it's Bryan. Just to maybe break down the quarter a bit, and the overall Recorded Music streaming of 11% on a normalized basis. Within that, I would say 2 or 3 pieces accelerated. You saw subscription at 13.5% versus 12% in the prior quarter. And then while ad supported and emerging combined decelerated, we did see growth and accelerating trend there in the traditional ad supported. Emerging can have some lumpiness based on deal timing, content delivery as well as mix of platforms.

卡梅倫，我是布萊恩。只是稍微細分一下本季度，在正常化的基礎上，整體錄製音樂串流佔 11%。其中，我想說 2 或 3 件加速了。您看到訂閱率為 13.5%，而上一季的訂閱率為 12%。然後，雖然廣告支援和新興廣告的綜合成長放緩，但我們確實看到了傳統廣告支援的成長和加速趨勢。新興市場可能會因交易時間、內容交付以及平台組合而出現一些波動。

But again, the underlying strength there in the core subscription streaming and the traditional ad supported and overall, I think you got to look at emerging, while there may be some lumpiness, we still believe it's a growing category. And so it -- over the long term, we expect it to continue to grow.

但同樣，核心訂閱串流媒體和傳統廣告支援的潛在優勢，總體而言，我認為你必須關注新興市場，雖然可能存在一些障礙，但我們仍然相信這是一個不斷增長的類別。因此，從長遠來看，我們預計它會繼續增長。

Our next question comes from the line of Batya Levi of UBS.

我們的下一個問題來自瑞銀集團的巴蒂亞·萊維（Batya Levi）。

Can you talk a little bit more about the initiatives to monetize super [fans]? I think you had plans launch an app. How are you approaching the partnership with DSPs versus going direct in that initiative?

能多談談透過超級[粉絲]賺錢的舉措嗎？我認為您計劃推出一款應用程式。您如何與 DSP 建立合作夥伴關係，而不是直接參與該計劃？

Sure. Thank you. Yes. So we've been working on i,. and it's well progressed, but nothing new to announce on that. On partnership with DSPs, the way we think about this partnerships versus doing it ourselves. The one, I think, unique insight with music is that unlike other forms of creation, it's incredibly ubiquitous. If you're an artist, you want your content to be distributed as widely as possible across as many touch points.

當然。謝謝。是的。所以我們一直在研究 i.進展順利，但沒有新消息可宣布。關於與 DSP 的合作，我們考慮這種合作關係的方式與我們自己做的方式不同。我認為，對音樂的獨特見解是，與其他形式的創作不同，它難以置信地無處不在。如果您是藝術家，您希望您的內容在盡可能多的接觸點上盡可能廣泛地分發。

And therefore, it's very hard to optimize for any individual platform, and try to anchor a superfans relationship in one place because your superfans are across many, many different platforms, which means I think we're naturally set up to be the right place to do this and do it cross-platform. And then we can always partner with the DSPs, but through the offering that we have. But I just think it's the absolutely ubiquitous nature of music. And finding super fans across all of those, but you can't optimize for any single place, any single platform. Therefore, it has to be a controlled solution.

因此，很難針對任何單一平台進行最佳化，並嘗試將超級粉絲關係錨定在一個地方，因為您的超級粉絲分佈在許多不同的平台上，這意味著我認為我們自然而然地成為了合適的地方這樣做並跨平台進行。然後我們可以隨時與 DSP 合作，但透過我們擁有的產品。但我只是認為這是音樂絕對無所不在的本質。並在所有這些方面尋找超級粉絲，但您無法針對任何單一地點、任何單一平台進行最佳化。因此，它必須是一個受控的解決方案。

Our next question comes from the line of Kutgun Maral of Evercore ISI.

我們的下一個問題來自 Evercore ISI 的 Kutgun Maral。

Our next question comes from the line of Michael Morris of Guggenheim Securities.

