Welcome to Warner Music Group's Second Quarter Earnings Call for the period ended March 31st, 2021. 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 today's call over to your host, Mr. Kareem Chin, Head of Investor Relations. You may begin. Good morning, everyone. Welcome to Warner Music Group's fiscal second quarter earnings conference call. Please note that our earnings press release, earnings snapshot, and the Form 10-Q we filed this morning will be available on our website. On today's call, we have our CEO, Steve Cooper, and our CFO, Eric Levin, who will take you through our results, and then we'll take your questions. Before our prepared remarks, I'd like to refer you to the second slide of our earnings presentation to remind you that this communication includes 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. Also, please note that all revenue figures and comparisons discussed today will be presented in constant currency unless otherwise noted. 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 reasonable basis for them. However, there can be no assurance that management's expectations, beliefs, and projections will result or be achieved. 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 to 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 earnings press release, our Form 10-Qs, Form 10-K, and other SEC filings. With that, I'll turn it over to Steve Cooper. Thanks, Kareem. Good morning, everyone, and thanks for joining us. As you know, we posted excellent results in our first quarter, and I'm very happy to say that trend continues to build momentum. When you consider that only the last two weeks of the prior year's quarter were affected by COVID, our results are even more impressive. At a time when our business is stronger than ever, we're lengthening our stride with chart-topping releases from many of our biggest artists and songwriters. Today, I'd like to cover three key topics. First, our quarterly results and all the great new music that's driving them. Second, our expansion into new markets around the world. Finally, our use of new technologies and emerging streaming platforms to further accelerate our growth. Despite the ongoing pandemic, second quarter total revenue grew 13% year-over-year, underpinned by double-digit revenue growth in both recorded music and music publishing. Adjusted EBITDA grew by 25%. Margin improved to over 21%. Recorded music delivered revenue growth of 13%, marked by double-digit growth in both digital and physical revenue. This growth more than offset the continued dislocation in artist services and licensing revenue. Recorded music streaming revenue grew 20%, driven by successful new releases and strong carryover performances. Ad-supported streaming has now fully recovered and grew at a higher rate than it did pre-COVID. Revenue from emerging streaming platforms such as Facebook, TikTok, and Peloton is now running at $200 million on an annualized basis. Physical revenue also saw a major resurgence, growing 19% year-over-year, primarily due to an uptick in vinyl demand. Our success in the quarter spanned label groups, genres, and geographies. This growth underscored our global strength as well as the diversity of our artists and repertoire. Here are just a few high points. Atlantic scored a massive number one single on the Billboard Hot 100 with "Leave the Door Open," the first release from Silk Sonic, the new Bruno Mars and Anderson.Paak collaboration. Cardi B also widened her lead for the most number one songs among female rappers with the mega hit "Up." At Warner Records, breakout star CJ topped Billboard's Emerging Artists chart with his single, "Whoopty." Meanwhile, Saweetie teamed up with Doja Cat on "Best Friend," hitting the top 10 on Billboard's Hot R&B and Hip-Hop Songs chart. Elektra's Masked Wolf scored an international smash with "Astronaut in the Ocean," generating well over 400 million streams to date and climbing to number one in eight countries. At Warner Music Nashville, Gabby Barrett released the hit single "The Good Ones," the follow-up to her 5-times platinum debut single, "I Hope." Three-peat Grammy-winning duo Dan + Shay unleashed their new smash, "Glad You Exist," and are currently tallying 40 million global streams per week. In Europe, The Snuts and Capo Plaza both had number one albums. Amazingly, seven tracks from Capo's album landed in Italy's top 10. We look to the rest of the year, our hot streak should continue with forthcoming albums from both emerging and established stars like Myke Towers, Quando Rondo, Coldplay, Silk Sonic, and Cardi B. More releases from our roster of global superstars will be dropping later this year. In music publishing, we delivered strong revenue growth of 12%, driven by a 33% increase in digital revenue. Performance revenue remained challenged by COVID due to the closure of bars, restaurants, clubs, and concerts. Sync was on the upswing, growing 12% as TV and film production resumed. In Q2, Warner Chappell had a share in 23 number ones across the radio streaming and Billboard U.S. charts. We were also honored with the ASCAP Pop Publisher of the Year award. The value proposition that Warner Chappell offers songwriters has never been more relevant. We've become the destination of choice for exceptional talent. We've done this by building a culture centered on growing careers and creating long-term value. With our best-in-class creative services team, global infrastructure, and a suite of tech tools, we've been able to distinguish ourselves. This has enabled us to retain big names like Saweetie, sign international stars like Jorge Drexler, and establish partnerships with labels like Love Renaissance. I've said repeatedly that music can come from anywhere and resonate everywhere. As we continue to grow our business across the globe, our focus