Welcome to Warner Music Group's third quarter earnings call for the period ended June thirtieth, twenty twenty-three. 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 third 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, Robert Kyncl, and our CFO, Eric Levin who will take you through our results, and then we will answer your questions. Before I prepare remarks, I'd like to refer you to the second slide of the earnings snapshot 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. All of these materials are posted on our website. 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's a 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 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. With that, I'll turn it over to Robert. Thanks, Kareem, good morning, everyone, and thank you for joining. After a challenging first two quarters, we're pleased to see strong evidence of back-half recovery that we told you to expect. This has been a big team effort. I'm grateful to all leadership, all of our operators around the world, and all of our incredible artists and songwriters. I was happy that our Q3 results were driven by such a wide diversity of music. Strength came from many different territories, labels, and revenue lines. We succeeded with artists and songwriters across the spectrum of genres and generations, we saw the return of some of our biggest superstars, whose new music fueled fans' engagement with all of their albums. In addition to improved performance in our core recorded music revenue, we also saw growth in licensing, artist services, and almost all areas of publishing. I'm particularly pleased to say we're seeing our momentum accelerate into Q4. I'll provide more details, but first, let me get into our Q3 results. Total revenue grew 10% and adjusted OIBDA increased 18%, with margins growing 140 basis points year-over-year. Recorded music revenue increased 9% and streaming grew 7%, reflecting double-digit growth in subscription revenue and modest growth in ad-supported revenue. Please note that beginning this quarter, when we talk about ad-supported streaming revenue, it includes revenue from emerging streaming platforms such as TikTok, Meta, Peloton, and others. Music publishing turned in yet another impressive quarter, delivering revenue growth of 16%, driven by strong streaming growth of 28%. I'd like to dive a little deeper into the different projects that drove these results, as they reflect the strength of our commitment to developing extraordinary talent and growing our incredible catalog. In recorded music, artists at all stages of their careers, global superstars and local names, new albums and timeless classics, all added to our growing momentum. Ed Sheeran's sixth studio album, Subtract, hit number one in 11 countries and top five in seven other countries. Melanie Martinez's third album, PORTALS, went top three in the US, UK, Canada, Ireland, New Zealand, and Australia, where she celebrated her first number one album. Both Ed and Melanie are great examples of the same phenomenon in the modern music business. New music, combined with touring, is resulting in an uptick of streams across the entire catalog. Given the cultural relevance of Latin music right now, I'm pleased to say that our Latin division is on fire. Recent successes include Puerto Rico's Myke Towers, who so-soared to number one on Spotify Global Top 50 with his song Lala, and Mexico's Yng Lvcas, whose monster hit, La Bebé, spent nearly four months in Spotify's Global Top 10. By the way, we just signed Yng Lvcas for publishing as well. Other amazing artists that are enjoying breakout hits include Korea's aespa, Italy's Capo Plaza, Sweden's Pål Lötberg, France's Ninho, the U.K.'s PinkPantheress, the U.S.'s Bailey Zimmerman, and Australia's Budjerah. We also partnered with Chinese superstar G.E.M. for her groundbreaking album, marking the first time a Mandopop artist has recorded a full-length Spanish release. This partnership truly highlights how languages and genres are cross-pollinating. The combination of our global reach and local expertise continues to give us a competitive advantage as we lean into this trend. Equally, it was great to see how music from our incredible catalog can continue to contribute meaningfully to our results. This includes major projects with renowned names such as Linkin Park and the Grateful Dead, as well as impressive carryover sales from newer artists such as Zach Bryan, Ava Max, and Don Toliver. I'm also happy to say that our Q3 momentum is carrying over into Q4. Lil Uzi Vert scored his third number one album on the Billboard 200 with Pink Tape, the first hip-hop album to top the chart in 2023. Young Thug's Business Is Business peaked at number 2, and Gunna's A Gift & a Curse debuted at number 3 on the Billboard 200, with his lead single reaching number 1 on the Spotify in the US. Dua Lipa's highly anticipated new track, Dance The Night, which is currently number 1 on the official European Airplay chart, kicks off the campaign for Barbie The Album, released on Atlantic Records. Like the movie itself, the album has been a massive global cultural event, hitting number 1 in 7 countries, including the UK, Canada, Australia, New Zealand, Netherlands, Ireland, and Portugal. It is the first soundtrack ever to land 3 top 5 singles in the UK. All in all, I'm pleased with our improvement in Q3, but we still have lots of work to do. Kudos to the whole recorded music team for how they partnered with our artists and worked hard to drive these results. In publishing, we continue to see impressive results from our strategy to diversify our revenue streams, strengthen our services, and mine our deep catalog. At the same time, our songwriters are contributing to massive hits, including Morgan Wallen's Last Night, Miley Cyrus's Flowers, and SZA's Kill