Free cash flow generation is highly inconsistent, evidenced by a sharp spike in the CapEx/Rev ratio to 26.2% in 2026Q2 compared to historical norms of 3-5%.
| Metric | TTM | Sep'25 | Sep'24 | Sep'23 | Sep'22 | Sep'21 | Sep'20 | Sep'19 | Sep'18 | Sep'17 | Sep'16 | Sep'15 | Sep'14 | Sep'13 | Sep'12 | Sep'11 | Sep'10 | Sep'09 | Sep'08 | Sep'07 | Sep'06 | Sep'05 | Sep'04 | Sep'03 | Sep'02 |
|---|
| Cash from Operations | 851M | 678M | 754M | 687M | 742M | 638M | 463M | 400M | 425M | 535M | 342M | 222M | 130M | 159M | 209M | 0 | 150M | 237M | 304M | 302M | 307M | 205M | 86M | 278M | -13M |
| Operating CF Margin % | - | 10.11% | 11.73% | 11.38% | 12.54% | 12.04% | 10.37% | 8.94% | 10.61% | 14.96% | 10.54% | 7.48% | 4.29% | 5.54% | 7.52% | - | 5.03% | 7.41% | 8.71% | 8.92% | 8.73% | 5.85% | 4.86% | 8.23% | -0.4% |
| Operating CF Growth % | 27.19% | -10.08% | 9.75% | -7.41% | 16.3% | 37.8% | 15.75% | -5.88% | -20.56% | 56.43% | 54.05% | 70.77% | -18.24% | -23.92% | - | -100% | -36.71% | -22.04% | 0.66% | -1.63% | 49.76% | 138.37% | -69.06% | 2238.46% | - |
| Net Income | 452M | 370M | 478M | 439M | 555M | 307M | -470M | 258M | 312M | 149M | 30M | -88M | -303M | -194M | -109M | 0 | -145M | -104M | -56M | -21M | 60M | -169M | -238M | 0 | 0 |
| Depreciation & Amortization | 402M | 376M | 327M | 332M | 339M | 306M | 261M | 269M | 261M | 251M | 293M | 309M | 321M | 258M | 244M | 0 | 258M | 262M | 268M | 246M | 236M | 239M | 140M | 0 | 0 |
| Stock-Based Compensation | 46M | 54M | 52M | 49M | 39M | 45M | 608M | 50M | 62M | 70M | 23M | 3M | 8M | 19M | 0 | 0 | 10M | 11M | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Deferred Taxes | -75M | -90M | -48M | -13M | 13M | 27M | -57M | -68M | 66M | -192M | -26M | -11M | -55M | -73M | -26M | 0 | 0 | 0 | -3M | -2M | -11M | 0 | 8M | 0 | 0 |
| Other Non-Cash Items | 232M | 189M | 93M | -1M | -117M | 34M | 91M | -35M | -355M | 84M | -4M | 39M | 113M | 94M | -3M | 0 | 21M | 54M | 80M | 71M | 67M | 116M | 162M | 278M | -13M |
| Working Capital Changes | -203M | -221M | -148M | -119M | -87M | -81M | 30M | -74M | 79M | 173M | 26M | -30M | 46M | 55M | 103M | 0 | 6M | 14M | 15M | 8M | -45M | 19M | 14M | 0 | 0 |
| Change in Receivables | -270M | -61M | -110M | -113M | -195M | -58M | 18M | -90M | -43M | -60M | 17M | 6M | 72M | -15M | -16M | 0 | 118M | -8M | 28M | 73M | 53M | -58M | -33M | 0 | 0 |
| Change in Inventory | -15M | -11M | 30M | -12M | -22M | -19M | -2M | 3M | -3M | 1M | 0 | -6M | -7M | -5M | 1M | 0 | 8M | 10M | 2M | 3M | 0 | -3M | -10M | 0 | 0 |
| Change in Payables | 56M | -28M | 86M | 77M | -21M | 91M | -32M | 3M | 82M | 48M | 23M | -17M | -87M | 73M | 44M | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Cash from Investing | -666M | -340M | -311M | -300M | -824M | -638M | -219M | -376M | 405M | -126M | -8M | -95M | -155M | -808M | -58M | -1.45B | -85M | 82M | -167M | -255M | -153M | -54M | -2.66B | -65M | -365M |
| Capital Expenditures | -646M | -334M | -303M | -241M | -326M | -574M | -125M | -145M | -88M | -60M | -67M | -79M | -102M | -71M | -64M | 0 | -87M | -38M | -57M | -29M | -30M | -30M | -15M | -51M | -88M |
| CapEx % of Revenue | 9.06% | 4.98% | 4.72% | 3.99% | 5.51% | 10.83% | 2.8% | 3.24% | 2.2% | 1.68% | 2.06% | 2.66% | 3.37% | 2.47% | 2.3% | - | 2.92% | 1.19% | 1.63% | 0.86% | 0.85% | 0.86% | 0.85% | 1.51% | 2.67% |