我們的下一個問題來自古根漢證券公司的麥可莫里斯。

I had two topics, if I can. The first I wanted to follow up on the question about pricing changes at Spotify, in particular. As you see the pricing changes that they have announced right now and the structure of those price changes, do you expect to participate in the incremental revenue that's being generated from the new pricing plans? Or do you see it as all specifically earmarked for their audio book product, that is part of a pool that you don't participate in?

如果可以的話，我有兩個主題。首先我想跟進有關 Spotify 定價變化的問題。當您看到他們現在宣布的定價變化以及這些價格變化的結構時，您是否期望參與新定價計劃產生的增量收入？或者您將其視為專門用於他們的有聲讀物產品，這是您不參與的池的一部分？

And also, do you think that this change by Spotify is sort of representative of another leg of the cycle of pricing, Robert, that you've spoken about in the past is helping to close that gap between the intrinsic value of music and the current price point?

另外，您是否認為 Spotify 的這一變化在某種程度上代表了定價週期的另一階段，羅伯特，您過去談到的定價週期有助於縮小音樂內在價值與當前價值之間的差距。點？

And then second, I wanted to ask about the lower touch services that you referenced developing. How do you -- I don't know if you could expand on this a little bit, but how do you ensure that this creates a pipeline to sort of deeper artist relationships that you can progress on, as opposed to offering a service that just kind of sustainably meets artist needs in kind of a less revenue or less profit-generating manner?

其次，我想問您提到的開發的低接觸服務。你如何——我不知道你是否可以對此進行一些擴展，但是你如何確保這創造了一條通往更深層次的藝術家關係的管道，你可以繼續發展，而不是僅僅提供一種服務以較少的收入或較少的利潤產生方式可持續地滿足藝術家的需求？

Okay. So on the first one. So first, what I would say is that we had 15 years of no price action by anyone, including myself, and [when I was on YouTube]. And so it is amazing to see that, a, we have price increases, that we actually can, on an earnings call, say words like we're now lapping 1 year anniversary of a price increase. I mean I just want to make sure it doesn't go unnoticed, because it has not existed for 15 years. So amazing, and now it's happening.

好的。所以就第一個。首先，我要說的是，我們有 15 年沒有任何人採取任何價格行動，包括我自己，以及 [當我在 YouTube 上時]。因此，令人驚訝的是，我們的價格上漲了，我們實際上可以在財報電話會議上說，我們現在正在慶祝價格上漲一周年。我的意思是我只是想確保它不會被忽視，因為它已經存在 15 年了。太神奇了，現在它正在發生。

Two, I think as services are growing and thinking through their pricing strategies. Obviously, this indicates that they're thinking about it super hard. They're coming with all kinds of different solutions, and bundled solutions are part of that suite. So I think all of that is a good news.

第二，我認為隨著服務的不斷發展並思考其定價策略。顯然，這表明他們正在認真思考這個問題。他們提供了各種不同的解決方案，而捆綁解決方案是該套件的一部分。所以我認為所有這些都是一個好消息。

The -- what -- as I mentioned before, I think we, the music companies have to make sure that the sanctity of our pricing is upheld correctly and that, that pricing also keeps on moving up all the time, as [I'm talking about] all the time. But the appropriate steps -- but it doesn't mean that there wouldn't be higher-priced bundled offerings that are allocated for those additional content providers. But that also benefits us because now there is a bundled offering.

正如我之前提到的，我認為我們音樂公司必須確保我們定價的神聖性得到正確維護，並且定價也一直在上漲，因為[我一直在談論]。但是適當的步驟 - 但這並不意味著不會為這些額外的內容提供者分配更高價格的捆綁產品。但這也讓我們受益，因為現在有捆綁產品。

Now there is a single offering. And as long as we price it correctly, ourselves, we will benefit. So I think all of this is the right direction, right things that our partners are focused on. There may be bumps in the road along the way, obviously, right, it's playing out with the CRB thing. But this is good news, in my opinion, to push forward.