is on culturally dynamic markets. We seek out vibrant music scenes with sustained growth in music consumption. Last year, we launched new offices in countries with massive untapped promises, such as India, Vietnam, Peru, and Turkey. This year, we've continued to expand our global reach. In Q2 alone, we made investments in markets that have vast growth potential given their combined population of almost 3 billion people. In China, we signed a multi-year licensing agreement and created a new joint venture label with Tencent Music. In Russia, we've extended our number one market share position through the acquisition of Zhara Music, now rebranded as Atlantic Records Russia. In the Middle East, we announced our investment and partnership with Rotana, the leading independent music label in the Arab world. In Africa, we recently appointed Temi Adeniji as our operating head for South Africa, as well as strategy for the continent. Temi and her team will continue to focus on growing our investments and partnerships with Africa's best independent players. They will also be providing local artists with the amplification support needed to reach global audiences. We're focused on maximizing our artists' and songwriters' reach and revenue across all fandom touch points, whether it's a snippet on social media, a soundtrack to an in-home workout, a live performance in a metaverse or an NFT digital collectible. These points show how the music ecosystem is broadening and deepening its relationship with people everywhere. Here are some recent examples of this strategy in action. Over the last few years, we've built up a network of award-winning media brands. To further accelerate the growth and monetization of these brands, we promoted Ben Blank to President of Media at WEA. Ben will lead our newly formed digital advertising creative content division. All of our owned and operated brands, UPROXX, Songkick, and HipHopDX, will retain their editorial independence and will benefit from a unified approach to ad sales and campaigns. We recently engaged the creativity of the Roblox community through two immersive experiences. We held an album launch party for Why Don't We, and Royal Blood performed at the Bloxy Awards. Both of these experiences have drawn millions of fans who were able to interact with virtual environments via their avatars. As we continue to explore new ways to connect artists and fans, we look forward to delivering events on a more frequent and bigger scale. Just yesterday, we announced a groundbreaking alliance and investment in Wave, the leader in virtual entertainment. Through this partnership, Wave will collaborate with WMG to develop virtual performances, experiences, and monetization opportunities for our global roster. This includes exploring new forms of ticketing, sponsorship, and in-show interactions. We're already working on a number of really exciting events scheduled over the next year. We were early to see that music would be fertile ground for digital collectibles. In 2019, we made an investment in Dapper Labs, the creators of NBA Top Shot. Last September, we began to experiment in this market, collaborating with Dapper to release two NFT CryptoKitties inspired by Warner Records rock band Muse. Last week, we announced an innovative new partnership with the world's largest avatar company, Genies. This partnership will enable our artists to sell exclusive digital wearables directly to their fans. Our goal is to develop authentic, quality, and environmentally conscious products that build long-term fandom relationships. While it's still early days for this space, we're enthusiastic about its potential. Finally, I want to personally thank all of our Warner Music Group colleagues, artists, songwriters, and partners for their incredible contributions to helping our company thrive over the past year. We're confident that the music entertainment industry will emerge from the pandemic with a renewed spirit of inventiveness and collaboration. All of us at WMG continue to look to the future with a tremendous amount of excitement and enthusiasm. With that, I'll turn it over to Eric. Thank you, Steve, good morning, everyone. Our second quarter performance was highlighted by new releases that performed well across formats, continued acceleration in revenue from emerging streaming platforms, and thoughtful cost management. This translated into impressive growth across most key financial metrics, including strong free cash flow conversion. Moving to our results in the quarter. Total revenue was up approximately 13% on a constant currency basis and up 17% on an as-reported basis compared to the prior year quarter. Artist services and recorded music and performance in music publishing were the areas most affected by COVID due to the cancellation or postponement of touring. If you exclude those areas, our revenue grew 16% on a constant currency basis and 20% on an as-reported basis compared to the prior year quarter. Both adjusted OIBDA and adjusted EBITDA saw significant year-over-year increases, reflecting strong operating performance as we continue to shift from physical to digital. Adjusted OIBDA increased over 21% to $255 million, with margin improving to over 20%. This improvement was driven by revenue mix, lower stock-based compensation and other related expenses, and cost management initiatives. Adjusted EBITDA increased over 25% to $268 million, with margin improving from 20% - 21.4%. The increase was largely due to the same factors that drove our adjusted OIBDA performance. Please refer to our press release for calculations and reconciliations related to adjusted OIBDA and adjusted EBITDA. In recorded music, Q2 revenue increased approximately 13% over the prior year quarter. Digital revenue grew 18%, driven by a 20% increase in streaming. Streaming as a