UPDATED: Universal Music Group, the world’s largest music company, reported revenue of €2,870 million for the third quarter — an increase of 4.3% year-over-year, or 4.9% in constant currency, although it noted that “excluding a prior-year item affecting comparability,” revenue actually grew 6.3% year-over-year, or 7.0% in constant currency.
Top sellers for the quarter included Taylor Swift, Sabrina Carpenter, Billie Eilish, Chappell Roan and Post Malone.
The company also announced that longtime chief financial officer Boyd Muir has been promoted to chief operating officer; the company is currently searching for a new CFO.
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According to the report, recorded music subscription revenue grew 7.6% year-over-year, or 8.2% in constant currency while streaming revenue declined 0.8% year-over-year, but grew 0.3% in constant currency. On Thursday’s earnings call, chief digital officer Michael Nash pointed to a slowdown in advertising growth on streaming services as a primary cause for the decline.
Adjusted EBITDA of €621 million increased 6.9% year-over-year, or 8.2% in constant currency, and adjusted EBITDA margin expanded 0.5 percentage points to 21.6%. However, excluding that prior-year item affecting comparability, adjusted EBITDA grew 8.9% year-over-year, or 10.3% in constant currency.
On the earnings call Thursday afternoon, chairman-CEO Lucian Grainge spoke about “Streaming 2.0,” a new approach unveiled at its Capital Markets Day last month that will focus less on scale in streaming and, instead, to maximize customer value through various subscription tiers and by selling additional merchandise or branding opportunities to fans — i.e. the “superfan” approach.
“While streaming has delivered robust growth to UMG for over a decade, streaming 2.0 will represent a new age of innovation, consumer segmentation, geographic expansion, and greater value through both subscriber and ARPU growth,” Grainge said last month, according to Bloomberg.
According to Thursday’s earnings report report, EBITDA and EBITDA margin were impacted by non-cash share-based compensation expenses of €236 million during the first nine months of 2024, compared to €448 million during the first nine months of 2023.Excluding these amounts, adjusted EBITDA for the first nine months of 2024 was €1,862 million, up 10.0% year-over-year, or 11.7% in constant currency. Adjusted EBITDA margin increased 0.8 percentage points year-over-year to 22.2%, driven by operating leverage and cost savings.
For the year to date, revenue of €8,396 million increased 6.3% year-over-year, or 7.4% in constant currency. Excluding a prior-year item affecting comparability, revenue grew 7.0% year-over-year, or 8.2% in constant currency.
Recorded music revenues for the third quarter of 2024 were €2,146 million, up 5.4% compared to the third quarter of 2023, and up 6.2% in constant currency. Subscription revenue grew 7.6% year-over-year, or 8.2% in constant currency, driven primarily by the growth in global subscribers, as well as price increases at certain platforms.Streaming revenue declined 0.8% year-over-year, but grew 0.3% in constant currency due to mixed performance at advertising-based platform partners as the digital advertising market remains volatile.Physical revenue decreased 2.0% year-over-year, or 0.7% in constant currency, as growth in vinyl sales largely offset a difficult comparison against last year´s strong CD sales inJapan. Downloads and other digital revenue declined 28.8% year-over-year, both as reported and in constant currency, attributable to the continued format shift towards streaming. License and other revenue increased 20.4% year-over-year, or 21.7% in constant currency, due to improvements in synchronization income, greater live and brands income and increased direct-to-consumer related activities. Top sellers for the quarter includedTaylor Swift,Sabrina Carpenter, Billie Eilish,Chappell Roanand Post Malone, while top sellers in the prior-year quarter includedTaylor Swift, Seventeen,Morgan Wallen,Olivia Rodrigoand King & Prince.
In the nine months endedSeptember 30, 2024, Recorded Music reven -
ues were €6,335 million, up 4.9% year-over-year, or 6.3% in constant currency. Subscription revenue of €3,397 million grew 8.2% year-over-year, or 9.2% in constant currency, driven primarily by the growth in global subscribers as well as the continued benefit of price increases at certain platforms. Streaming revenue of €1,039 million grew 0.9% year-over-year, or 1.8% in constant currency as the digital advertising market remains volatile. Physical revenue declined 3.5% year-over-year, but was in line with last year in constant currency, as growth in vinyl sales in the U.S. andEuropeoffset a difficult comparison against last year´s strong CD sales inJapan. Downloads and other digital revenue decreased 21.8% year-over-year, or 21.4% in constant currency, attributable to the continued format shift towards streaming. License and other revenue improved 13.0% year-over-year, or 14.2% in constant currency driven by improvements in synchronization income, greater live and brands income and increased direct-to-consumer related activities. Top sellers includedTaylor Swift, Billie Eilish,Morgan Wallen,Sabrina CarpenterandNoah Kahan, while top sellers in the prior year included King & Prince,Taylor Swift,Morgan Wallen, Karol G and Metro Boomin.
Adjusted EBITDA of €1,862 million increased 10.0% year-over-year, or 11.7% in constant currency, and Adjusted EBITDA margin expanded 0.8 percentage points to 22.2%. Excluding a prior-year item affecting comparability, detailed below, Adjusted EBITDA grew 10.8% year-over-year, or 12.4% in constant currency.
Top sellers for the year to date include Swift, Eilish, Carpenter, Morgan Wallen and Noah Kahan.
Music publishing revenue amounted to €500 million in the third quarter of 2024, up 1.8% year-over-year, or 2.2% in constant currency. Music publishing revenue in the third quarter of 2023 included the €53 million benefit from the CRB Phonorecords III Accrual. Excluding this item, Music Publishing revenue was up 14.2% year-over-year, or 14.7% in constant currency.
Within music publishing, digital revenue grew 0.3% year-over-year, or 0.7% in constant currency. Excluding the CRB Phonorecords III Accrual, digital revenue grew 22.4% year-over-year, or 22.9% in constant currency, reflecting continued growth of streaming and subscription revenue.Performance revenue declined 4.7% year-over-year, or 3.8% in constant currency as a result of lower collections in parts of Europe.Synchronisation revenue increased 16.4% year-over-year, or 18.5% in constant currency driven by growth in advertising campaigns in the U.S. andEurope. Mechanical revenue increased 12.0% year-over-year both as reported and in constant currency as a result of improved physical sales.
Year to date, in the nine months endedSeptember 30, 2024, Music Publishing revenue amounted to €1,508 million, up 9.3% year-over-year, or 10.0% in constant currency. Music Publishing revenue in the nine months endedSeptember 30, 2023included the €53 million benefit from the CRB Phonorecords III Accrual. Excluding this item, Music Publishing revenue grew 13.6% year-over-year, or 14.4% in constant currency.
“Even as we continue to grow revenue and Adjusted EBITDA, we are already making progress on the strategic initiatives we outlined at our recent Capital Markets Day,” said Lucian Grainge, UMG’s Chairman and CEO. “We continue to advance our Artist-Centric strategy, a key pillar of our work to evolve streaming’s underlying business model, or what we call ‘Streaming 2.0’.Through these initiatives, we are setting the stage for a new wave of streaming growth and new opportunities to UMG, its artists, songwriters and shareholders.”
Boyd Muir, UMG’s EVP, CFO and President of Operations, said, “Our focus remains on maximizing the long-term value of the business. The diversity of our revenue is not only driving attractive results in revenue and Adjusted EBITDA growth for UMG this quarter, but also positioning the company for strong continued growth in the coming years.”
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