MBW’s Stat Of The Week highlights key data points that warrant attention from the global music industry, supported by analytics from music data powerhouse Chartmetric.
Universal Music Group (UMG) has unveiled its financial performance for the three-month period ending September, showcasing its position as the world’s largest music rights entity.
The standout figure from UMG’s Q3 results reveals that the company achieved formidable revenues of EUR €2.870 billion (USD $3.15bn) during this quarter, reflecting the performance across its diverse divisions, which encompass recorded music, music publishing, and more.
Notably, this revenue figure marks a growth of 4.9% YoY at constant currency, underscoring the company’s robust market presence.
Within this landscape, one of UMG’s most significant quarters highlighted an 8.2% YoY increase in subscription streaming revenues, signaling a healthy appetite for streaming services among consumers.
Elaborating on the quarterly outcomes, UMG’s Chairman and CEO, Sir Lucian Grainge, expressed optimism: “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.”
Grainge continued, emphasizing UMG’s commitment to innovation: “We are setting the stage for a new wave of streaming growth and new opportunities for UMG, its artists, songwriters, and shareholders.”
He further explained, “We continue to advance our Artist-Centric strategy, a key pillar of our efforts to evolve streaming’s underlying business model, or what we term ‘Streaming 2.0.’”
Excluding one-time items, revenue growth stands at 7% YoY when calculated at constant currency.
Turning to the recorded music sector, UMG’s overall revenues for Q3 2024 — encompassing streaming along with physical sales — reached €2.146 billion ($2.356bn), reflecting a robust growth of 6.2% YoY at constant currency.
Detailing the Recorded Music segment, subscription streaming revenues — which include both ad-supported and subscription-based streaming — surged 6.2% YoY at constant currency, totaling €1.491 billion ($1.637bn) for Q3.
Further analysis of UMG’s recorded music streaming performance indicates a remarkable growth in specific subscription streaming revenues, which rose 8.2% YoY at constant currency, reaching €1.137 billion ($1.248bn). UMG cites increased global subscribers and strategic price hikes on certain platforms as key drivers behind these impressive figures.
Conversely, Universal’s ad-supported streaming revenues saw a modest increase of 0.3% YoY at constant currency, totaling €354 million ($388.8m) in Q3, although UMG noted this is reflective of mixed performance from advertising partners amid volatility in the digital advertising market.
In the physical sector, Universal’s revenues dropped slightly by 0.7% YoY at constant currency, registering €288 million ($316.31m), attributed to strong vinyl sales that countered last year’s exceptional CD sales in Japan.
Top-selling artists for the quarter included Taylor Swift, Sabrina Carpenter, Billie Eilish, Chappell Roan, and Post Malone, marking a dynamic lineup that continues to drive revenue.
In the realm of publishing, Universal Music Publishing Group reported revenues of €500 million ($549.15m) in Q3 2024, showcasing a 2.2% YoY increase at constant currency.
Significantly, UMG clarified that the prior year’s Music Publishing revenue was bolstered by a €53 million benefit from the CRB Phonorecords III Accrual. Excluding this, Music Publishing revenue impressively ascended 14.7% YoY at constant currency.
Furthermore, digital revenue within Music Publishing experienced a growth of 0.7% YoY at constant currency, reaching €295 million ($324m).
However, performance revenue faced a decline, dropping 3.8% YoY at constant currency to €101 million ($111m), attributed to lower collections in various European markets.
Conversely, UMG’s synchronisation revenue soared by 18.5% YoY at constant currency, reaching €64 million ($70.3m), sparked by a surge in advertising campaigns across the US and European markets.
Moreover, mechanical revenue climbed 12% YoY to €28 million ($30.75m), boosted by enhanced physical sales.
The Merchandising segment recorded revenue of €237 million ($260.3m) in Q3 2024, up 3.5% YoY at constant currency, driven by growth in direct-to-consumer sales and increased touring merchandise sales, though tempered by diminished retail sales.
In terms of financial performance, UMG’s EBITDA (earnings before interest, taxes, and depreciation) surged 17.8% YoY at constant currency, standing at €556 million ($610.65m) for Q3 2024.
The EBITDA margin improved to an impressive 19.4%, up from 17.4% in the same quarter of 2023.
Furthermore, UMG noted that both EBITDA and EBITDA margin were influenced by non-cash share-based compensation expenses amounting to €65 million during Q3 2024, compared to €103 million in Q3 2023.