| Acquisitions | 22M | 0 | 19M | 45M | 0 | 0 | -94M | -231M | -23M | 73M | 45M | 0 | 0 | -737M | -8M | 0 | -7M | -16M | 0 | 0 | 0 | 0 | -2.64B | 0 | 0 |
| Investments | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| Other Investing | -46M | 0 | 0 | 0 | 0 | 0 | 94M | 231M | 23M | -73M | -3M | 0 | 0 | 737M | 20M | -1.45B | 0 | 11M | -135M | -251M | -104M | -24M | -10M | -14M | -277M |
| Cash from Financing | -83M | -497M | -396M | -325M | 188M | -61M | -316M | 88M | -955M | -128M | -216M | -19M | 37M | 511M | -3M | 1.2B | -3M | -346M | -59M | -94M | -81M | -416M | 2.66B | -121M | 385M |
| Debt Issued (Net) | 358M | -1M | -2M | 164M | 535M | 244M | 75M | 197M | 10M | 1M | -211M | -16M | 157M | 706M | 0 | 100M | 0 | -343M | -17M | -17M | -10M | 338M | 1.62B | 0 | 0 |
| Equity Issued (Net) | -62M | -16M | -5M | 0 | -6M | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 1.1B | 0 | 0 | 0 | 0 | 0 | 175M | 1.05B | 0 | 0 |
| Dividends Paid | -394M | -383M | -361M | -340M | -318M | -265M | -344M | -94M | -925M | -84M | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | -42M | -79M | -74M | -926M | -8M | 0 | 0 |
| Share Repurchases | -62M | -16M | -5M | 0 | -6M | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | -380M | -202M | 0 | 0 |
| Other Financing | 15M | -97M | -28M | -149M | -23M | -40M | -47M | -15M | -40M | -45M | -5M | -3M | -120M | -195M | -3M | -1M | -3M | -3M | 0 | 2M | 3M | -3M | 0 | -121M | 385M |
| Net Change in Cash | 104M | -162M | 53M | 57M | 85M | -54M | -66M | 105M | -133M | 288M | 113M | 89M | 2M | -147M | 148M | 0 | 55M | -27M | 78M | -34M | 79M | -267M | 84M | 92M | 7M |
| Free Cash Flow | 675M | 539M | 638M | 446M | 416M | 64M | 338M | 255M | 337M | 475M | 275M | 143M | 28M | 88M | 145M | 0 | 63M | 199M | 247M | 273M | 277M | 175M | 71M | 227M | -101M |
| FCF Margin % | 9.47% | 8.04% | 9.93% | 7.39% | 7.03% | 1.21% | 7.57% | 5.7% | 8.41% | 13.28% | 8.47% | 4.82% | 0.92% | 3.07% | 5.22% | - | 2.11% | 6.22% | 7.08% | 8.06% | 7.88% | 5% | 4.01% | 6.72% | -3.07% |
| FCF Growth % | 9.4% | -15.52% | 43.05% | 7.21% | 550% | -81.07% | 32.55% | -24.33% | -29.05% | 72.73% | 92.31% | 410.71% | -68.18% | -39.31% | - | -100% | -68.34% | -19.43% | -9.52% | -1.44% | 58.29% | 146.48% | -68.72% | 324.75% | - |
| FCF per Share | 1.30 | 1.04 | 1.23 | 0.86 | 0.80 | 0.12 | 0.66 | 0.50 | 0.67 | 0.95 | 0.55 | 0.28 | 0.06 | 0.18 | 0.29 | - | 0.42 | 1.33 | 1.67 | 1.87 | 1.84 | 1.45 | 0.14 | 0.45 | -0.20 |
| FCF Conversion (FCF/Net Income) | 1.49x | 1.86x | 1.73x | 1.60x | 1.35x | 2.10x | -0.97x | 1.56x | 1.38x | 3.74x | 13.68x | -2.44x | -0.42x | -0.80x | -1.87x | - | -1.05x | -2.37x | -5.43x | -14.38x | 5.12x | -1.21x | -0.36x | -0.21x | 0.00x |
| Interest Paid | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Taxes Paid | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
High Debt Leverage Sensitivity
According to quarterly financial statements, WMG's OCF/NI ratio has fluctuated wildly from a low of -0.32 in 2024Q2 to a high of 7.41 in 2024Q4, indicating that reported net income is a poor proxy for the company's actual ability to generate cash from operations.
