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Universal Music Group posted higher revenue and earnings for its third quarter on Wednesday amid growth across its businesses, including its recorded music unit, which benefited from new releases by Billie Eilish and Drake.
In its first earnings report since its spinoff from French telecom and media conglomerate Vivendi in late September, the music major, led by chairman and CEO Lucian Grainge, touted its momentum.
Universal Music Group’s shares jumped in its stock market debut on Amsterdam’s Euronext exchange in late September. With the music powerhouse’s market listing, French media company Vivendi cashed in on a bounceback of the music sector thanks to a boom in streaming revenue, while retaining a stake of about 10 percent in the music major for a minimum period of two years.
Third-quarter earnings before interest, taxes, depreciation and amortization (EBITDA) rose 12.1 percent to 426 million euros ($494 million). Adjusted EBITDA, which excludes such factors as compensation expense, rose 20.7 percent to 461 million euros ($535 million).
Revenue for the third quarter rose 16.1 percent to 2.15 billion euros ($2.49 billion), or 17.4 percent when assuming constant currency exchange rates as the firm’s recorded music, music publishing and “merchandising and other” segments all contributed to the improvement.
In UMG’s recorded music unit, quarterly revenue rose 15.5 percent, or 16.9 percent assuming constant currencies, to 1.71 billion euros ($1.98 billion) as subscription and streaming revenue grew 14.0 percent, or 15.2 percent in constant currency and physical revenue grew 8.9 percent, or 11.6 percent, “driven by strong vinyl demand as well as growth in direct-to-consumer sales.” UMG also noted that other digital revenue fell 4.7 percent, or 3.5 percent in constant currency, “as the global decline in downloads continues.”
Top sellers for the quarter included new releases from Billie Eilish, King & Prince and Drake, as well as continued sales of BTS and Olivia Rodrigo.
Music publishing unit revenue amounted to 363 million euros ($421 million) in the third quarter, up 19.8 percent, or 21.4 percent on a constant currency basis. “Revenues benefited from the continued growth in subscription and streaming, the timing of certain society distributions and from an improvement in synchronization,” UMG said. “While performance revenue experienced the delayed impact of last year’s COVID-related slowdown, this was more than offset by revenue from catalogue acquisitions.”
Management lauded the broad-based momentum.
“Our operational and financial performance this quarter — our first as an independent, publicly traded company — demonstrates both why UMG is the world’s most successful music company, as well as how our commitment to artists’ career development and fostering innovation promotes growth across the music ecosystem,” said Grainge.
“Our results this quarter demonstrate the continued strength of our artist roster and catalog, the increasingly diversified revenue streams of our business, and our ability to deliver growth for our shareholders,” said Boyd Muir, CFO and president of operations.
On an earnings conference call, Grainge said that music was on a “stunningly powerful trajectory” given new ways for artists and their fans to connect and interact, but argued that “there really are no other companies like ours.” He touted the firm’s focus on long-term artist development as a key success formula and called UMG “the driving force of progress and innovation in the industry.”
Among other relationships, Grainge on the call highlighted a recent licensing and distribution deal with South Korean boy band BTS. He also said that the production of original film and TV content, including projects about Eilish, The Bee Gees and The Velvet Underground, provided a key growth opportunity that allows UMG to “promote our intellectual property outside the traditional realms of music.”
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