現在只有一個產品。只要我們自己定價正確，我們就會受益。所以我認為所有這些都是我們伴侶關注的正確方向、正確的事情。一路上可能會遇到坎坷，顯然，對吧，CRB 的事情正在上演。但在我看來，這是一個值得推動的好消息。

On the second question, the lower touch, lower touch services. I think it's important to realize that there are artists who are getting started. At many different stages of their career, somebody has no following and [over] somebody has a big one. And it's important for us to effectively widen the net in which we can work with artists and find great talent. So it's really -- it's basically about the deal flow, if you really put it in business terms.

關於第二個問題，低接觸，低接觸服務。我認為重要的是要認識到有些藝術家正在起步。在職業生涯的許多不同階段，有些人沒有追隨者，而有些人則擁有大量追隨者。對我們來說，有效地擴大與藝術家合作並發現優秀人才的網絡非常重要。所以，如果你真的用商業術語來說的話，它基本上是關於交易流程的。

And I think the thing that we're focused on is to make sure that we don't simply just follow the model where we have more shops in the goal, but the same sort of -- I'm going to mix two sports analogies, but same batting average. But -- but then we also actually are making money from the shots on the goal, that we actually run the business more profitably across these offerings. And so I think that's what your question was getting at. And that is exactly the intent.

我認為我們關注的事情是確保我們不只是簡單地遵循我們在目標中擁有更多商店的模式，而是相同的——我將混合兩個體育類比，但擊球率相同。但是，我們實際上也從射門中賺錢，我們實際上透過這些產品來經營業務，從而獲得更多利潤。所以我認為這就是你的問題的目的。這正是我們的意圖。

We want to make sure that we're building things in a way that it's technology dependent, that is providing operating leverage and then not only we get more shots on the goal, but also improve our outs overall and have a profitable relationship and mutually beneficial relationship with all of the artists in the system.

我們希望確保我們以一種依賴技術的方式構建事物，即提供營運槓桿，這樣我們不僅可以更多地實現目標，而且還可以改善我們的整體表現，並建立有利可圖的互惠互利的關係與系統中所有藝術家的關係。

Our next question comes from the line of David Karnovsky of JPMorgan.

我們的下一個問題來自摩根大通的大衛卡諾夫斯基。

Robert, you noted in the quarter, the contribution from shallow and deep catalog results. Maybe a follow-up on this. [Absent] an artist, putting out a new album, what are some tools you have to kind of drive increased engagement with your older content? And then separately, looking at Universal and TikTok's announcement, there's a lot of lip service paid to potential protections around AI and then also co-development of tools to enable creativity. I just wanted to follow up here. Does this agreement anything incremental for WMG and kind of your ability to make the imports front?

羅伯特，您在本季度提到了淺層和深層目錄結果的貢獻。也許是對此的後續行動。 [缺席]一位藝術家，推出了一張新專輯，您有哪些工具可以提高人們對舊內容的參與度？然後分別看看Universal 和 TikTok 的聲明，有許多關於人工智慧潛在保護的口頭承諾，以及共同開發工具以實現創造力。我只是想跟進這裡。該協議對 WMG 是否有任何增量以及您在進口方面的能力？

I ask you to repeat the first question, I couldn't really capture it.

我請你重複第一個問題，我無法真正理解它。

Sure. It was just a follow-up on your comments around shallow and deep catalog and what tools you have in your disposal, absent an artist putting out a new album to drive more engagement with older content.

當然。這只是您對淺層和深層目錄以及您可以使用的工具的評論的後續行動，沒有藝術家推出新專輯來推動與舊內容的更多互動。

All right. So on the first one, this has actually been an area of focus for us for quite some time. And the best way to think about this is that, obviously, catalog is a tremendous wealth that we have. It's a -- it's something that continues to grow, pay dividends. And it's just an incredible resource for us. And -- the -- when you think about where a vast majority of the revenue is coming from, it's digital distribution.

