Welcome to Warner Music Group's second quarter earnings call for the period ended March 31, 2026. 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 afternoon, welcome to Warner Music Group's Fiscal Second Quarter Earnings Call. Please note that our earnings press release, earnings snapshot, and Form 10-Q are available on our website. On today's call, we have our CEO, Robert Kyncl, and our CFO, Armin Zerza, who will take you through our results and then answer your questions. Before our prepared remarks, I'd like to remind you that this communication involves forward-looking statements that reflect the current views of Warner Music Group about future events and financial performance. We plan to present certain non-GAAP results, including metrics that are adjusted for notable items during this conference call and in our earnings materials 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. 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 as 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 these risk factors is contained in our filings with the SEC. With that, I'll turn it over to Robert. Hello, everyone, thank you for joining us today. Our strong Q2 results prove that our strategy is working. With a 12% increase in total revenue, a 24% increase in adjusted OIBDA, and over 200 basis points of margin expansion, we are demonstrating the benefits of our transformation. This growth is underpinned by an increase in recorded music subscription streaming revenue of 15% on an adjusted basis. This was bolstered by the combination of broad-based strong execution by our operating units and by the successful implementation of contractual PSM increases that began in the quarter. We continue to make progress on our three strategic pillars, growing our market share, increasing the value of music, and becoming more efficient and effective. We use AI to help us achieve all three of these, which I'll touch on throughout my remarks. Starting with market share growth, which remains a primary objective, we're driving gains through developing new talent and delivering consistent creative success with emerging and established artists and songwriters across multiple geographies, improved monetization of our catalog, and increased focus on distribution. Our execution across all of these has delivered strong year-over-year share growth in our fiscal Q2. Overall, U.S. streaming share grew 1.1 percentage points, and U.S. new release share grew 2.7 percentage points. Our creative success is evident in recent high-profile wins, including Bruno Mars dominating four Billboard charts simultaneously, PinkPantheress securing her first Billboard Global 200 number one, and Don Toliver scoring his first number one album. Like Bruno, many of our current superstars are homegrown, Dua Lipa, Charli xcx, and many more. You can go back decades in our history to artist discoveries like Led Zeppelin, Grateful Dead, Madonna, Prince, and many others who have launched and sustained highly successful careers at our labels. Flash forward to today, we continue to introduce the world to breakout chart-topping stars like PinkPantheress, Sombr, Della K, The Marías, and Alex Warren. These are just a few of the many examples of our outstanding track record in artist development. We've successfully transferred this capability around the world. We've delivered a string of number ones from local artists in Italy, Poland, Sweden, France, Spain, and Mexico. Our rising Mexican star Junior H, for example, just launched at number one on both the Spotify Global and U.S. Top Album Debut charts. Turning to catalog, which represents about 65% of our recorded music streaming revenue, we've delivered growth across shallow and deep vintages. Our always-on marketing approach, reimagined for today's younger generation, is yielding results as we find new ways to continuously revitalize our timeless repertoire. In addition, we have great success introducing iconic artists to younger audiences through new releases. Madonna is just one great example. She became a Warner artist more than four decades ago, and we're about to release her 14th studio album, Confessions II. As a result of our catalog marketing campaign leading into the new album, we've seen her weekly streams increase 24% versus baseline, with under 28-year-old fans accounting for 35% of her Spotify streams. Her new duet, Bring Your Love with Sabrina Carpenter, arrived last Friday and is Madonna's highest charting track yet on Spotify and fueled her biggest-ever streaming day on the platform. Additionally, our catalog is home to over one million tracks from more than 70,000 artists. AI tools that we've developed make it possible for us to stimulate engagement with this vast treasure trove of content quickly and cost-effectively through the use of motion art, visualizers, lyric videos, and many more. At the same time, we're using our proprietary model to determine where our marketing activities should be focused. Our ability to create these assets quickly and inexpensively, combined with our focused marketing activities, enables better and deeper monetization of our catalog, ultimately amplifying our market share growth. Enhancing our distribution offerings through strategic partnerships and investments is an important driver of our market share growth strategy. Our recent deal with TuStreams, a leading