Warner Music Group, home to the likes of Ed Sheeran, Cardi B and Bruno Mars, reported lower fiscal first-quarter revenue and earnings on Thursday as new CEO Robert Kyncl set his sights on “the next phase of our evolution,” while also highlighting “a challenging business environment.”

The latest quarter was hit by timing factors as the comparable year-ago period included an additional week, as well as foreign currency impacts.

Revenue for the quarter ended on Dec. 31 fell 8 percent, or 3 percent in constant currencies, to $1.49 billion. That was driven by an 11 percent drop in recorded music (or 6 percent on a constant currency basis) and a 5 percent decline (or 1 percent on a constant-currency basis) in digital revenue, including a 4 percent drop in streaming revenue. WMG noted though that “underlying growth in total streaming revenue despite a challenged macroeconomic environment.” Music publishing revenue rose 9 percent (or 14 percent on a constant currency basis).

WMG’s quarterly net income of $124 million fell 34 percent from $188 million in the prior-year period. Adjusted operating income before depreciation and amortization (OIBDA) decreased 6 percent to $335 million.

In the music major’s publishing unit, top sellers in the latest period included the Red Hot Chili Peppers, Zach Bryan, Lizzo and Sheeran.

At the start of the year, Kyncl had joined WMG as its new CEO, replacing Stephen Cooper. He knows Warner Music well, having spent years as the chief business officer of YouTube, one of the label’s biggest partners. 

Kyncl said on Thursday: “Music’s value, power and ubiquity are among the many reasons I decided to join WMG and lead the next phase of our evolution.” He added: “As we navigate a challenging business environment, we expect to have a strong release schedule in the second half of 2023 while managing our costs throughout. The foundations of this company are strong, and our addressable market is continuously growing. We are excited to drive new monetization opportunities through our investments in new artists and songwriters, our catalog and our global expansion.”

Added CFO Eric Levin: “Our results reflect our resilience and operational discipline in the face of macroeconomic headwinds, as well as the impact of the extra week in the prior-year quarter. Our continued focus on efficiency enabled us to deliver strong operating and free cash flow growth, even while certain revenue lines came under pressure. We are enthusiastic about our release schedule for the second half of the fiscal year, which will feature amazing music from some of our biggest artists.”