好的。因此，對於第一個問題，這實際上已經成為我們相當長一段時間以來關注的領域。思考這個問題的最佳方式是，顯然，目錄是我們擁有的巨大財富。它是一種持續成長、帶來紅利的東西。這對我們來說是一個令人難以置信的資源。而且，當你想到絕大多數收入來自哪裡時，那就是數位發行。

Therefore, if we want to increase the performance of catalog, we have to make sure that we optimize all of our titles, across all of our main DSPs. And now this sounds very, very simple said that way. But when you think about the size and scale of our catalog, it's a very, very difficult task. And it's one that you can't only do with people because the number of SKUs is simply too high.

因此，如果我們想要提高目錄的效能，我們必須確保優化所有主要 DSP 上的所有標題。現在這聽起來非常非常簡單。但當你考慮到我們目錄的規模和規模時，這是一項非常非常困難的任務。而這不能只與人合作，因為 SKU 的數量實在太多了。

So we have a project on this across our technology team and our business team to basically move down through the entire catalog and make sure it's properly optimized for streaming in on every single large DSP. So it's a very sort of methodical approach. And all of this augments our marketing campaigns against catalog, which we have done in the past, which we continue to do, and we're applying more and more frontline like focus on catalog titles, and that's also yielding results. So it's kind of like a 2-pronged approach, one, which is very, very scaled. And then the other one, which is very high touch where we select what we push.

因此，我們的技術團隊和業務團隊對此有一個項目，基本上是向下移動整個目錄，並確保它針對每個大型 DSP 上的串流進行了適當的最佳化。所以這是一個非常有條理的方法。所有這些都增強了我們針對目錄的行銷活動，我們過去已經這樣做了，我們將繼續這樣做，並且我們正在應用越來越多的一線，例如關注目錄標題，這也產生了結果。所以這有點像是雙管齊下的方法，其中之一是非常非常大規模的。然後是另一個，這是非常高接觸性的，我們可以選擇我們推送的內容。

On the second part on UMG [pick dock], obviously, I have no details about their business. So I can't really comment on it at all other than what I can say is that I'm pleased that they reached an agreement. And as I said, that the Morgan Stanley conference, I think, on stage with Ben Swinburne. And I think Lucian also said the same thing recently, which is this category is still very much in the early stage of evolution. And we need to stay vigilant to make sure that it's driving accretive growth to our companies.

關於UMG [挑選碼頭]的第二部分，顯然，我沒有關於他們業務的詳細資訊。因此，我無法對此發表任何評論，只能說我很高興他們達成了協議。正如我所說，我認為摩根士丹利會議是與本·斯溫伯恩一起在台上進行的。我想盧錫安最近也說了同樣的話，那就是這個類別仍然處於進化的早期階段。我們需要保持警惕，以確保它推動我們公司的成長。

Our next question comes from the line of Stephen Laszczyk of Goldman Sachs.

我們的下一個問題來自高盛的史蒂芬·拉斯奇克（Stephen Laszczyk）。

Bryan, on margins, I was curious if there's any help you could give us on the expected pace of margin expansion this year, just as we see some of the cost efficiencies to flow through the income statement and how that's comparing versus the rate at which you can reinvest. Any help there would be great. And then maybe just on the market for music rights. Would be curious if you could give us an update on what you're seeing in that market. It feels like there was hope at the bid ask will get closer as rates came down, but that appears that might not be the case at this point. Just curious what you're hearing on that front.

布萊恩，關於利潤率，我很好奇您是否可以就今年利潤率擴張的預期速度為我們提供任何幫助，正如我們看到損益表中的一些成本效率以及與成本效率相比如何你可以再投資。任何幫助都會很棒。然後也許只是在音樂版權市場。如果您能為我們提供您在該市場所看到的最新情況，我們會很好奇。隨著利率的下降，人們似乎希望出價會越來越接近，但目前看來情況可能並非如此。只是好奇你在這方面聽到了什麼。

Stephen, thanks, Bryan. On margin, and as we say, we remain focused on our three goals of healthy top line, margin expansion, cash flow conversion. We did call out and reiterate the cash flow conversion this quarter, just knowing that Q2 is seasonally a timing -- a quarter where with timing of receivables and payments and deal timing that we do have low cash conversion. And on margin, again, we're -- as we look out over the year, and I think you got to look at that over the course of the year, rather than quarter-to-quarter. There will be lumpiness in margin, again, based on timing slate deals, as well as just internal efficiencies. So we remain focused on it. We don't guide quarter-to-quarter, but I think you can look over the long term and now we're focused on it.