Bill, all of which reached number one on Billboard Hot 100. We're also seeing huge successes from Germany's Apache 207, Spain's Quevedo, the UK's Dave, and Mega Hot producer, Metro Boomin, to name a few. We're always expanding our publishing roster and have recently signed deals with GRAMMY-winning pop rockers, Imagine Dragons, Ice Spice's producer, RIOTUSA, and Spanish star, Ana Mena. I'd like to emphasize one other key theme today, our efforts to grow the value of music, which includes our approach to AI. We're focused on creating virtuous cycle, where innovation, fan engagement, and greater monetization thrive together, providing even bigger opportunities for artists and songwriters and music fans around the world. When I arrived at WMG, one of the first priorities I identified was the push for increases in music subscription prices. I am pleased with the traction that we're getting. Last month, TIDAL, YouTube, and Spotify all followed Apple, Amazon, and Deezer by upping their prices. This is the fiscally responsible thing to do for themselves and for the creative community. I'd like to thank them all for taking this important step. Back in March, I said that if we adjusted for inflation since 2011, the year that music streaming was introduced in the US, the price of a monthly music subscription in the US should be $13.25 today. I'd like to point out that in 2011, the price of the standard Netflix plan was $7.99. It has since increased to $15.49 today. If the monthly price of a music subscription had gone up by the same proportion, it would have increased from $9.99, where it was in 2011, to $19.37 today. Let's remember that music subscription services give you access to all the music ever released in a continuously growing library for roughly the price of a single CD. You need to subscribe to 3 or 4 movie and TV services for roughly $45 a month to get anywhere near a comprehensive offering. We see these initial price increases as an encouraging start. There's no evidence that the services are experiencing elevated levels of churn. We believe the market will bear further price increases in the future, and we're expecting that they'll arrive on a more regular cadence than in the past. Again, when I joined WMG, one of the questions I repeatedly got was about TikTok. 7 months in, I'm pleased to say we also made great progress there. Last month, we announced an expanded and significantly improved deal with them. The agreement covers the main TikTok app, the rollout of the subscription service, TikTok Music, the video editing app, CapCut, and TikTok's commercial music library. Our deal gives our artists and songwriters access to new levels of monetization, marketing, and fan development features. This is a first-of-its-kind partnership that will also mean the joint development of additional and alternative economic models as we grow the ecosystem together. I know there is interest in the specifics of our expanded relationship, due to confidentiality provisions, we aren't at a liberty to disclose them. What I can say is this: the deal features improved monetization per MAU that is comparable to other ad-supported DSPs, fully recognizing the value of our music and how critical it is to engagement on the platform. I was glad to have had the benefit of my experience at YouTube, aligning with the music industry on solutions that work for everyone. We look forward to working with the team at TikTok, along with our other partners, to continue to innovate and grow the value of music. The market's adoption of subscription price increases, combined with the ongoing evolution of our key partnerships, gives us tremendous optimism for the future of streaming growth. As we turn to AI, I'd like to point out we have long history of working together with distribution platforms to establish licensing models that drive growth and innovation. For the past 15 years, music companies and distribution platforms have partnered to grow user-generated content as a multibillion-dollar revenue stream for artists and songwriters. Today, there are obvious similarities with AI. Working with our artists and songwriters, we're leaning in, moving fast, and working with a network of partners, including both generative AI engines and distribution platforms. Many Warner artists are already exploring impactful ways to use generative AI to create, augment, and remix their music. We have some great examples from big names on the way later this quarter. Other artists are using generative AI for visuals, with artists like metal band Disturbed and dance producer, R3HAB, and the superstar rock band, Linkin Park, all creating highly impactful music videos. In addition, AI-enabled stem separation technology is giving new life to recordings by artists who are no longer with us. For example, AI has been used to isolate the vocal performance from sound recordings of legendary entertainer, Sammy Davis Jr., and renowned opera singer, Maria Callas, as part of groundbreaking sync deals. We're deeply inspired by our artists' abilities to embrace and push the boundaries of the latest technology. I'd like to highlight one of the first official and professionally AI-generated songs featuring a deceased artist, which came through our ADA Latin division. Costa Rican musician, Pedro Capmany, has released a new duet with his dad, the legendary father of Costa Rican rock, José Capmany. This is José's first song since 2001, the year of his tragic death. After analyzing hundreds of hours of interviews, a cappellas, recorded songs, and live performances from José's career, every nuance and a pattern of his voice was modeled using AI and machine learning. The resulting song movingly announces the arrival of Pedro's son, José's grandson. It also coincides with José's catalog being available on all streaming services for the first