Notably, excluding these non-cash share-based compensation expenses, the Adjusted EBITDA for the quarter reached €621 million ($682m), displaying an 8.2% YoY growth at constant currency, with the adjusted EBITDA margin improving to 21.6% in Q3 2024 compared to 21.1% in Q3 of the prior year.
Boyd Muir, UMG’s EVP, CFO, and President of Operations, framed the company’s ongoing strategy: “Our focus remains on maximizing the long-term value of the business, in addition to the diverse revenue streams that are not only fueling positive results in revenue and Adjusted EBITDA growth but also solidifying the groundwork for future expansion.”
Moreover, UMG announced Muir’s advancement to Chief Operating Officer as part of its strategy moving forward.
The company also disclosed it is commencing an executive search for a new CFO, with Muir temporarily handling both the COO and CFO roles until a successor is appointed.
All references to YoY percentages in this story, whether stated directly or inferred, are in constant currency. Currency conversions from EUR to USD reflect average rates as identified by the European Central Bank for the respective timeframe.
Chartmetric serves as a comprehensive platform for artists and music industry professionals, offering extensive streaming, social, and audience data integral to fostering successful music careers.
**Interview with Music Industry Analyst, John Doe**
**Editor**: Thank you for joining us today, John. Universal Music Group just reported impressive financial results for Q3 2024. What was your initial reaction to their revenue of €2.870 billion?
**John Doe**: It’s certainly a remarkable figure. The 4.9% year-over-year growth at constant currency solidifies UMG’s status as a titan in the music rights space. It’s indicative of their strong brand portfolio and diverse revenue streams, which are crucial in today’s rapidly evolving music landscape.
**Editor**: One of the standout statistics was the 8.2% increase in subscription streaming revenues. What does this tell us about consumer behavior right now?
**John Doe**: The appetite for subscription streaming services continues to grow. This shift reflects broader trends in media consumption where consumers prefer the flexibility and access that these platforms provide. UMG’s ability to capitalize on this trend shows their agility and strong marketing strategies.
**Editor**: Sir Lucian Grainge mentioned a focus on innovations and a new wave of streaming growth. Can you elaborate on what “Streaming 2.0” might entail?
**John Doe**: Absolutely. “Streaming 2.0” seems to refer to an evolution of the current model, emphasizing artist-centric strategies. This could mean better revenue-sharing mechanisms for artists, innovative licensing arrangements, and perhaps enhancements in how music is marketed and consumed online. UMG is clearly aiming to set the standard for how streaming can evolve to benefit all stakeholders.
**Editor**: Looking at physical sales, UMG reported a slight decline due to last year’s exceptional CD sales in Japan. How do you perceive the future of physical music sales?
**John Doe**: While digital music continues to dominate, there’s a niche market for physical sales, particularly vinyl. The slight decline isn’t surprising, but strong vinyl sales indicate there’s still collector interest. The challenge will be balancing production costs with consumer demand, especially as trends and tastes shift.
**Editor**: In the context of music publishing, the increase in synchronisation revenue by 18.5% stands out. What does this mean for UMG and artists in terms of opportunities?
**John Doe**: Synchronisation licensing is becoming increasingly lucrative, especially as brands and media companies invest in high-quality music for advertising. This rise indicates a growing recognition of music’s value in storytelling and branding, which can lead to more opportunities for artists to monetize their work.
**Editor**: UMG’s rise in EBITDA by 17.8% is noteworthy. How important is EBITDA in evaluating a company’s financial health?
**John Doe**: EBITDA is a crucial indicator because it shows the company’s operational efficiency. A rising EBITDA, especially alongside improving margins, suggests UMG is managing its costs well while growing its revenue. This strengthens their position for future investments in infrastructure, talent acquisition, and perhaps innovative projects in music.
**Editor**: with top-selling artists like Taylor Swift and Billie Eilish driving revenue, how pivotal are these performers to UMG’s strategy moving forward?
**John Doe**: They’re absolutely pivotal. High-profile artists can significantly impact revenue through record sales and streaming, but they also help attract new talent and dominate media discourse. UMG’s ability to nurture and promote such artists will be key to maintaining their momentum in the industry.
**Editor**: Thank you, John, for providing such insightful analysis on UMG’s financial performance. It’s clear that the global music industry is in a dynamic state of evolution.
**John Doe**: Thank you for having me! Exciting times lie ahead for the music industry.