independent force in the Música Mexicana space, and our acquisition of Revelator, which Armin will discuss in more detail, not only enhance our capabilities, but also help us establish a powerful pipeline of emerging talent and catalog while creating new pathways into our global ecosystem. Our publishing business grew 10% this quarter, continuing its strong momentum. From our songwriters MAG and Scott Dittrich contributing to Bad Bunny's number one song on the Billboard Hot 100, to our deals with Grammy winner Laufey, R&B hitmaker and Grammy-winning producer Dre Harris, and chart-topping singer-songwriter Ernest, Warner Chappell's hot streak continues. We've also expanded our global presence by launching publishing operations in India. A brand-new way for us to drive share is through long-form programming. Last quarter, we announced a multiyear first-look deal with Netflix to produce documentaries. Today, we announced a multiyear first-look deal with Paramount Pictures to produce theatrical live-action and animated feature films. I'd like to give big thanks to our partners at Unigram and at William Morris Endeavor who helped us structure both partnerships, and I look forward to our continued collaboration. These agreements represent new and exciting ways to tell amazing stories about the lives, music, and legacies of our most popular artists and songwriters. In doing so, we're introducing them to new fans all around the world, building their brands and expanding engagement with their music. Moving to our next pillar of growing the value of music. When I joined the company, I identified the need to increase the value of music. Today, we're doing this in a number of ways. These include TSM increases, deals with emerging AI platforms like Suno, and premium-tier offerings with traditional DSPs that feature AI. We've made meaningful progress in several of these areas. First, after more than a decade of volume-driven growth, we're now seeing TSM increases, which contributed to our mid-teen subscription streaming growth in the quarter. These increases provide greater certainty around our economics, irrespective of retail pricing. Beyond traditional streaming, AI represents an important step towards enhancing the value of music. There has been a lot of discussion about whether AI will have an accretive or dilutive impact on our industry. Numerous DSPs have reported that the ever-growing volume of AI music being uploaded is seeing very limited engagement and therefore has minimal dilutive impact. Of course, we're closely aligned with our DSP partners to ensure that contractual protections are in place to prevent or limit dilution. We've taken a leadership role in creating new monetization frameworks with emerging AI companies. Our pragmatic experimental approach will deliver new revenue streams. Our partnership with Suno serves as a proof point for AI and incremental value creation. Suno's 2 million subscribers are paying an average of $12.50 per month, clear evidence of the willingness of super fans to pay more for interactivity. Not only are we building an ongoing consumption-based revenue model that enables us to scale as our partners do, we are also ensuring that AI models respect copyright, name, image, likeness, and voice to protect our artists and songwriters. Implementing clearly drawn boundaries is enabling us to harness AI technology for license models that ensure fair compensation to artists and songwriters. In fact, we were just named one of TIME magazine's 100 most influential companies for our leadership through this AI era. Additionally, we're actively engaged with our traditional DSP partners to launch new AI-powered premium tiers that will benefit our artists and songwriters by allowing fans to engage more deeply with their music. We continue to believe that our industry-leading and thoughtful approach to AI will drive one of the biggest incremental value creation opportunities for our industry and look forward to sharing updates on future initiatives. Turning to becoming more efficient and effective. Our ongoing journey to become more efficient is unlocking our ability to invest more in our core business. This drives our market share growth, which translates into improved top and bottom-line acceleration and cash generation and ultimately shareholder value. We're not shying away from making tough decisions and doing the difficult foundational work necessary to drive a step change in our operational effectiveness. Our strategic reorganization and focused investments in tech, as well as the successful rollout of our financial transformation program, have enabled the profitable growth that is reflected in our results. For the second consecutive quarter, we have now delivered margin expansion above our full-year target of 150- 200 basis points. Further proof that our strategy is working. We're excited about our release schedule, which includes new music in Q3 from Charli xcx, Lizzo, Alex Warren, Sombr, Tiesto, Teddy Swims, Kehlani, and many more. In summary, our momentum is strong, our strategy is working, and there's a lot of runway. We're driving successful results by focusing on our three strategic pillars, growing market share, increasing the value of music, and becoming more efficient and effective while using AI to power all three. The building blocks are in place to deliver on our growth targets, and