time. With the right framework in place, AI will enable fans to pay their heroes the ultimate compliment through a new level of user-driven content, including new cover versions and mashups. AI is unquestionably one of the most transformative forces in human history. Nonetheless, this technology shift is more familiar terrain than first meets the eye. Like many technologies before, it presents massive opportunities for human creativity and innovation. Q4 is off to a strong start with amazing releases, including Barbie The Album, Burna Boy, Ninho, PinkPantheress, Tiago PZK, Kali, Tiësto, and Anne-Marie. We have new music coming from Zach Bryan, Sia, Dan + Shay, David Guetta, Charlie Puth, Omar Apollo, and Robin Schulz. We have a fantastic roster of artists and songwriters and a great team. We continue to invest in our expertise and infrastructure, both creative and technological, in order to create long-term success. As I said on my first earnings call, I'm a big believer in action speaking louder than words. Today, more than anything else I've said, it's our results that show we're gaining real traction, and there is a lot to be excited about in Q4 and beyond. Eric, over to you. Thank you, Robert. Good morning, everyone. Our Q3 results are reflective of a robust release slate, strong carryover from a variety of artists across different genres and geographies, easing ad comps, and outstanding performance in our publishing business. As a result, we delivered solid growth across key metrics, including revenue, Adjusted OIBDA, and Adjusted OIBDA margin. Total revenue increased 10%, reflecting growth in both recorded music and music publishing. Adjusted OIBDA increased 18%, with a margin of 19%, compared to 17.6% in the prior year quarter. These increases were primarily due to strong operating performance and disciplined cost management. Our margin performance in the quarter was not materially impacted by savings from our March headcount reduction, as we reinvested most of the savings into technology. Although we anticipate that we will similarly reinvest most of those savings for the balance of this fiscal year, we are raising our guidance to deliver full-year margin expansion at the high end of our 50 to 100 basis point range. Recorded music revenue grew 9%. Streaming revenue increased 7%. Subscription streaming revenue grew in the low double digits, and ad-supported increased in the low single digits. As Robert mentioned earlier, starting Q3 and going forward, when we talk about ad-supported streaming revenue, it will be inclusive of revenue from emerging streaming platforms. Our streaming results improved in each month of the quarter as we released new music. Additionally, the market-related ad-supported headwind moderated as we lapped the pressure we began to see in the prior year quarter. Physical revenue increased 2%, driven by solid performance in the U.S. Artist services and expanded rights revenue increased by 14% due to higher concert promotion and merchandising revenue. Licensing revenue increased 24%, driven by growth in sync and broadcast fees. Recorded music Adjusted OIBDA increased by 16%, with a margin of 20.6%. This is an increase of 130 basis points compared to the prior year quarter. Music publishing continues to deliver strong results, posting 16% revenue growth, driven by strength in digital and mechanical. Digital revenue grew 27%, and streaming revenue increased 28%, reflecting the continued growth in streaming, digital deal renewals, and a revenue true-up of $9 million. We had a $17 million benefit from the CRB rate increase in the prior year quarter, and we had a $7 million benefit in the current quarter. Performance revenue decreased by 9% due to the timing of payments from collection societies. Mechanical revenue increased by 45%, primarily due to a higher share of physical sales and timing of distributions. Sync was flat due to lower commercial licensing activity, offset by copyright infringement settlements. Music publishing Adjusted OIBDA increased 32% to $74 million, with margin increasing 310 basis points to 26.1%, driven by strong operating performance. In April, we successfully launched certain components of our financial transformation program in select territories. The program remains on track to meaningfully roll out in a wave-based approach and with expanded functionalities during fiscal 2023, 2024, and into 2025. Once fully implemented, we expect the program to yield annualized run rate savings of $35 million-$40 million. Q3 CapEx decreased to $33 million, as compared to $35 million in the prior year quarter. Operating cash flow decreased 10% to $146 million from $163 million in the prior year quarter due to higher cash taxes and cash interests. Free cash flow decreased 12% to $113 million from $128 million in the prior year quarter. Adjusted OIBDA to operating cash flow conversion was 49% in Q3. Our goal remains to deliver an operating cash conversion of 50%-60% over a multi-year period, and we expect to achieve this target for 2023. As of June 30, we had a cash balance of $600 million, total debt of approximately $4 billion, and net debt of $3.4 billion. Our weighted average cost of debt is 4.1%. Our nearest maturity date is in 2028. As we look ahead, we expect continued improvement in our results. We are working hard to execute against our plan and look forward to sharing more about fiscal 2024 on our next earnings call. Thank you to everyone for joining us today. We'll now open the call for questions. Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Benjamin Swinburne with Morgan Stanley. Your line is now open. Good morning. Robert, you mentioned the price increases. I think you thanked the DSPs for what you described as a good start. At least from our, our perspective, there's a bigger prize longer term, which is really continued movement of prices higher and really a, maybe a structural change to sort of the incentives that are driving the market. I'm wondering if you could talk a little bit about your confidence in your ability or the industry's ability to really drive significant change in the incentive structure, and whether or not you have a new agreement with Spotify, because there was some disclosure in their quarterly filing suggesting they've got a number of new commitments with partners. Universal announced, you know, a new agreement. Would love to hear your thoughts on sort of the long-term changes you'd like to see the industry adopt beyond just one year of price increases, and also whether you can talk a little bit about your relationship with Spotify and whether anything's changed there. Thank you. Thanks, Ben. Let me take it from the backwards. So no, we do not have a new deal with Spotify. So let me just clarify that upfront. ... The, you know, we're not in relationship with the consumers, our DSP partners are. They are free to raise prices at any time without any contractual change, so it's not required in order to do so. I think, you know, as I look forward into the future, obviously, you've heard me, even in my opening remarks, talk about the value of music and, and, you know, this being a first step in what I believe is a more regular cadence of increases. Let me give an example of what I think should happen more often and, and why. If you look at the history of Netflix and their innovation around price, it was really both on the way down and on the way up. Netflix started at $20 a month, more than 20 years ago, then it went up to $22, and then it, over the course of many years, has innovated down to 19, 18, 17, 16, all the way down to $7.99. Then it started to grow it back up, and today the standard plan is $15. I forget the name of the next plan, with more family members on it, is $19, so it goes to $20. The level of innovation around price is incredible, and I think that the DSPs in the music space will begin on the same path because the video services are showing us a price elasticity that consumer has, that it is not resulting in elevated levels of churn. Let me be clear, I am not suggesting that we go to $19 today. That is not what I'm saying. What I'm pointing out is the innovation that is happening in the entertainment space around it, the value that we all provide to users, and the elasticity that is there. We are, you know, we obviously want to make sure that we're working collaboratively together with our DSP partners to innovate, you know, over the next decade around this point. Thank you. Then if I could ask you, you a follow-up, you, and/or Eric, just around margins. I mean, this quarter, we really saw the business deliver the kind of growth I think we all kind of expect over time, particularly both revenue but also operating leverage. I think there's still some question out there, Robert, about whether your appetite to sort of reinvent the, the, the organization from a technology point of view is gonna cause some kind of pause in the margin story that we're, we're, we're seeing again this quarter. Just wondering if you could talk a little bit about the technology investments you're making and whether you think you can continue to drive operating leverage in the business over time, assuming the top line performs. Thank you very much. Ben, this is Eric. I'll take that. I think the first thing to note is that we did a restructuring, reduced headcount this year, are getting meaningful savings from that. Our technology investments are really being funded by those savings, not coming out of margin. That's the first point. Second point is, at the IPO, we had a long-term projection of 100 basis points increase per year on average in margin. We have largely met that. We're saying we're gonna meet that again in 2023. I will say that as we look forward, we are focused on margin increases. We are working on our 2024 budget now, so I don't have anything specific to say for 2024. I will say that we actively, Robert, myself, the business team, actively worked on a game plan for OIBDA growth and margin improvement within fiscal 23. We're working collectively as a team. Early in the year, I said 50 to 100 basis points was realistic for this year. Now we're confirming the high end of that range as our objective, as our goal for the year. That is largely through active management of the business, both revenue growth. We saw re-accelerated digital growth and recorded this year an extraordinary performance in our publishing division, both with growing margins and active cost management, not just in headcount, but also areas like marketing, that allow us to achieve this strong margin growth. We, as a team, will continue to look at growth in the business, both top line and margin. Where exactly it'll land, 2024, we'll report, in future quarters as we finalize our budget, but it's very much in the center of our focus. Thanks, Ben. Thank you. Thank you. Our next question comes from the line of Michael Morris with Guggenheim Securities. Your line is now open. Hi, good morning. Thanks for taking the question. I wanted to ask about the TikTok agreement. There's a lot of complexity in the announcement here, so I'm hoping you can share some additional detail. You know, as you look at the different components of this agreement, Robert, can you help us understand, you know, which elements are the most impactful to your business, maybe in the near term, as compared to which elements need to unfold a bit more over time? Some details there would be great. I'm also curious as to whether this deal sets any precedent for other technology partnerships that you have. Finally, Eric, you know, you've discussed in the past moving some of these kind of emerging agreements from fixed payment