史蒂芬，謝謝，布萊恩。在利潤方面，正如我們所說，我們仍然專注於健康的營收、利潤擴張、現金流轉換這三個目標。我們確實呼籲並重申了本季的現金流轉換，只是知道第二季是一個季節性的時間點——在應收帳款和付款時間以及交易時間方面，我們的現金轉換率確實較低。在保證金方面，我們再次展望這一年，我認為你必須在一年中而不是季度與季度之間審視這一點。同樣，根據交易時間表以及內部效率，利潤率也會出現波動。所以我們仍然關注它。我們不會按季度進行指導，但我認為你可以放眼長遠，現在我們專注於它。

And then -- and on the content rights market, -- as we -- I think, first, the second question was around capital allocation and M&A, et cetera, and Bryan answered and saying, look, we're looking at lots of different content rights, as well as technology solutions that augment our built in-house road map. And on the content rights piece, there's a lot of opportunities, the pipelines of deals that we're maintaining ARPU significant. It is more than we can even afford today.

然後 - 在內容版權市場上， - 正如我們 - 我認為，首先，第二個問題是圍繞資本配置和併購等，布萊恩回答說，看，我們正在考慮很多不同的內容權利，以及增強我們內部路線圖的技術解決方案。在內容版權方面，有很多機會，我們正在保持 ARPU 重要的交易管道。這超出了我們今天的承受能力。

And therefore, we're very diligent about what we go after and the returns that we can yield from that and it's all around the world. So there are a lot of different opportunities, and we expect those to continue and perhaps even increase, because there have been many buyers in the past who may need to make changes in their portfolios.

因此，我們非常努力地追求我們所追求的目標以及我們可以從中獲得的回報，這在世界各地都是如此。因此，存在著許多不同的機會，我們預計這些機會將持續下去，甚至可能會增加，因為過去有許多買家可能需要改變他們的投資組合。

Yes. And Stephen, I would just add to that. I mean there's a bit of a double-edged sword there in terms of higher rates, making it more rigorous. I think you're also seeing a maturation or rationalization across buyers in the market, but also that the interest and the pricing, just speaks to the value of music, and I think it's just an attractive space. And so as Robert said, we still see runway there and our ability to invest.

是的。史蒂芬，我想補充一點。我的意思是，就更高的費率而言，這有點雙刃劍，使其更加嚴格。我認為你也看到了市場上買家的成熟或合理化，而且興趣和定價也說明了音樂的價值，我認為這只是一個有吸引力的空間。正如羅伯特所說，我們仍然看到那裡的跑道和我們的投資能力。

Okay. So I think that's it for -- with all the questions. I really appreciate your time. Thank you for all your questions. And please do you not forget to go to your favorite DSP and listen to Randy Travis and his song, where that came from which was generated with AI, with Randy's permission with his producer, from his entire life, and it's just a wonderful collaboration an example of what is possible with AI. Thank you.

好的。我想這就是所有的問題了。我非常感謝您的寶貴時間。感謝您提出的所有問題。請不要忘記去你最喜歡的 DSP 聽 Randy Travis 和他的歌曲，這些歌曲來自於 AI 生成，經過 Randy 和他的製作人的許可，來自他的一生，這是一次美妙的合作，人工智能的可能性範例。謝謝。

This concludes today's conference call. Thank you for participating. You may now disconnect.

今天的電話會議到此結束。感謝您的參與。您現在可以斷開連線。