we've established a growth culture to continue our momentum and to accelerate long-term value creation for our artists, songwriters, and shareholders. Before I hand it over to Armin, I want to share that starting tomorrow, in addition to continuing to serve as our CFO, he will also serve as our COO. His expanded remit will now include corporate development, central marketing, business and market intelligence, and WMX. I wanted to thank Armin for the impact he has had on the organization and business in a short period of time, and I look forward to continue partnering with him to deliver operational excellence, growth, and value creation. Congrats, Armin. Over to you. Thank you, Robert. In my new expanded role, I look forward to partnering with you and the team to continue driving top and bottom-line growth while strengthening our operational, commercial, and financial excellence at the company. I also wanted to start by thanking our teams for delivering an exceptional second quarter and first half of the fiscal year. We are seeing incredibly strong business momentum. Our second quarter was highlighted by acceleration in revenue growth, robust margin expansion, and strong cash generation. This is the fourth consecutive quarter where we have delivered growth in line with or above our sustainable growth model. Led this quarter by a step change in growth in subscription streaming revenue. Total revenue grew 12% in the quarter, reflecting double-digit increases across both Recorded Music and Music Publishing. Recorded Music revenue grew 13%. Led by subscription streaming, which accelerated to 15% growth on an adjusted basis. Ad-supported streaming, also strong, grew 11% on an adjusted basis. Both subscription and ad-supported streaming benefited from healthy market growth and global market share gains. Subscription streaming also saw the benefit of PSM increases. Physical revenue increased 18%, driven by strong releases in the quarter, as Robert discussed. Artist services and expanded rights revenue increased 33%, driven by concert promotion revenue, primarily in France, as well as higher merchandising revenue. Music publishing revenue grew 10%. Led by 16% streaming growth. Total company-adjusted OIBDA growth was 24% and margin expanded by 230 basis points, ahead of the high end of our full-year target for the second quarter in a row, reflecting strong operating leverage, core subscription streaming growth, and cost savings delivery. In an ongoing effort to provide greater transparency and visibility around our performance, we'll be disclosing adjusted net income and adjusted EPS moving forward. In the second quarter, adjusted net income increased 41% and adjusted EPS of $0.44 increased 38%. We generated operating cash flow growth of 83% in the second quarter, and through the first half of the year, our conversion ratio is at 66% of adjusted OIBDA. As of March 31st, we had a cash balance of $741 million, total debt of $4.7 billion, and net debt of $4 billion. In summary, our strategy is working, and our teams are executing with excellence. Looking forward, we are well-positioned to continue delivering on a sustainable growth model, which is anchored in high single-digit total revenue growth, double-digit adjusted OIBDA and adjusted EPS growth, and 50%-60% operating cash flow conversion as a percentage of adjusted OIBDA. As Robert mentioned, we'll achieve this by focusing on our three strategic pillars to drive future growth, which I will discuss in more detail. First, on growing our market share, our priority remains investing into our core business organically and inorganically to accelerate shareholder value creation. We do this by focusing our investments on, first, the most valuable repertoire markets with the highest growth potential globally. Second, high margin, accretive catalogs, also leveraging our joint venture with Bain. Third, distribution capabilities which enable us to serve the independent artist community profitably. We have made significant progress against each of these areas. On organic investments, we are growing market share broadly across DSPs, labels, and regions, with the exception of APAC, where we just recently appointed a new leader. On inorganic investments, following the upsizing of our joint venture with Bain, I'm pleased to share that the joint venture has deployed $650 million to acquire a number of heavyweight catalogs which have an attractive return profile. We continue to maintain a strong pipeline of potential opportunities and look forward to sharing more updates in the future. On distribution, we have signed an agreement to acquire cutting-edge independent digital music platform Revelator. Aligns with our approach to pursue bolt-on acquisitions that elevate our distribution offering. With cloud-based tools that streamline operations and financial reporting for artists and labels and distributors, Revelator will provide powerful infrastructure to help us better serve the critically important independent community. This will be an accelerant for profitable distribution revenue growth and market share expansion. Importantly, across our portfolio of organic and inorganic investment, we have now institutionalized a globally coordinated deal evaluation and investment process. This process involves our creative, commercial, and operating teams and allows us to look across our