structures into more variable agreements. Does this agreement start to compensate you more on a usage basis? You know, particularly given just the popularity of the platform. Thanks, guys. Sure. Oh, go ahead, you, sir. Sure. Go ahead, sorry, Robert. All right, Eric and I are tussling. I won. Obviously, we can't share much, it's confidentiality, as I mentioned before. What, what I can tell you on, on the elements, obviously, I, I focused on value for us, and, what is important to me is that whether it's in ad-supported or subscription, that we have fairness across all of our distributors, so that nobody feels disadvantaged or advantaged in any way, and, and, and that we have a well-distributed, distributor, set of partners, we're all sort of feeling equal. That was an important tenet of the relationship with me, but, with, with TikTok. What I also wanted to make sure is that we focus on the users, on their users, because that is important to TikTok and any DSP, you know, for that matter. I think it's important for, for, music companies to focus on that equally, in order to make it win-win. I have to say that I'm very pleased with the way Shou, the TikTok CEO, has engaged and, and sought also a win-win deal for both sides. I want to make sure that this impactful platform drives even more value for us in the future because we're delivering the value to them as well. I think we've achieved this between both parties. But there's a lot of work to do for us to unleash even more opportunities, and we have a roadmap for that. Yeah, let me add a few things. Thanks, Robert. One is, and again, consistent with what Robert said, and how our philosophy is, having services that compete with each other that our monetization is in line so that we're not incented to support one service versus another, but to provide the best content we can across all services and let their competition in the market determine where audiences go. We're achieving our objective as we do these deals. TikTok is an example of that. It also opens up new growth drivers as they roll out subscription services and then other products that they want to. What I will say is, we have been saying for quite some time that we've had emerging streaming deals that were concluded in 2021, that we expected renewals in 2023 and 2024. This obviously is a substantive one of them. What we will say is that this is happening pretty much when we expected and in line with where we would have expected this to. This is really consistent with our model and our forecast, and, you know, we're really pleased this deal concluded, and Robert said, you know, in good partnership, so, we move forward. Thanks, Michael. Great. Thank you, guys. Thank you. Our next question comes from the line of Batya Levi with UBS. Your line is now open. Great, thank you. Can you provide a little bit more color on, on the emerging platform revenue mix now and your expectations for growth over the next couple quarters? Maybe just one question on the advertising trends. Did you start to see some improvement in the base, excluding the emerging platform, and how should we think about that going forward? Thank you. A few... Thanks for the question. The first thing is, this is the first quarter, and hopefully, this simplifies things for folks out there. We know that it's been something we've had to explain in components in the past. We're now combining the emerging streaming category and the traditional ad-supported streaming category combined, which is how we know others report this as well. We have seen improvement in the in that category sequentially, as the market improves, specifically for ad-supported services. You see that in the reporting of public reporting of some of the services that we have licenses with. We're seeing this as a continued category of improvement quarter- to- quarter. We see the emerging subset, more of the social gaming subset, as continuing to show upside and opportunity and growth, and the traditional ad side, which was declining for the past year or so, really starting to come back into a positive growth environment. Across the board, we've been pleased. And again, as we've said, as I said before, you know, we had a series of renewals that are coming up in 2023 and 2024, TikTok being one that we've talked about publicly that was just done, noting that that didn't affect our Q3 results, that that deal was done in our fiscal Q4, and we'll see that in our fiscal Q4. Got it. Thank you. Thank you. Thank you. Thank you. Our next question comes from the line of Kutgun Maral with Evercore ISI. Your line is now open. Good morning, thanks for taking the questions. I was hoping to follow up on the streaming revenue discussion. You know, when I think of the DSP price increases, TikTok deal, and improved ad-supported trends, at this moment, there seems to be more tailwinds to growth. You know, maybe there have been at any other point over the last few years. I know you called out that momentum has carried into Q4, but is there any more color you could provide on if we should see another acceleration in the year-over-year growth and how high that could get to? Specifically, I realize you don't provide guidance, but are we entering a period for the next year or so when recorded music subscription streaming revenue growth could get closer to a low teens range compared to the double digits in Q3? Thank you. Thanks, Kutgun. This is Eric. I'm happy to take the question. I think you're right. When you look at, you know, traditionally, when you'd look at, I mean, the time of our IPO, just looking back a couple of years, when you looked at what's going to drive streaming growth, it was the numerical growth in subscribers. It was literally subscription growth. Now it's a multipronged growth engine. It continues to be subscriptions, but now it's not just