MBW’s Stat Of The Week is a series in which we highlight a data point that deserves the attention of the global music industry. Stat Of the Week is supported by music data analytics firm Chartmetric.
Universal Music Group has published its financial results for the second quarter and first half of the year.
The headline stat from the world’s largest music rights company’s Q2 results (for the three months to end of June): UMG generated revenues of EUR €2.932 billion across all of its divisions (including recorded music, publishing and more).
UMG’s Q2 revenue figure converts to USD $3.15 billion at the average quarterly exchange rate published by the European Central Bank, and was up 9.6% YoY at constant currency.
Commenting on the results, UMG´s Chairman and CEO Sir Lucian Grainge, said: “Our continued strong revenue growth this quarter demonstrates that we are, by design, a multifaceted music entertainment company that places our artists at the center of everything we do.”
Credit: Sthanlee B. Mirador/Sipa USA/Alamy
“Our continued strong revenue growth this quarter demonstrates that we are, by design, a multifaceted music entertainment company that places our artists at the center of everything we do.”
Sir Lucian Grainge
He added: “Our unique structure, which is both innovative and constantly evolving, enables us to support our recording artists and songwriters with an ever-expanding array of revenue sources, reinforced by new products and the exciting next phase of development of streaming services.”
Amongst UMG’s other Q2 highlights were a 6.9% YoY jump in the company’s subscription streaming revenues, a 14.4% YoY increase in the company’s physical revenues, and 43.7% YoY growth in its ‘Merchandising and Other’ revenue segment.
RECORDED MUSIC
Universal’s overall recorded music revenues for Q2 2024 (including streaming plus physical etc.) were €2.2 billion ($2.368bn), up 6.8%YoY at constant currency (see below).
Within the Recorded Music segment, UMG’s ‘Subscription and streaming revenues’ (including ad-supported and subscription streaming revenues) grew 4.1% YoYat constant currency to €1.480 billion ($1.593bn).
Breaking down UMG’s recorded music streaming figure further reveals that the company’s subscription streaming revenues grew 6.9% YoY at constant currency to €1.137 billion ($1.224bn).
UMG said this growth was driven “primarily by the growth in global subscribers as well as the impact of certain price increases.”
Evidence of that global subscriber growth arrived yesterday. The world’s largest subscription music streaming service, Spotify, reported yesterday (July 23) that it added 7 million premium subscribers in Q2 to finish the quarter with a global Premium Subscriber base of 246 million paying users.
Meanwhile, the price increases referenced by UMG could also refer to those implemented by the likes of Spotify, which in July last year, increased its flagship subscription price point in several territories including the US and UK for the first time in its 15-year history. Just under a year later, it raised its subscription prices again in key mature markets, including the US and UK.
Universal’s ad-supported recorded music streaming revenue, meanwhile, decreased 3.9% YoY at constant currency to €343 million ($369.3m), due, according to UMG, “to a deceleration in growth at key advertising-based platform partners as well as shortfalls on certain platforms related to the timing of deal renewals”.
Within Universal’s recorded music business, physical revenues shot up by 14.4% YoY at constant currency to €357 million ($384.38m). UMG pinned this growth on “a favorable release schedule driving vinyl sales in the US and Europe”, which it said, “more than offset a difficult comparison against last year’s strong CD sales in Japan”.
Elsewhere in UMG’s recorded music segment, ‘License and other’ revenue grew 18% YoY on both a reported and constant currency basis. UMG reports that this growth came “as a result of improvements in synchronization income, greater live and audiovisual production income and increased direct-to-consumer related activities”.
Top sellers for the quarter included releases from Taylor Swift, Billie Eilish, SEVENTEEN, Morgan Wallen and Ae! group, while top sellers in the prior-year quarter included King & Prince, Morgan Wallen, SEVENTEEN, Taylor Swift and Stray Kids.
MUSIC PUBLISHING
Elsewhere, Universal’s Music Publishing division,Universal Music Publishing Group, generated revenues of €511 million ($550.19m) in Q2, up10.4%YoY at constant currency (see below).
Within Music Publishing, digital revenue reached €311 million ($334.85m), up 17.4%YoY at constant currency, driven by “the growth in streaming and subscription revenue and the timing of deals,” according to UMG.
Synchronization revenue grew 1.7% YoY year-over-year on both a reported and constant currency basis.
Mechanical revenue, meanwhile, declined 10.3% YoY at constant currency “as a result of the industry’s continued shift towards digital formats,” UMG said in its filing on Tuesday.
MERCHANDISING AND OTHER
Merchandising and Other revenue in the second quarter of 2024 reached €227 million ($244.41m), an increase of 43.7% YoY at constant currency.
UMG reported that this growth was driven by “growth in direct-to-consumer sales and higher touring merchandise sales as a result of strong touring activity in the period”.
EBITDA ETC.
In Q2 2024, UMG’s EBITDA (earnings before interest, taxes, and depreciation) grew 17.4% YoYat constant currency to €580 million ($624.48m).
EBITDA margin was 19.8%, compared to 18.7% in the second quarter of 2023.
UMG noted in its filing that EBITDA and EBITDA margin were impacted by non-cash share-based compensation expenses of €69 million during Q2 2024, compared to €85 million during the second quarter of 2023.
Excluding those non-cash share-based compensation expenses, UMG’s adjusted EBITDA for Q2 was €649 million ($698.77m), up 11.3% YoY at constant currency.
Meanwhile, as you can see from the table above, UMG’s adjusted EBITDA margin expanded 0.2 percentage points to 22.1% in Q2 2024 vs. 21.9% in Q2 2023, due – Universal noted – to “revenue growth and cost savings from the previously announced strategic organizational redesign, partially offset by the unfavourable impact of revenue mix resulting from a greater proportion of merchandising and physical sales”.
“We continue to invest into the growth we see ahead of us as we execute against our long-term strategic plan.”
Boyd Muir, UMG
Boyd Muir, UMG’s EVP, CFO and President of Operations, added: “Our varied revenue streams, across both emerging and established businesses, allowed us to once again achieve high-single digit revenue growth and double-digit Adjusted EBITDA growth this quarter.
“We continue to invest into the growth we see ahead of us as we execute against our long-term strategic plan.”
All references to YoY percentages in this story, whether stated as such or not, are in constant currency. All EUR-USD conversions in this report for Q2 2024 have been made as the average prevailing quarterly rate as identified by the European Central Bank.
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