The extreme variance in the conversion ratio suggests that non-cash charges and timing differences in royalty payments significantly distort bottom-line results. Investors should monitor whether these swings represent structural accounting complexities or underlying instability in the cash collection process.
As reported in recent filings, WMG's free cash flow trajectory remains inconsistent, with margins swinging from a negative 5.4% in 2024Q2 to a peak of 21.2% in 2026Q1, highlighting the company's difficulty in maintaining a predictable cash generation profile across different release cycles.
This volatility suggests that the company's cash flow is highly sensitive to the timing of major artist payouts and licensing receipts. The inability to sustain positive FCF margins consistently may indicate that the business model requires significant upfront capital that is not always aligned with the timing of revenue recognition.
Based on the provided data, WMG's CapEx/Rev ratio reached a significant 26.2% in 2026Q2, a sharp departure from the more typical 3-5% range observed in prior periods, suggesting a potential shift toward aggressive investment in infrastructure or content acquisition.
Such a substantial spike in capital expenditure warrants further investigation into whether this represents a one-time strategic investment or a permanent increase in the capital intensity required to maintain market share. If this trend persists, it may place additional pressure on the company's already strained free cash flow.
Analysis of recent financial statements reveals that working capital changes have been highly erratic, ranging from a $162 million inflow in 2024Q4 to a $228 million outflow in 2025Q3, reflecting the inherent lumpiness of royalty settlements and artist advance recoupment cycles.
These significant fluctuations in working capital appear to be a primary driver of the company's inconsistent operating cash flow. The reliance on these lumpy cash movements suggests that WMG's liquidity position may be more vulnerable to timing mismatches than a more stable, recurring revenue business.
As indicated by the company's financial disclosures, WMG has maintained a consistent dividend payout of approximately $90 million to $100 million per quarter, even during periods where free cash flow was negative, suggesting a commitment to shareholder returns that may be disconnected from immediate cash reality.
This capital allocation strategy appears to prioritize investor expectations over the preservation of cash during lean periods. Given the company's high leverage, this persistent outflow may limit the financial flexibility required to navigate potential industry downturns or fund necessary strategic acquisitions.
Quick answers to the most common questions about buying WMG stock.
Warner Music Group Corp. (WMG) generated $678.0M in net cash from operating activities in 2025. This reflects the cash generated directly from core business operations.
Warner Music Group Corp. (WMG) generated $539.0M in free cash flow in 2025. Free cash flow is the cash left over after capital expenditures, which can be used to pay dividends, repurchase shares, or pay down debt.
Warner Music Group Corp. (WMG) spent $334.0M on capital expenditures in 2025. CapEx represents the cash invested in physical assets like property, plant, and equipment to maintain or grow the business.
In 2025, Warner Music Group Corp. (WMG) returned $383.0M to shareholders via cash dividends and spent $16.0M on share repurchases. This shows the company's commitment to returning capital to its equity investors.