category saw growth across all key components, with both subscription and ad-supported streaming growing double digits. Growth in revenue from emerging streaming platform continues to meaningfully outpace the broader streaming category. As Steve mentioned, we are now generating more than $200 million in annualized revenue from these platforms. Physical revenue increased by an impressive 19%, driven primarily by increased demand for vinyl and releases from The Yellow Monkey, Neil Young, and Fleetwood Mac. Licensing revenue declined 12%, as growth in sync was more than offset by lower broadcast fees. Artist services revenue, which includes tour-related merchandising as well as direct-to-consumer retailer EMP, declined 3%. While revenue related to concert promotion and tour-related merchandising significantly declined year-over-year, EMP saw continued healthy revenue growth of over 44% as limited access to brick-and-mortar stores in Europe drove online shopping. For Q2, recorded music adjusted OIBDA increased by more than 27% over the prior year quarter to $242 million due to revenue mix, cost savings, and the impact from our recent acquisitions. Adjusted OIBDA margin increased two percentage points to 22.9%. Music publishing revenue increased by approximately 12%, as growth in digital and sync revenue more than offset declines in performance and mechanical revenue. Digital revenue increased by more than 33%, reflecting the continuing shift to streaming and timing of new deals with digital service providers. Synchronization revenue increased by 12% due to increasing motion picture and commercial income. The decline in performance revenue was primarily due to COVID, while the decline in mechanical revenue reflects the continuing shift to streaming. Music publishing adjusted OIBDA decreased by 6%, from $49 million- $46 million, with margins declining from 29.5%- 24%. Those declines were attributable to the timing of a non-recurring benefit in the prior year quarter, as well as the impact of revenue mix driven by the reduction in high-margin performance revenue due to COVID. Operating cash flow grew by 74%, increasing to $150 million compared to $86 million in the prior year quarter. This improvement was driven by strong operating performance, timing of working capital, including payments from certain digital service providers, and timing of royalties. Free cash flow increased to $89 million from $67 million in the prior year quarter. CapEx was $20 million compared to $13 million in the prior year quarter. The increase is related to our previously announced plans to upgrade our IT and finance infrastructure. The total investment associated with our financial transformation program is expected to be about $20 million in fiscal 2021, with annualized run rate savings of approximately $35 million-$40 million once fully implemented for 2023. For fiscal 2021, we expect total CapEx to be in the range of $90 million-$100 million. Cash taxes were $35 million in the quarter, and as of March 31st, we had a cash balance of $588 million and net debt of approximately $2.8 billion. On January 20th, we completed an amendment to our term loan credit agreement. The amendment extends the maturity from November 1, 2023 to January 20, 2028, and removes a number of negative covenants. In April, we refinanced our 5.5% notes through the issuance of $325 million of incremental Term Loan B, reducing our blended cost of debt to 3.4% and extending our maturities. In closing, we're extremely proud of our first half results and look forward to delivering an exciting slate of new music over the rest of the year. We thank you for joining our call today and will now open the call to questions. Thank you. To ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from Kutgun Maral with RBC Capital Markets. Your line is open. Good morning. Thank you for taking the question and congratulations on the results, particularly with the strong streaming momentum. I know you don't give guidance, but going forward, as you look at what seems to be an increasingly competitive landscape with some large players aggressively pursuing acquisitions, are you concerned about your outlook going forward? Thanks. Thanks for the question, Kutgun. The short answer is not at all. We're really very confident about our competitive position, and I think the Q2 results are really a great signal of what's to come through this year and beyond. It's important to recognize that we are recording these revenues and EBITDA while we have maintained really rigorous financial discipline. We're one of the few music companies in the world that can really both buy and build in a universe of opportunity that's exploding right now. That's true for our A&R with everyone from emerging artists and songwriting talent to global superstars and music legends. It's true for our M&A activities. Look at our investments in territories like Russia and Africa, or the acquisition of owned and operated channels like EMP and IMGN. It's true for our technology, where our tools like our proprietary A&R app, Sodatone, or our partnerships with innovative brands like Roblox, Genies, or Wave continue to grow. Bottom line is we have what everybody wants, which is the best music in the world. What continues to make us unique is the combination of our scale and agility. We've really got a number of really incredible releases coming over the rest of the year. I expect our momentum to grow and, to be frank, the whole organization, as we see what we've got teed up and as we begin to come out of COVID, are really, really fired up. Thank you. That's great. Thank you. Our next question comes from Andrew Uerkwitz with Jefferies. Your line is open. Yes. Hi. Thank you for taking the question. I guess I just wanted to kind of see if you could expand on some of these new