Strong subscription revenue, improved margins and successful new releases from Sabrina Carpenter, Chappell Roan and Post Malone helped Universal Music Group (UMG) post revenue of 2.87 billion euros ($3.16 billion) in the third quarter, up 4.3% year-over-year (4.9% in constant currency).
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to 621 million euros ($683 million), up 8.2% compared to the same period last year. The Amsterdam-based company's adjusted EBITDA margin improved to 21.6% from 21.1% in the previous quarter, helped by cost savings from the organizational redesign announced in February and lower A&R and marketing costs, CFO Boyd Muir he said during Thursday's (Oct. 31) earnings call.
If there had been no one-time gain in the prior quarter, revenue growth would have been 7.6% and adjusted EBITDA growth would have improved to 10.8%. Last year, Universal Music Publishing Grou (UMPG) acknowledged the back-payment accrual from the Copyright Rights Board's (CRB) Phonorecords III decision. This led to revenue of €53 million ($58 million) and added €11 million ($12 million) to UMPG's adjusted EBITDA.
UMG had a typically strong quarter of chart-topping new releases. CEO Lucian Grainge noted during the call that Carpenter's album Short n' Sweetreleased on August 23, reached No. 1 in 15 countries and topped the US Billboard 200 album chart for four non-consecutive weeks. Elsewhere, Roan's The Rise and Fall of a Midwest Princess over Bulletin boardalbum Sales Chart in September, while Malone's latest album, F-1 Trisdebuted at No. 1 on the Billboard 200 and also climbed the Top Country Albums chart. Island also has a UK Top 10 hit with Gigi Perez's “Sailor Song”, which reached No. 28 in the US
The recorded music segment improved 5.4% to 2.15 billion euros ($2.36 billion) thanks to a 7.6% improvement in subscription revenue. Other streaming revenue, however, fell 0.8% (up 0.3% in constant currency) to 354 million euros ($389 million). Physical sales fell 2 percent to 288 million euros ($317 million) while licensing revenue jumped 20.4 percent to 325 million euros ($357 million). Subscription growth was hurt by “just over a percentage point” by “continued challenges” in the home gym subscription market and the exit of the 10K Projects label to Warner Music Group, Muir said. Lower CD sales in Japan were partly offset by strong vinyl sales, he added, especially in the US
Muir reaffirmed UMG's previously announced guidance of 8% to 10% compound annual growth rate for recorded music subscription revenue through 2028. However, UMG may not always reach this target range in any given quarter, and Muir reminded listeners that the fourth quarter marks a year since Spotify's price hike helped UMG — and other labels — experience a surge in year-over-year subscription growth.
UMPG improved 1.8% (2.2% in constant currency) to 500 million euros ($550 million). Excluding the CRB accrual, publication revenue increased 22.4% (22.9% in constant currency). Digital revenue rose 0.3% to €295 million ($324 million), sync rights rose 18.5% to €64 million ($70 million) and hardware revenue rose 12% to €28 million ($31 million dollars). Performance rights fell 4.7% to 101 million euros ($111 million).
UMG's Bravado merchandise division had revenue of 237 million euros ($261 million), up 4.4 percent from the year-ago period. The company attributed the growth to stronger direct-to-consumer sales and higher sales of tour merchandise. In the US, Bravado has benefited from touring artists such as Slipknot, Imagine Dragons, Nicki Minaj, blink-182 and Malone, according to Muir.
from our partners at https://www.billboard.com/pro/universal-music-earnings-revenue-grows-new-releases-subscriptions/