entire global portfolio of global potential investments to target the largest and highest ROI opportunities. This disciplined approach to capital allocation has enabled us to generate returns of approximately 20% on these investments. Finally, in addition to driving enhanced shareholder value through our investments, we continue to return capital to shareholders through our quarterly dividend and opportunistic share buyback program. Second, we see increasing the value of music as critical to growing our company. We are pursuing innovative partnerships with traditional DSPs and emerging AI platforms through several avenues, including, first, PSM increases on existing tiers. Second, licensing agreements with innovative emerging AI platforms. Third, collaborating with scale DSP partners on AI-centric premium tiers. In quarter two, we began to see the impact of these PSM increases, which contributed 3 percentage points to our subscription streaming growth of 15% on an adjusted basis. Additional PSM increases across other DSPs will roll in throughout the balance of the fiscal year, providing further support for this important metric. In addition to driving value through existing streaming tiers, we see AI as an important driver of future growth as we partner with both AI platforms and existing DSPs on higher ARPU offerings. Our recent licensing deals with leading AI platforms, including Suno, which is currently generating $300 million in annualized revenue and has announced that it is planning to launch its fully licensed offering later this year, will begin to contribute materially to our subscription streaming revenue growth starting in fiscal 2027. At the same time, we are actively engaged with our largest DSP partners around AI-centric offerings that will support higher-priced premium tiers, enhancing consumer experience and value creation for our industry. Third, turning to becoming more efficient and effective, we are focused on, first, our ongoing cost savings program. Second, driving profitable growth with a priority on core streaming growth. Third, operating leverage. I do want to spend some time today on our organizational redesign and related cost savings initiatives. They're not only delivering on schedule, but at the same time accelerating growth, which is a testimony to our team's executional excellence around the world. Based on this, we now expect to achieve the high end of our 150 - 200 basis points margin expansion target in fiscal 2026. The success of this reorganization has made identifying and driving cost efficiency a part of our organization's DNA. We will share more details about our ongoing cost savings initiatives in the coming quarters. At a high level, the implementation of our global, regional, local organization model and ongoing transition to a more standardized data architecture and operating processes enables us to leverage AI more effectively across the company for process automation and better real-time decision-making. This, in turn, has been freeing up more resources to focus on value-added work, ultimately leading to incremental growth at lower cost. As an example, we have started on this journey with our finance teams, leveraging our financial transformation initiative to use AI tools for advanced real-time forecasting and reporting, which has significantly accelerated decision-making. Again, based on the progress we have seen here, we plan to use new AI-driven tools more to further streamline finance and other functions. These tools, in combination with our relentless focus on profitable growth, will contribute to our margin targets of mid-20s in the short term and high 20s over the longer term, further improving cash flow productivity. In closing, successful execution across our three strategic pillars, namely growing market share, increasing the value of music, and becoming more efficient and effective, has enabled us to accelerate profitable growth, creating a flywheel effect that frees up more capital to invest at attractive returns, driving better results and enhanced shareholder value creation. At the same time, we are leading the industry in AI initiatives, which we believe will be a material contributor to our top and bottom line growth starting in fiscal 2027. All of this, combined with highly disciplined capital allocation and return thresholds, as well as rigorous cost and cash management, gives us confidence in our ability to continue delivering against our sustainable growth model in fiscal year 2026 and beyond. We remain excited about the prospect of creating significant shareholder value and look forward to providing updates on our progress. With that, we'll take your questions. Thank you. If you would like to ask a question, please press star one on your telephone keypad. If you would like to withdraw your question, simply press star one again. Your first question comes from Peter Supino with Wolfe Research. Your line is open. Hi, good afternoon. An important piece of your conference call, your prepared remarks, was your successful market share developments. Looking back at the last year, you had several quarters of improved market share. I wanted to ask you if you could expand on your prepared remarks about what you're doing differently and how much of that feels sustainable versus the result of things smart decisions done in the past that might not be part