opportunities. The announcements with Genies and Wave, how should we think about that TAM opportunity for virtual fan engagement? Kind of as a follow-up of all the new kind of opportunities that you've laid out, social virtual platforms for music, exercise, and all these other things, which one gets you most excited? Thank you. Steve, do you want to take that or you want me to take that? Yeah, I'll take the first part, then you should chime in. Great. First of all, thanks for the question, Andrew. We've got great expectations for the investments we make. We make investments from the perspective of how can these help us amplify music? How can these investments amplify our touch points with fandom? How can these investments help us create and monetize new revenue streams for our artists? If you look at the investments we're making, they track, in many ways, the eyeballs and ears of billions of people around the world that are developing, creating, and living in metaverses. When you look at a number of our recent investments, all of them are focused on us having the tools, the technology, and the access to these new worlds, Andrew, which we expect to continue to grow these worlds. We expect to continue to grow at meaningful double-digit numbers. This is consistent with us wanting to ensure that we are able to effectively operate on every fandom touch point that should and will become available to our artists and songwriters. Hopefully, that answers your question from a strategic perspective. Yeah, absolutely. If I can add to that just from perhaps a TAM and financial standpoint. One of the things that we talked about is, three years ago, these emerging forms of streaming revenue was approximately zero. One quarter ago, we said on an annualized basis, the revenue was running at about $150 million. Now, this quarter, we're saying it's running on an annualized basis at $200 million. They are growing rapidly and growing more diverse, as Steve said. On your question about TAM, it's much more challenging but exciting in many ways to compare this to, say, subscriptions where your TAM is your smartphone universe. Here, your TAM is your smartphone universe, but you potentially have multiple touch points and therefore multiple opportunities to monetize music within one smartphone. One user could use social media but also like to have live streams, participate in games, whether it is metaverses or otherwise, and with Genies utilize their avatars. They could also collect NFTs. As you see from the range of partnerships that we've put together, some are areas that are active in monetizing and well-distributed already, and others are really looking to the future and activating new forms of NFTs, whether it is with Dapper, where we've done some CryptoKitties for the band Muse or new activations that we're looking at. Getting our artists on Genies with avatars or working with Wave on live streams and new ways to monetize. The opportunity to expand this universe is really limited by the ability to create new products and continue the tremendous momentum to monetize them. We're excited about what's happening here and really focused on growing this universe. Thank you. No, thank you for the detailed answers. Appreciate it. Thank you. Our next question comes from Benjamin Swinburne with Morgan Stanley. Your line is open. Thanks. Good morning. Maybe two questions. Eric, I know you guys don't give guidance. I'll take a stab at it because you've had a strong first half of the year, and this year, I think you guys talked about back in November being back half-weighted. Obviously, you did say it was 13% constant currency growth this quarter with some COVID headwinds, and you've talked about the release schedule in the back half. Do you think xFX revenue growth accelerates in the back half of the year versus what we've seen in the first half? That's the first. Steve, you mentioned Ben's promotion and sort of your initiatives in media. It got a decent amount of press coverage. I guess most of us don't think about Warner as an advertising business in terms of actually selling ads and creating branded content. I'm just wondering if you could talk about the strategy and if you can size the opportunity or if that's a business that you have today that maybe is bigger than we realize. Just any color would be great. Thank you both. Sure. Eric, why don't you go first, and then I'll respond. Appreciate your shout at guidance, Ben. We don't give guidance, but we certainly give color. At the beginning of this year, we said we expected a strong second half release schedule, and we continue to expect to have a strong second half release schedule. We've already seen singles coming out from Cardi B and Silk Sonic, Bruno Mars, Anderson.Paak collaboration. There's more great music coming out that Steve mentioned earlier in his talk. We're very excited about the second half of the year. We think the momentum and growth trajectory that we've been continuing to build, even through COVID, we're fully managing our business for growth going forward. Although we don't give guidance, we're very excited about the second half of the year, Ben. Thank you. Ben, with respect to advertising, excuse me. We've been with all the pollen, I can barely speak anymore. I hear you. Between the pollen and videos all day. We've been in the ad sales business for quite some time. We have an ad sales seat on YouTube where we are very active. We have developed product for brands on a regular basis. What we've done historically is our operations have been engaged one by one in the ad selling and the brand support space. What we're now doing is consolidating all of our ad sales, all of our brand support and production capabilities under one leader, so that we will have a unified, integrated package from the Warner Music Group by way