developed markets. Emerging markets have accelerated their growth in subscriptions. Pricing, we've seen in the past year, pricing come pretty much across the board now for all virtually all substantive distributors. You're seeing emerging streaming continue to grow, with positive renewals reaffirming the category and its potential. You're seeing the traditional ad-supported streaming that was affected by economic weakness, starting to improve and get back to positive growth. We're seeing a series of growth drivers in streaming, all of which are seeing positive momentum. As far as the number that that growth will hit in the short term, I wouldn't want to give that forecast. There are many third parties that published numbers there. I would ask you to look at, study, and evaluate their assumptions. I would say that as we're entering fiscal almost entering fiscal 2024 versus 2023, the environment across the board has become meaningfully more positive and optimistic as far as the variety of growth drivers and the strength of the growth drivers. We do agree with you that there's real positive momentum out there, Kutgun. Thanks for the question. That's great. Thanks, Eric. Thank you. Our next question comes from the line of Benjamin Black with Deutsche Bank. Your line is now open. Hi. Thank you. Good morning, and thanks for the questions. Robert, on the last earnings call, you mentioned the disconnect between sort of the value of streams from higher caliber artists and sort of the current payment model. Obviously, you know, quite a few DSPs have raised pricing. I guess my question here is, have you made any progress towards a more artist-centric model? Then just a quick follow-on, follow-up question on TikTok. I think when it was announced, you mentioned the possibility of, you know, new revenue opportunities for your artists and your songwriters, and also new fandom monetization on possibilities. What, what exactly are those new opportunities? Any, any, any additional color or commentary would be great there. Thank you. On the progress around DSPs. If you sort of step back, you know, what, what I highlighted before is there's, there's sort of disparity between the value that users receive by subscribing to music services and what it costs today, right? I've, I've, like, said it multiple times, versus Netflix, versus inflation, et cetera. That's one thing. And, and the need for innovating around price optimization and, you know, what has served the industry incredibly well for the past 15 years was this collaboration about getting hundreds of millions of people, multiple hundreds of millions of people into the premium experience, creating playlists and having stickiness, and, and having a great value prop. I don't think that that is what will serve the industry well in the next 15 years. We will all collectively have to focus on much more innovation around audience segmentation and price optimization, without negatively impacting any of the users, I should add. That is not a thing that happens overnight or, you know, a quarter- to- quarter. It's a carefully developed and orchestrated change that we will undergo, but don't expect news on that anytime soon. It takes time to unfold, and it takes multiple parties, you know, it takes two to tango in this, and it's more than two in this case. But I'm very much focused on it because I do think it is the right thing for all parties involved. And it's, and it's worth undergoing and doing it in the most collaborative fashion possible. I forgot there was a second part of your question, which... Oh, TikTok. TikTok. I think I said earlier that I can't give too many details on TikTok because of our confidentiality agreements, and I get a lot of questions on it. Every time you have massive user engagement, which TikTok has, right? It's been very successful in creating it. It creates new opportunities, not just for that company that has the consumer, but also for companies that work with it to develop new revenue streams off of this fan engagement. Whether that fan engagement is promotional in nature or economic and e-commerce driven, you know, all of those are the possibilities. What I wanted to establish is having a strong agreement with TikTok that gives us the license to both go deep together and innovate, you know, in, in the coming years, and that's what we're doing. We're-- I can't really share any more details on that, but other than I'm very pleased to be partnered with them, to partner with Xiao and his team, and, you know, off and running. Great. Great. Thanks. I have to try. Thank you. Thank you. Our next question comes from the line of Douglas Creutz with Cowen and Company. Your line is now open. Hey, thank you. You talked a bit about the, some of the opportunities you've had using AI to, to create music. I just wondered if you could talk a little bit about both sort of on the legal side, the rights issues that you have to negotiate when doing that, and then also just in terms of the relationships with the artists. Obviously, AI has become a, a point of some significant tension in other entertainment fields, and where your discussions sit right now with respect to that? Thank you. Yeah. As you can imagine, you know, we are deeply engaged with our distribution partners as well as with the generative AI engines. It's like sort of two fronts that we're having lots of discussion and collaboration around. I always view this as both defensive and offensive, and that is one of the reasons I mentioned in my opening remarks, some of the great progress we're making around generative AI with some of our artists. There's, you know, and there's a lot more that is happening behind the scenes that I have not talked about, and because it's a creative tool. However, the thing that is important is that artists have a choice, because there are