of a repeatable process. Thank you. Thank you, Peter. Before I answer your question, I wanna take a small pause and recognize where our company is today. After years of doing hard, unsexy foundational work, after making tough organizational decisions and redesigns and just doing lots of really tough, difficult decisions while growing the business, we have now hit our stride. You can see it, you said it yourself, fourth consecutive quarter of growth, printing solid numbers. I would say the numbers today are far more than solid. Amazing. It feels really good to be at Warner today because none of this is short-term. This is a result of long, proactive work, and our team is amazing. Our infrastructure is getting stronger and stronger. We buy when we need to, but we do it prudently, so we're not overspending, and we're having amazing creative success. We're firing on all cylinders, and it is amazing to be able to say that, and it's amazing to have the team that we have that underpins all of this. Our gains are not in one region or one country or one sales channel. It's broad-based other than APAC, as Armin mentioned. That is amazing to be able to say. Value is contributing to growth in addition to volume. That is amazing to be able to say. All of the things that we set out to do, we're doing, they're showing up in our numbers, and they're showing up in our creativity. Our disciplined capital allocation is yielding results. Strong leadership is yielding results. We feel incredibly confident about the present and about the future. Looking forward, we're really confident about our prospects because of three things. One, we have a very strong pipeline management, and what that means is we're looking at new release, catalog, artist deals, acquisitions, partnerships, all of that holistically. When we do that, we deploy resources to the best possible ROI opportunities. We have a very focused catalog optimization program in flight, and it is yielding results. Catalog is 65% of our revenue, therefore very important. It deserves all the attention that it gets. Within that, we have a new always-on marketing approach reimagined for today's young people. We are introducing iconic artists to younger generations through new releases. We've developed AI tools that help us manage not only small sliver of top few hundred titles in our catalog, but the entire thing through the use of AI. We also have developed a model that helps us prioritize all this work. It is amazing to be able to drive gains this way. Three, we have a very disciplined focus and strong focus on distribution. It's been a meaningful contributor to our growth. We continue to build features. We acquired Revelator to accelerate in that area. We've had a lot of success signing new partnerships. All of this makes us confident about the future and why we'll continue to grow and gain share. Your next question comes from Benjamin Black with Deutsche Bank. Your line is open. Great. Good afternoon. Thank you for taking my question. I have one for Armin, please. Could you deconstruct your subscription streaming growth performance? How much did TSM increases market share and sort of the fact that you had a somewhat easier comp versus the prior year contribute? Then looking ahead how should we think about the growth rate there for the rest of the year? Thank you. Hey, Ben. Well, first, I wanna start with where Robert started and say a big thank you to the team for the progress we've been making and a consistent growth we're now delivering top and bottom line. It's incredible to see the broad-based progress, not just on growth, but also on margin and cash. Thank you again to our team around the world. To your question, Ben, if I deconstruct the 15% growth, first, if you look at subscriber growth around the world, we think that's around 6%-7%. Pricing this quarter, as I mentioned, was contributing to about 3 percentage points of growth. We think market share was about 3 percentage points of growth. You mentioned a lower base last year. We also think that's worth about 2-3 points. If you take that out, we probably delivered about 12%- 13% growth on an apples to apples basis. We are very excited about the growth that we have been delivering, as Robert and I mentioned, but we think there's many more opportunities going forward to continue to deliver growth for the company. Remember, this is really just based on subscriber growth and pricing. One, there's more pricing to come over the course of the year as we mentioned before. Two, there's really no contribution from M&A in our numbers, and as you know, we have just deployed $650 million from our venture and that will come to fruition over time. Two, as Robert mentioned, we have been acquiring a distribution capability to a company called Revelator that will start to show up later this calendar year. Last but not least, we have done several deals with AI companies and we're in the process of doing deals with DSPs to grow our business profitably, not just in DSPs and higher tiers, but also with new AI companies. We're really excited about the opportunity going forward and are very confident that we can continue to deliver numbers that are consistent and/or higher with our sustainable growth model. Great. Thank you and congratulations on the expanded role. Thank you. Your next question comes from Jason Bazinet with Citi. Your line