of supporting agencies, brands, and frankly, crossovers with our artist roster. We are evolving the way we approach those markets in order to give them one-stop shopping, so to speak, Ben. Got it. I presume that means you think that business would grow faster or be more substantial over time as a result of these changes? Yes. Because [it is, it will be,] strategies will be unified, presentations will be far more effective and efficient, and we will give agencies, brands, and others the ability to search and select across our global portfolio. Both on a global and a regional basis, this should make us a much stronger magnet for attracting ad revenue. Thank you. Thank you. Our next question comes from Michael Morris with Guggenheim. Your line is open. Thank you. Good morning, guys. I have two questions. Maybe the first one for Eric is really about the long-term EBITDA profit margin opportunity. You guys have had great expansion there, and you've talked about your discipline. I'm curious, it is a very competitive industry. You need to appeal to artists and things of that nature. It's transparent. How do you see the opportunity for EBITDA margin expansion over time, and does it somewhat have a lid on it by virtue of that transparency? My second topic is around the international investments that you made. Three that you pointed out there are pretty different in nature. I'm hoping maybe you can expand a little bit on the magnitude of the opportunity for each independently. Also just what you bring in. Is it a matter of you bringing your existing sort of artist catalog and having new avenues to exploit that? Is it more a matter of you being able to go into these markets and help discover and expand the catalog or expand your roster? Just curious as to what the growth path is for those investments. Thank you. Sure. I can take these. On our long-term EBITDA margin, we have been consistent that as we look out, call it three, four years, that we think perhaps low to mid-20s EBITDA margin is realistic. When we started to communicate that is before we really knew the impact of COVID and how long it would last. In 2019, our adjusted EBITDA margin was 19%. This quarter, it's 21.4%, so we've already moved into the low 20s. There are a couple of reasons for that. One is some of the COVID revenue streams, or some of the revenues I shouldn't call COVID. Some of the revenue streams that have been curtailed because of COVID, mostly related to live, our tour merch business, notably in the U.S., and our concert promotion businesses in Europe, which are not huge as a percent of our total business are low, but they're also low-margin businesses. Don't have a huge effect on EBITDA, but if the revenues are in the short term curtailed, they provided short-term upward lift to adjusted EBITDA. Our underlying business, with the exception of that, is running pretty much right on what we expected along the plans we expected. As the business moves to be more and more digital, we expect in recorded music that to drive a natural margin uplift, and we're seeing that. We're also managing a series of cost savings initiatives. We have a global cost savings program that's working with our corporate, our music publishing, and recorded music divisions to find efficiencies related to automation. We are finding impact from that. We are generating new policies to make sure costs from real estate or travel are reduced, not just in the short term when we're out of the office from COVID, but in the long term when we return. As we've mentioned, we also have our financial transformation that once fully online, is going to save us $35 million-$40 million a year. The combination of all these, even as we return from COVID and live comes back, hopefully later this year and into 2022, will allow us to manage our business, we believe successfully, and maintain margins in the low 20s. We will continue to work for that to be our long term. We will continue from there to look for opportunities to continue to even improve it from there. We are managing on the plans that we have expected. We're always looking for technologies that allow us to drive further efficiency into our business. I'm sure we'll be managing this hard for the next several years and even beyond. With our investments, this quarter, we've had several types of investments. We had international investments, which you mentioned, and investments in the digital future. This quarter, our investment in Zhara, which was an independent Russia label but now is operating as Atlantic Records Russia, just cements our position as the number one player in Russia, really allowing us to just broaden our A&R, broaden our roster, allow us to further drive music into a fast-growing market that we're truly excited about. Some of our other international investments, specifically in areas like the Middle East and Africa, we just see as high growth markets for the future, where streaming and digital is really coming online. Whether it's Chocolate City in Nigeria that allows us to have local repertoire on the ground there, or our investment Africori distributor in the market, just extends our reach and allows us to build our foothold in an expanding market with repertoire and distribution capabilities. Similarly, in the Middle East, we've launched offices so that we have owned and operated labels throughout the Middle East. We have an operation in Beirut that works pan-regional. We've launched our label group in Turkey. Our relationship in Rotana allows us to both have a strong partnership with a leading player in the market, but also have global distribution rights to their music outside of the Mid East region, allowing us to take advantage of that rapidly growing segment of the market. We continue to look for opportunities to find emerging markets that are coming online