Universal Music Exceeds Expectations With Strong Revenue Growth

Universal Music Group (UMG) has experienced a robust revenue increase for the fourth quarter of 2024, despite worries in the industry about a potential slowdown in music streaming.

As the largest record label globally, UMG reported total revenue of €3.44 billion (A$5.7 billion), reflecting a 7.9% growth at constant currency. This figure exceeded analysts' expectations, which were set at €3.27 billion.

Specifically, revenue from subscriptions and streaming services grew by 5.6%, amounting to €1.60 billion (A$2.64 billion). This growth surprised analysts, who had anticipated a more modest growth rate of 4.1%. However, it is important to note that this growth rate was lower than the previous quarter's performance of 6.2%.

Examining subscription revenue more closely, it saw a notable increase of 9%, reaching €1.23 billion (A$2.03 billion). This boost was mainly driven by an upsurge in paid subscribers. In contrast, advertising-supported streaming revenue declined by 4.1%, totaling €375 million (A$619 million). This decline is attributed to a shift in listener preferences from premium video platforms towards less monetized short-form content services.

To continue increasing revenues, UMG is implementing its ‘Streaming 2.0’ strategy, which focuses on converting ad-supported users into premium subscribers. Additionally, the company is exploring new opportunities in areas such as fan engagement, merchandising, and branding.

UMG also achieved a 3.4% rise in physical sales, including CDs and vinyl records, with total sales amounting to €458 million (A$751 million).

In terms of financial performance, the company’s EBITDA reached €799 million (A$1.31 billion), exceeding analysts' predictions of €721.4 million and maintaining a strong profit margin of 23.2%. For the entire year, UMG reported a net profit of €2.09 billion (A$3.43 billion), significantly up from €1.26 billion (A$2.07 billion) in 2023.

Looking ahead, Universal aims for an annual revenue growth rate of over 7% through 2028. Strategies include expanding partnerships, such as with Amazon Music, to enhance artist support and address concerns about AI-generated content. UMG has also finalized a multi-year distribution agreement with Spotify introducing new pricing tiers.

Moreover, preparations are underway for a U.S. share sale by September 15, in compliance with an agreement with billionaire investor Bill Ackman’s Pershing Square, which is set to offload $500 million (A$820 million) worth of shares in the company.

music, revenue, strategy