Universal Music 3Q Revenue Jumped on Subscriptions, Streaming Growth -- Update

By Mauro Orru

Universal Music Group NV--the record label behind the Weeknd, Billie Eilish and Taylor Swift--posted higher revenue for the third quarter as subscriptions and streaming continued to grow, albeit at a slower pace than earlier this year.

The world's largest music company said Thursday that revenue for the three months to the end of September climbed to 2.66 billion euros ($2.68 billion) from EUR2.15 billion last year.

Universal's recorded-music business, which encompasses subscription and streaming, accounted for the lion's share of revenue. Subscription revenue grew 8.7% at constant currency to EUR991 million, while streaming revenue rose 5.2% to EUR362 million.

However, streaming growth cooled down considerably compared with the second quarter, when streaming revenue jumped 16% at constant currency. Streaming services enjoyed a banner two years as listeners turned to digital when coronavirus restrictions brought live concerts to a standstill, though the pace of growth has slowed in recent months as coronavirus restrictions have largely subsided.

Earlier this week, streaming giant Spotify Technology SA posted a better-than-expected rise in revenue and users for the latest quarter. The company is weighing price hikes for its services sometime next year, after Apple Inc. on Monday raised the subscription price in the U.S. for its music service by $1 a month, citing an increase in licensing costs.

Universal shares jumped after Apple's announcement as analysts expect the move will bring in additional revenue for the record label.

"We are continually improving the monetization of music and music-related content, generating high-quality revenue and recurring income from more sources than ever before," Universal Chief Executive Lucian Grainge said in a statement announcing the results.

Downloads and other digital revenue, also part of Universal's recorded-music business, jumped 56% at constant currency to EUR137 million. License and other revenue climbed 30% to EUR306 million, driven by a strong recovery in live tours.

However, revenue from physical sales, such as CDs, slipped 9.6% at constant currency to EUR264 million, a decline that Universal attributed to the digital-consumption transition and a difficult comparison against strong physical sellers in the prior-year quarter. BTS, Blackpink, Ado, INI and Morgan Wallen were among the top sellers for the quarter.

Adjusted earnings before interest, taxes, depreciation, and amortization--a key profitability measure for Universal--rose to EUR553 million from EUR461 million last year.

Universal was expected to post revenue of EUR2.54 billion and adjusted earnings of EUR527 million, according to Visible Alpha consensus.

Write to Mauro Orru at [e-mail]; @MauroOrru94

(END) Dow Jones Newswires

October 27, 2022 12:44 ET (16:44 GMT)

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