some that may not like it, and that's totally fine. Then there are some that will embrace it, and that's also fine. We have to make sure that we ensure that they have a choice, and that something is not done to them, that is done with them. That is my utmost priority here, because there's nothing more precious to an artist than their voice, and protecting their voice is protecting their livelihood and protecting their persona. I want to make sure that we deliver on that, and at the same time, we deliver on opportunities that the tools can provide them. Thank you. Thank you. Our next question comes from the line of Sebastiano Petti with J.P. Morgan. Your line is now open. Hi, thanks for taking the question, Eric. You know, just, just trying on this one here. You know, you said you wouldn't give us any color on 2024 in terms of margins, but can you help us unpack maybe the phasing in of the financial transformation program? You know, what if-- You know, could you perhaps highlight what%, or what you saw in the quarter? Was it material? Maybe how that'll phase in through 2025. As you're looking in, as you're looking into 2024, anything that we should keep in mind in terms of comps this year, you know, relative to 2022, which will perhaps normalize i- inside of 2024, you know, thinking about, you know, the reported margin expansion, what that kinda looks like more on a like for like basis, and 2023 seems to, you know, better, better than perhaps how it's, you know, coming in on a reported basis? Then I guess another kind of cleanup question here, while, you know, just on the emerging streaming platform, you know, great that it's gonna be combined with ad-supported going forward to align with peers. Could you give us an update on the underlying emerging streaming platform revenue, perhaps in the quarter, and trying to parse that out against the true underlying ad-supported, you know, growth, I think, you call that? Thank you. Okay. A lot of questions packed in there, Sebastiano. Nice to hear from you. All right, let me try to tackle that. I think I've got three groups of questions. One is financial transformation. What we're trying to communicate there is a few things. One is that it's launched, it is live. We have several markets now using the new technology successfully, and that is fantastic. It is, it is working and functional in a few markets. What we have done is adjusted our launch schedule to come in waves across fiscal 23, 24 and into fiscal 25. This will allow us to make sure that we have the proper support and hypercare as each segment of markets is rolled out, to make sure that it is successful, and that as we do this, we have the ability to use the new processes and tools successfully with the right training, the right controls. So it's a very thorough launch plan phasing over time. As we roll out, the benefits will roll in with it. Obviously, a substantial portion of the benefits happen when it is global. So some of the benefits will roll in in 2024, although a very modest amount, larger in 2025, and once it's rolled out in 2025, the benefits will expect to be robust for fiscal 2026. ... You asked the questions about margin. I'm not sure I 100% got it. What I will say about fiscal 2023, is that the acceleration of digital and streaming revenue in the second half of 2023, which is high margin revenue, is a great boost, and our active cost management is allowing us to meet the, you know, high end of the range, which is what we've been looking at in prior years. Not every year is exactly the same. I don't have an analytical like-for-like comparison sitting in front of me, but every year we are looking for the opportunities to achieve the high end of the range, depending on the mix of releases, distributed versus owned, artist services, and its rate of growth, which is lower revenue. Every year has a slightly different profile. As we look at, and we'll look at in the 2024 budget, look at the profile of 2024's revenue and the margins of that revenue and build the best plan for the year we can, with margin growth as one of the things we are actively managing. Your last question was, now that we're reporting emerging streaming and ad-supported together, I think you want us to, to give some color on each piece. What we'll say is that, in emerging streaming, there were no notable new deals in 2023. The TikTok deal... I'm, I'm sorry, in Q3 of 2023, the TikTok deal commences in Q4. The category in emerging streaming continued to grow nicely, I would say well into the teens, and ad-supported continued to show sequential improvement, heading back towards growth. Hopefully, that gives you the color that you wanted, Sebastian. Thanks, Eric. Appreciate all the color. Thank you. Our next question comes from the line of Matthew Thornton, with Truist Securities. Your line is now open. Hey, good morning, Robert. Good morning, Eric. Most of mine have been answered, so a couple of housekeeping questions, if I could. I think given the cadence of the recent price increases across the DSPs, I would assume that we probably don't see the full run rate impact of that until the calendar fourth quarter, so fiscal first quarter. I just wanna make sure that that's a fair assumption. Then maybe for Eric, in the publishing side of things, in streaming, I think there was a couple puts and takes between renewals and a revenue true-up and some CRB impact, and I think there was a copyright infringement settlement within Sync. I'm, I'm just kind of curious how to net those out in terms of what the maybe the net impact from some of those one-time items might have, might have been in the quarter. Any color there would be helpful. Thanks, guys. Thanks, Matthew. I'll, I'll take the second one first, because they pretty much net out to zero. The two most substantive things in publishing was the