is open. Thanks. I just have three AI questions for Robert. First, you mentioned in your prepared remarks, your agreements sort of limit dilutive impact from AI-generated music, but have you seen any so far? Second, is there any update you can give us on when you think Suno might launch their license offering? Third, any color you can give us on when you think traditional DSPs might take advantage of the agreements with you to offer consumers the ability to create their own songs off of your IP? Thanks. Yeah. Thank you. Obviously we're prudent in all of our negotiations, and we're building protections into those. To answer your question directly, no, we have not seen dilution. We've been expanding our share consistently for the last four quarters, and we have not been affected by it. Also, if you know, I'll just use public data from Deezer and Apple. If you, if you look at it on Deezer, 75,000 AI-generated tracks uploaded every day, which makes up roughly 44% of daily uploads, but really it results in 1%-3% of streams and even much smaller fraction of royalties, like tiny. 85% of those streams are actually deemed fraudulent. No impact. On Apple, it's less than half a percent of listening. Those are just two public stats that I can quote that exist out there. We feel good about that. In general, we think that consumers will like offerings that blend creation and consumption, which is why our DSP partners are looking into it, and we're talking to them about creating that. We love that future because it increases engagement with content, with artists and songwriters, and it drives output. It's a positive development for us. We're excited about it. Nothing new to announce, but we're working on it with our partners. Great. Your next question comes from Kannan Venkateshwar with Barclays. Your line is open. Thank you. Armin, maybe one for you. Can you provide a bridge on how you will achieve your longer term margin targets and efficiency plans? How much did savings versus operating leverage contribute to margin performance in Q2? Maybe longer term, I mean, some of those market share gains you guys have had over the course of recent quarters, how much can catalog deals help you make this structural and sustain this over time? Because in the industry, the market shares tend to be mean reverting over longer time periods. Can you actually sustain this over time? Thanks. Hi, Kannan. Let me start with margin. On the margin side, we're obviously very happy with the progress. Fiscal year to date, we're delivering ahead of our targets, and we're now confident to increase our projection for the year to the high end of our target. In terms of drivers, the first one is really focus on profitable growth. I've said this many times. It's really important for us to ensure that we grow each of our businesses in a highly profitable way, and you see that in the streaming growth that we're delivering across the company. The second one is a continuous ongoing focus on cost savings, and I mentioned this in my prepared remarks. There's really a culture of productivity now in the company that we are excited about, not just for the purpose of productivity, but also to be able to reinvest into growth and accelerate share of value creation, as I mentioned. The third one is we are very disciplined in making sure that we don't add people when we grow all the time, that we drive operating leverage. That will continue in the next years to come, not just next year. In addition to that we have additional drivers that we are leveraging. One, you mentioned our catalog business. Catalog is not just about acquisitions. Robert talked about that. It's 65% of our business, and we are now growing share on our catalog business without any acquisitions. That's really critical to understand. T his is a business which can grow for years to come at very, very high above average margins. It's part of our profitable growth strategy. The second big area we are focused on is how do we innovate and create new business models and drive pricing up? Robert has been championing pricing for the industry for many years. It's finally happening, frankly, he's also been championing us leaning forward on AI, we believe that starting next year, we'll see material benefits from that, not just on our growth, but also on our margin. I'm very confident that our margin targets are achievable. Frankly, our margins in our industry were way too low. When I started here, it was in the low 20s. As you can see, fiscally to date, we're around 24%. We're getting towards the short-term mid-20s target. I'm very confident we can get to the high 20s target in the medium to long term. On your question on catalog, frankly, M&A is the best more contributor overall. What's more important for us over the long term is that we find new and innovative ways to grow catalog. One of the larger ones that we are acquiring and growing now, but also, as Robert mentioned, on long term, where we are not just leveraging human manpower, but also AI to make sure we identify the opportunities and then support them. Net, we are really confident about the prospects that we have for our entire business. Thank you. The next question comes from Kutgun Maral with Evercore ISI. Your line is open. Good afternoon. Thanks for taking the questions. Maybe for Armin, congrats on the expanded remit. I wanted to see if you could