Universal Music Group chairman and CEO Sir Lucian Grainge has hailed the company’s “continued strong performance” as it delivered its financial results for Q2 and the half-year ending June 30 earlier today.
UNIVERSAL Q2 PERFORMANCE
Sir Lucian Grainge has said Universal are “proud” of their performance as their revenue for the second quarter of 2023 was €2,697 million, which represented an increase of 6.4% y-o-y, or 8.8% in constant currency. The company said this was “driven by strong growth in the recorded music and merchandising and other segments.”
Universal’s recorded music subscription revenue grew 10.6% y-o-y or 13.0% in constant currency and streaming revenue grew 2.9% y-o-y, or 5.3% in constant currency.
Within this, Universal cited its recorded music top sellers included Taylor Swift – who has been breaking lots of records recently – King & Prince, Morgan Wallen, Seventeen, and Stray Kids.
Universal’s adjusted EBITDA of €590 million increased 16.4% y-o-y, or 19.2% in constant currency, and its adjusted EBITDA margin expanded 1.9 percentage points to 21.9%.
Merchandising and other revenue in Q2 was €157 million, up 11.3% y-o-y, or 12.1% in constant currency. This, it said, was “driven by growth in direct-to-consumer sales and despite a decline in touring merchandise sales on lower touring activity compared to the prior year quarter.”
Universal’s music publishing revenue in Q2 was €464 million, which was down 2.5% y-o-y, or 0.6% in constant currency. UMG did, however, note it had previously disclosed in its Annual Consolidated Financial Statements for the year ended December 31, 2021 that it had adjusted its accounting policy “in relation to certain revenues that are collected through societies (the ‘Change in Society Accounting’).” As such, a €98 million impact associated with the Change in Society Accounting in Q2 of 2022 reflected “a one-time catch-up for the receipt of higher income than was accrued at the end of 2021.”
Excluding this one-time benefit, the company said Universal’s Music Publishing revenues grew 22.8% y-o-y or 25.7% in constant currency. This was, it said, “a result of the continued growth in streaming and subscription revenue and improvement in performance income.”
Digital revenue declined 23.7% y-o-y, or 22.6% in constant currency due to the Change in Society Accounting partly offset by growth in streaming and subscription revenue.
Performance revenue grew 169.4% y-o-y, or 185.3% in constant currency.
Sync revenue improved 1.7% y-o-y, or 5.3% in constant currency. Mechanical revenue grew 26.1% y-o-y, or 31.8% in constant currency, as a result of improvements in physical sales.
As an artist-centric company, we’re not only proud of our continued strong performance, but we’re also particularly excited that it enables us to accelerate our strategy to promote a healthier streaming business
Sir Lucian Grainge
UNIVERSAL’S HALF-YEAR UPDATE
As well as its Q2 results, Universal also issued its H1 results, giving a further glimpse into Universal’s performance.
In its official report, Universal stated that in the half year ended June 30, its revenue increased to €5,148 million, up by 8.7% compared to the half year ended June 30, 2022 (“H1 2022”), or 9.1% in constant currency.
Its recorded music subscription revenue grew 11.6% y-o-y on both a reported and constant currency basis and streaming revenue grew 2.3% year-over-year, or 1.8% in constant currency.
Its adjusted EBITDA of €1,112 million increased 15.6% year-over-year, or 16.2% in constant currency, and Adjusted EBITDA margin expanded 1.3 percentage points to 21.6%
Net cash provided by operating activities before income tax paid of €703 million increased 16.2% compared to €605 million in H1 2022.
Merchandising and Other revenue grew to €264 million in H1 2023, up 6.5% y-o-y, or 5.6% in constant currency. Again, this was said to be “driven by the growth in direct-to-consumer sales and despite lower touring merchandise and retail sales.”
Universal’s music publishing revenue amounted to €889 million in H1 2023, up 4.5% y-o-y, or 4.8% in constant currency. Excluding the aforementioned prior-year Change in Society Accounting benefit, music publishing revenues grew 18.1% year-over-year, or 18.5% in constant currency. It said this was “as a result of the continued organic growth in streaming and subscription revenue and improvement in synchronisation and performance revenue.”
Speaking about the results, Sir Grainge said: “As an artist-centric company, we’re not only proud of our continued strong performance, but we’re also particularly excited that it enables us to accelerate our strategy to promote a healthier streaming business — one that rewards real artists and real music — and drive growth opportunities for the broader music ecosystem.”
Boyd Muir, UMG’s EVP, CFO and president of operations, added: “Our strong growth in revenues, Adjusted EBITDA and operating cash flow has enabled our continued strategic investment in the business, further driving long-term shareholder value as we continue to execute on our vision.”
The results come hot on the heels of Spotify unveiling their Q2 results yesterday, you can read that breakdown here.
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