with streaming and invest in their growth as the monetization opportunities become real. We are really very focused on investing where there's a financial return, so we really try to identify fast-growing markets and invest into that growth. Noting we're also doing investments in the digital ecosystem in, obviously we've invested in Roblox, and we're doing a lot with them to experiment with live streams and how to activate those with monetizations. Wave, Genies, these are some of the leaders in the digital ecosystem, and we really want to be in on the front edge, making sure that music is getting all the attention it deserves as these digital activations both are reaching millions of people around the world, but also finding the right long-term monetization model that's both satisfying to music fans and rewarding to our artists. So we're really kind of engaged across all of these fronts. Thanks, Michael. Thank you, Eric. Thank you. Our next question comes from Jessica Reif Ehrlich with Bank of America. Your line is open. Thank you. Good morning. A couple of questions. Physical was surprisingly strong. Was that all Japan? What's the outlook for physical in general? Secondly, music publishing. It feels like there's still a deal a day that's been going on for a couple of years. Can you talk about your appetite for music publishing at this point, given elevated acquisition multiples? You had some acquisitions. How much did that contribute this year? How much is, I guess, organic growth versus how much did acquisitions add? Thanks. Sure. Steve, if you want, I can tackle some of this, you could add on whatever strategic color at the end. Physical, look, we had a 19% growth quarter, a strong growth quarter for physical. Vinyl is a growth segment within physical, we're looking for releases and activations to really unlock that potential. Some of that was Japan, specifically The Yellow Monkey release was very strong in Japan, we've also had terrific re-releases from our catalog of Fleetwood Mac's Rumours and from Neil Young's classic releases that allowed us to tap into that market as well. Overall, I think we still have to be cautious about physical. The CD market is still in decline. There are an opportunity based on release schedule to have strong quarters, but I would say overall, we should expect physicals in decline, but we will be working very hard to maximize its potential, both through CDs, but especially in vinyl, which is a long-term attractive market that's growing. In music publishing, why don't I tackle that last because I suspect Steve will want to add onto that. On M&A, the transactions we did earlier this year, Jessica, contributed $11 million to adjusted EBITDA. We had a strong growth quarter excluding those, but obviously they were additive as well. I would just say in music publishing. That we are a full-service operator with Warner Chappell. We both are able to sign songwriters very early in their careers, help them develop their songwriting skills, pair them with other co-writers, help them pitch their songs to superstar artists. We are not just an acquirer. We are active in developing, and that is a huge part of our business at Warner Chappell, but we're also a very disciplined investor. We do look at the deals that come in the market. We do close deals when they have the proper financial return, and because we're able to look at deals across all genres, across all geographies around the world, we have found no shortage of attractive investments to make. Yes, there are a lot of deals happening there, and if the deal ever gets past the point that we think the return profile is attractive to us relative to our other opportunities and relative to our return threshold, that we'll pass and find other deals. We are not finding a shortage of attractive investment opportunities to continue to grow Warner Chappell's business. Steve, I don't know if there's anything you want to add, but I think I kind of answered the question. Yeah, Jessica, I think Eric touched on all of the high points. We have been engaged in these acquisitions. As importantly, we are providing an array of services to many of these acquirers because most of the people coming into this market that are making these investments are pure financial players. The fact of the matter is that these assets have to be managed, and one of the services we provide is actually the management of these portfolios to these third-party buyers. I'd like to point that out. Number 2, when we emphasize our financial discipline, it's not only what we have to do to grow the top line and the bottom line, but it's also to ensure that our cash flow from operations remains very healthy. One of the things we are really thoughtful and disciplined about is not buying assets at multiples that will create or severely crimp cash flow from operations. When we look at our metrics and we look at the multiples that some of these deals go at, very candidly, we look at those deals and say, "We can't make them work." We can't make them work because we've got a real cost to capital. We pay dividends to our shareholders. We've got to maintain a healthy cash flow from operations. If we can't figure out how to really optimize in all of the right ways some of these deals in the marketplace, we just take a pass. Hopefully, that answers your question. Thank you. Our next question comes from Todd Juenger with Sanford C. Bernstein. Your line is open. Hi. Thanks. Good morning. I've got really just one topic. Probably love to hear Steve's thoughts. I think, Eric, you might have a few things to chime in, too. The topic is data, especially in an increasingly sort of digital world. You have all sorts of business and channel partners who are developing repositories of data about listening and listeners and fans and your artists. Just