talk about your approach to capital deployment. What has enabled you to deliver returns in line with your targets, and what processes have you implemented since joining a year ago? Thank you. Well, thank you, Kutgun Maral. In simple terms, we are driving productivity in everything we do, okay? We're using the same approach to capital allocation. How do we do that? It's really focused on three things. One, making sure we have a clear strategy and a clear growth model, we call it SGM or sustainable growth model. Two, ensuring that we manage our portfolio tightly as a company. Then three, creating a culture where people feel proud about spending less, including on A&R deals or M&A deals. Let me talk about each of them. On the strategy side, our priority is very simple: invest in our core music business organically and inorganically and ensure that we are focused on the largest repertoire markets around the world where we see the biggest growth potential. As we do that, also ensure we look at the biggest and most profitable and most realistic opportunities. That's number one. Number two, on portfolio and portfolio management, we are very focused on not just one individual deal. We are much more focused on ensuring that we optimize our portfolio overall. The benefit of that is like you as an investor. You're not investing in just one company, you're investing in a portfolio of companies. The benefit of that, one, the outcome of our investment is much more predictable, so we actually know pretty well what the impact on top line growth is, bottom line growth and cash conversion. We can much more predictably invest and double down on our growth strategy. The second important outcome for us is that as we look at our portfolio of deals versus not just individual deals, we can actually work with our operating and creative teams to ensure that we look at how do we optimize our portfolio and don't just chase one expensive deal. The third component that I mentioned is all about culture and operations being proud about spending less and ensuring we deliver better returns. We're now working with our creative, commercial, and operating teams to ensure it that we review our portfolio basically every other week now and have a view of somewhere between 12- 36 months to ensure they understand and develop a culture of, "Hey, how do we ensure that we spend less money to ensure that we deliver the growth?" That culture really is penetrating the entire company. That's really our approach these days, and we are very confident with the outcome. As I mentioned in the prepared remarks, we are delivering returns that are about 20% across our portfolio. That's very helpful. Thank you. Your next question comes from Ian Moore with Bernstein. Your line is open. Hi. Maybe for Armin. Can you detail the expected annualized revenue and adjusted EBITDA contributions you expect for the catalogs you've acquired through the Bain JV, and maybe any return targets for those assets? Thank you. We generally don't disclose specifics around those deals since we have confidentiality agreements in place. What I can say is we are very happy with our partner and the progress we are making. As I mentioned in my prepared remarks, we have deployed about $650 million of the $1.65 billion of JV capacity that we have. Those investments are very focused on iconic high-margin catalogs, and importantly, those catalogs where we see growth potential, because important for us to ensure that we deliver above-average returns. The return thresholds are very much the same that I just discussed on A&R investments, we make them part of our overall portfolio analysis. Those returns are very attractive for us and our shareholders. Finally, what's also important for us is not just to acquire those catalogs, but it's actually equally, if not more important, to ensure that we have a dedicated team in place that can grow those catalogs. Robert did something that I think was brilliant. He actually appointed a global catalog leader with Kevin Gore has been growing our catalog share over the last 12 months, that's excellent to see because those are high margin businesses that we love to grow. Thanks. Your next question comes from Doug Creutz with TD Cowen. Your line is open. Hey, thank you. One for Robert. I get questions from clients sometimes about the attractiveness of distribution businesses, given that at least notionally they're lower margin. Can you talk a bit about how your distribution business fits into your overall business strategy in terms of economic value creation, and maybe address how Revelator and TuStreams deals fit into that strategy? Thank you. Thank you. First, I think Armin mentioned the importance of portfolio management and it doesn't mean just portfolio of deals, but also portfolio of deal types, right? We're very focused on this two-dimensional portfolio management, and obviously distribution within that second dimension of the deal types plays a significant role. It's a large part of the industry, and we've been investing into it on a technology side. We've been investing into it on the talent side. We've appointed, about one year ago, Alejandro Duque to run ADA, our distribution arm, and Alejandro has actually two jobs, ADA and Latin America. The Latin American market is very distribution-heavy market, so he's cut his teeth on that, and he's managed to run