revenue true-up in streaming and the CRB Phonorecords III, which has now been finalized, the kind of backlog revenue impact now that it's able to be calculated. The revenue true-up was a positive. The CRB, although there was a positive this quarter, the prior year was a positive, was $10 million more. When you net that all out, it all nets to zero. The streaming revenue growth of 28% in publishing is about what it is once you net out all those true-ups. It's really kind of negates each other. On the price increases on the recorded side, I would really say to expect the benefit of those, or the full benefit of those, in fiscal 2024. You know, Spotify's announced rate increase, as an example, takes a few months to execute, roll out to their consumers, then roll out into our numbers. I'd expect to see, the price increases roll through our numbers in fiscal 2024. Not, not, I don't think, realistically, in Q4 2023. Maybe I could just sneak one more on housekeeping as well, there, Eric. The lower variable marketing spend that you talked a little bit about in the release, I just wanted to kinda double-check if that's something that's sustainable or if that's something that needs to come back a little bit. Any, any color there as well? Thanks again. I'd say it's too early for, for us or me to make a definitive statement there. I think some of that depends on the release schedule, which markets it's skewed towards. Some markets have higher need to break local music and a higher marketing demand. When some products come out in with partners or partnerships of how they're released, it creates efficiencies in marketing. It depends on the release schedule for next year. Obviously, as you see from this year, we're very actively looking at evaluating and managing costs, including marketing. As we look forward, we will continue to with great discipline evaluate and manage those. I wouldn't want to yet call a specific permanent lower variable marketing. I will say that we're very actively looking to manage and improve margins, and that is one of the significant tools that you have to use. Great. Appreciate the color. Thanks, guys. Thanks, Matt. Thank you. Our next-- last question comes from Stephen Laszczyk with Goldman Sachs. Your line is now open. Hey, great. Thanks. Good morning. I was wondering if you could maybe talk a little bit more about the momentum you saw in market share in the third quarter on the back of some strong releases, you know, especially if there's anything you can say around, you know, perhaps the cadence or magnitude... of those trends, and then maybe looking ahead, could you maybe give us an update on how the release slate stacks up in the back half of this year, versus what we saw in the first half? Sure. First, I wanna point out that we had-- we obviously had, you know, great release slate with lots of momentum and lots of success. At the same time, our catalog has also delivered, which is, which is something that I tremendously appreciate. It was, you know, we've kind of been, you know, firing on both engines in new release and catalog. We have a great slate for the next for the next quarter. There's I would say the best way to think about this is that, you know, we enter the quarter with great success, with Lil Uzi from Lil Uzi Vert, Gunna, Young Thug, Kelly Clarkson, aespa, and the Barbie soundtrack, obviously, is a huge blockbuster. Our entry into the quarter has been great, and our slate looks, you know, also very, very strong, for Q4 and the rest of the year. There's lots of great new releases coming out, from Burna Boy, Ninho, PinkPantheress, Tiago PZK, Kali, Tiesto, Anne-Marie, and so on and on and on. You know, and we have some new music coming from Zach Bryan and Dan + Shay, Sia, David Guetta, Charlie Puth, Robin Schulz, et cetera. There's a lot of activity. The team is firing on all cylinders, and I'm just glad that, you know, we have re-accelerated and that we continue. Great. Then maybe just a longer-term question on the publishing business. You're seeing some great momentum on that side of the house. I was wondering if you could maybe talk a little bit more about the diversification and services strategy that you're, you're pushing through in that business, and to what degree we maybe could expect similar outperformance on the publishing side over the course of 2024. Thank you. Yeah, I mean, it's, it's hard for me to guide for 2024, just to sort of be in line with Eric, on, on that. What I can say is that, Guy and Carianne have done a tremendous job over the past four years with Warner Chappell and, and run a very efficient and effective machine. They've, they've diversified our services. They mine the catalog incredibly well. You know, we have 1 million... You know, more than 1 million songs that we're focusing on monetizing, and that, that takes some machine to do. They're incredible operators, and, you know, their results are really speaking for themselves. Obviously, I worked with them very closely to, to set this up for the future and make sure that we continue, but I'm, I'm not prepared to guide on that into 2024 as of today. Overall, I just wanna close by saying I'm very grateful to the whole company, to our team's hustle, you know, in the last quarter and in the current quarter. And it's great to see music speaking for itself and delivering the results. Thank you. Thank you. I'd like to hand the call back over to Robert Kyncl for closing remarks. I wanna thank you all for taking the time out of your day to dial into our call, for all of your thoughtful questions, for challenging us on things, and again, very appreciative to the entire team at Warner Music Group, and I look forward to our next earnings call with you. Have a great morning. This concludes today's conference call. Thank you for your participation. You may now disconnect.