to name some, your streaming DSPs are developing their own data. The ticketing services and live event managers are developing, well at least in a non-COVID world, are developing data. Obviously, the social platforms and gaming platforms are developing all this data, and I'm sure you have your own first-party data. I guess my question or the topic is, there's a perception among investors that this data is very valuable. Is that true? Do you find a lot of value in any of this data? Is any of this data particularly valuable to you versus some of it that may be sort of redundant or more nice to have? I guess, Eric, where you might especially come in for a financial audience here is, if this stuff is valuable, how are you obtaining access to it? Are you ever explicitly paying for datasets, or are you ensuring access to data you need from your partners in your agreements with other forms of consideration, and how are you making sure that that's part of the agreements that you have with your partners? Thanks. Eric, why don't I start, and then you can make all the points which I am sure on this. Todd, just to give you a sense of the Warner Music Group, we process 2 billion lines of data every day, and that's growing. Data, I guess philosophically, you start with it's not so much the data that's important, it's what you can glean out of the data by way of useful information and really informative insights that make sense. When people talk about data oceans, they're literally talking about oceans. The trick is to be able to organize that data. [Not only] if you look at data like the Pacific Ocean, while it's important to analyze from zero to 15 feet, you got to be able to organize, categorize, and pull really useful information and really great insights from not only zero to 15 feet in the Pacific Ocean, but all the way down to the Marianas Trench. Data without the right organization, categorization, and algorithms to identify the really useful stuff and the real insights isn't worth much in itself. That being said, we get data on a daily basis from hundreds upon hundreds of sources, and you're right that everybody's got their own data. What makes us different is we're an aggregator of data across all of these platforms. We get data from Live Nation, we get it from Spotify, Apple, YouTube, Deezer, Facebook, TikTok, on and on [and on]. While they have and they can analyze their data, it's only one of the cut facets of the diamond, Todd. We actually have the data and the sourcing that allows us to look at every facet of the diamond. You got to keep in mind that one of the services we provide to our artists and songwriters is data aggregation, which given our internal data scientists and the way we mine this data, so to speak, allows us to provide them with useful information and oftentimes really interesting insights. Is data helpful when you can organize and manage that way? Absolutely. When they return, it allows us to run far more effectively our marketing and promotion operations because we can focus on where our artists' fans are, what they want, and what more they're demanding. The unequivocal answer is data, when handled in a proper way, does have a lot of value. Incidentally, one of our mantras whenever we do deals is "No data, no deal." Eric, you may want to add to that. [The only thing I want to add] Steve, I thought that was right on the money. The only thing I want to add is, or just supplement, is we do have a series of tools that use all this data, which is to really power our decision and help our experts make the most efficient business decisions in real-time. We have Sodatone, which is our A&R tool, which allows our A&R executives to see music that's flickering at the early stages and artists that are just getting started, to see which artists we should meet and potentially sign and help develop their music and their careers. We have Opus, which is our marketing tool that helps us use tool about music that's already in the market to decide where and how best to promote it so that we're driving the most efficient both use of our marketing resources to drive music performance in the market. Steve mentioned we have artist portals that allow artists to see how their music is performing and where in the market. We have song pitching tools, we have sync tools. We have a series of tools that use both internally generated and externally generated data across hundreds of sources to make sure we're running our business in the most effective way we can. We continue to upgrade our data and our tools to make sure that we're using these in ways that are driving real outcomes, Todd. That was super interesting. Thank you both for your thoughts. Thank you. Thanks, Todd. Thank you. Our next question comes from Matthew Thornton with Truist Securities. Your line is open. Hey, good morning, guys. Maybe a couple really quick ones, if I could. The first one, Spotify obviously is in the midst of raising prices. [And relatedly,] my question is, maybe for Steve Cooper, do you have any sense as to orient expectation as to whether other DSPs will follow suit? Is there any reason why price increases from the DSPs wouldn't flow through commensurately in parallel to your streaming business? I guess that's my first question. Just a second question around live music. There's been talk of around theme parks and things like that. There's been talk of pent-up demand as we recover and come out of COVID. I'm wondering if you have any evidence of pent-up demand around live concerts, festivals, et cetera. Anything you can point to there. Any color there would be great. Thanks, guys. On the first, I'll give you my sense, and then Eric can follow up on many of the financial ramifications. Let me take the second first, though. I think there's a general view, Matthew, that there is pent-up