that territory on the margin, which is the same as our companies. He's the right person for the job, and he's already a year into it. He has proven it. It takes talent, technology, partnerships the whole village to really deliver this. What really underpins it is our holistic portfolio management and making sure that we're driving growth and distribution while also achieving our margin objectives, which are obviously important. We and Armin has outlined those both on the short term as well as longer term. We also focus on acquisitions, but we're very prudent in the way we deploy capital in those. One of those is Revelator, obviously, which is technology and capability acquisition, and the other one was TuStreams that we mentioned earlier, which is focused on the Música Mexicana and has a very significant position there. Overall, we're very happy with our progress here. We have great momentum, very strong growth rate, and it fits into our margin profile as discussed with you. Terrific. Thank you. Your next question comes from Mike Morris with Guggenheim Securities. Your line is open. Thank you. Good afternoon, guys. I wanted to ask you first about the comment about the strong ad environment, that you noted and showed up in your numbers. I'm curious if you could expand on that, 'cause there's certainly been some inconsistency in growth across the industry, and with the Middle East conflict. Are you seeing strength from any particular partners or geographies? I'd love to hear any outlook for the sustainability there. Second, if I could, Armin, congratulations on the expanded role. I'd like to direct the question to Robert, though. Robert, how do you see Armin further contributing to the business success with this new role? Also, how do you make sure that the financial function, which he has been instrumental in strengthening, remains strong? Thank you. Okay. Let me take the ad question, Mike. It's different across partner. There are some partners that have very strong ad revenue growth. That's the comment around the market, we are growing share in that partners. Obviously we are seeing even stronger growth. There are some partners that are not doing well yet in ads, although there's a strategic intent to improve that, I'm sure you know who I'm talking about. We're actually very confident that that specific partner will do that, we're actually hopeful that they can contribute more to our ad growth in the future to continue to accelerate it. We're also growing share in that, in our platform. Last but not least let's come more on the DSP side. We feel very good about the future prospects. On the social platform side as you know, we did a new deal with one of our partners, and that's also contributing to ad growth. A lot of that is structural, and we also believe that one of our partners will do a much better job in the future, and therefore we're also confident this will become a bigger contributor to our growth in the future. It's really important because we have billions of consumers that we serve around the world. With that, I'm going to hand it over to Robert to talk about my work plan for the next 12 months. Well, actually, I love this because I can do Armin's 360 review in front of everybody in a fully transparent manner. This is fun. First, Michael, by the way, great question. You should know I don't make decisions suddenly. This is something that actually has kind of been in practice. This is nothing new. It's just a title change that's reflecting how we've been operating. Armin has added responsibilities along the way over the last 12 months, one by one. We don't make any change. We don't make any announcement. Nothing. It's just kinda like things have to work. Now, we've hit our stride. We feel really strong about what it is that we do here, how we got here, and more importantly, prospects for the future. We really feel like we need to double down on operational excellence across the company and simplification, which then leads to a lot of automation through AI, which allows us to deliver more for artists and songwriters with the same team and grow our business rapidly. Having a strong alignment between our financials, our budget management forecasting, it's just very, very closely tied to the operation of the company and a role like that makes sense. It's just reflective of how we've been already operating, so we're just making it official. That's it. Thank you. Appreciate it. That is all the time we have for questions. I'll turn the call to Robert Kyncl for closing remarks. All right. In closing, again, it feels great to be at Warner. It feels great to work hard for years and now have consistent delivery and accelerating, and it feels great to have confidence about the future. As you guys know, I don't say this lightly, this is truly a work of a lot of people around the company. These are not isolated incidents, it's systemic, and we have a growth-oriented culture in the company, very entrepreneurial, but at the same time, mindful that we need to deliver on our margin expansion, at the same time have a profitable growth, and that we have to innovate, innovate for the sake of our artists and songwriters and shareholders. With that, thank you for your confidence, thank you for your time, and we'll see you next time. This concludes today's conference call. Thank you for joining. You may now disconnect.