demand for live. I'm sure you saw the sellout crowd in New Orleans a week or so ago for the UFC championships. There have been large crowds at managed events over the last couple of months. When New Zealand opened for live concerts, there was a surge in demand. I think one would just logically conclude that there is a pent-up demand. I would also say that over the last 12, 13, 14, 15 months, I think we should also expect changes in behavior, where if historically 100 people wanted to go to a concert, I'm obviously making these numbers up, there will now be 10 or 15 or 20 who will have lingering concerns about live and large crowds and will continue to double down on the habits created during COVID by way of watching things on live streams or by watching virtual concerts and interacting in different ways. I think that while there is pent-up demand, there may be some behavioral changes just because of the lingering uncertainties around COVID. With respect to price increases, Spotify's announced a number of price increases for a variety of their offerings in emerging markets, developing markets. They've now announced in the U.S. and I believe the U.K. I think that what people have a tendency to do on these services is build their library, build their playlists, there's a stickiness. I think that as Spotify and or others experiment with these price increases, if they don't see any meaningful churn events, and to date, we're not aware of any, but to the extent that they don't see any meaningful churn events, I think what we should have an expectation about is that other DSPs will begin to raise their prices as well. Keep in mind that there is a massive gap between pricing for audio, said differently, pricing for their ears, than there is pricing for video or eyeballs. I think that our long-term expectations are that the gap between audio and video will have to erode, Matthew. They may never be on a par with each other, but we do believe that audio will have to make incremental gains over time relative to the value proposition that's associated with video. Hopefully, that answers your question, Matthew. Eric, you should add anything you want to add. No, Steve, I thought you covered it very well. I could just- Thank you. Sorry, what was that? Question just for Eric, I guess. Is there any reason when a DSP raises price, I would expect that the impact to your business happens in parallel and commensurately. Is there any reason that that wouldn't be the case? I just want to clarify that. Thanks again for the clarification on the questions, guys. Well, thank you. I would just say we don't talk about specific DSP deals, so I don't want to get granular, but I would say, in general, when retail rates go up in the market, that in general, we would expect to share and participate in that incremental upside. Yes. Thank you. Thanks, ma'am. Our last question comes from Jason Bazinet with Citi. Your line is open. Thanks so much. Your business is so interesting because for many, many years it was in decline as physical collapsed, and now we're in sort of secular growth as the digital pivot's underway. I think what's hard in that sort of two-decade context is to get a sense of, on a full year basis, if you happen to have a bunch of hit records or hit artists that are on your roster, what it really means on, let's say, a full year basis in terms of growth. In other words, market share gains or losses. Am I right to sort of think of it as like bull case 1 or 2 points, bear case 1 or 2 points as a headwind or a tailwind in any given year? Is that a reasonable number? Thanks. Thanks, Jason. I would say that it's music certainly now, and I haven't been in the music business for 20 years. I've been there for seven. I would say that's a bit of a multi-pronged, multi-layered analysis to it. One, music has just become very global. We're releasing music in 50 markets around the world, and one can have really strong releases in Japan and Germany, and that can be really impactful. One can have some of our big kind of Anglo global superstars release music, and it can be really impactful. We could have a series of different ways to drive music and performance in the marketplace. [So] I would say that we have multiple tools. We certainly have, which I think you were talking to kind of the global superstars that really have an opportunity to have an impact on the global music market. We also have local and regional stars and new stars we're developing and breaking all the time that have a real impact. A lot of this is a portfolio across genres, artists across different stages of their career. We always take great pride in our ability to identify and develop and market the next generation of superstars and drive them into the market and have long-term relationships. They're hopefully what we plan for long-term careers. We do this all over the world in Asia, Latin America, Europe, and obviously in the U.S. and U.K. as well. I do think that individual artists have the ability to move the market, as you said, by maybe a point or so. [But] overall, we look at a very, very deep and broad portfolio every year, regardless of which names are on it, and making sure we're releasing great music. If we're releasing great music, we're confident that we can drive the performance and growth in our business that we expect. We've been doing that for the past seven, eight years at this point. Understood. Very helpful. Thank you. Thank you. Thank you. I would now like to turn the call back over to Steve Cooper for closing remarks. Again, I want to thank everybody for taking the time to join us today. Please, everyone, stay safe and have a really good time enjoying Cinco de Mayo. We'll talk to you in a few months. Bye bye. This concludes today's conference call. Thank You for participating. You may now disconnect.