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Universal Music Surpasses $10B in Annual Revenue on Big Bumps for Streaming and Physical

The world's biggest label closed out 2021 with over $5B in streaming revenue.

The Universal Music Group’s revenue grew by more than 1 billion euros in 2021 to 8.5 billion euros ($10.1 billion) from 7.43 billion euros ($8.4 billion) for the year ended Dec. 31, 2021, the company announced on Thursday. That represents a 14.4% increase or a 17% increase year-over-year in constant currency.

With its earnings announcement on Thursday (March 3), UMG becomes the first major music company to surpass the $10 billion revenue milestone. (This story uses an exchange rate of $1.1905 experienced by UMG in 2021 and the 1.13 exchange rate experienced by UMG’s former parent Vivendi in 2020.)


While UMG’s net income was down to 886 million euros ($1.05 billion), or 0.49 euros (58 cents) per diluted share, from last year’s 1.366 billion euros ($1.5 billion), or 0.75 euros (85 cents) per share, that decline was attributed to non-cash charges for declines in the value of shares UMG owns in Spotify and Tencent; as well as 102 million euros ($121.4 million) in some one-time expenses relating to UMG becoming a publicly-traded, stand-alone company and non-cash-based compensation expenses. On an adjusted basis, net income for 2021 was 1.271 billion euros ($1.51 billion), versus 2020’s 1.03 billion euros ($1.16 billion), or a 19.4% increase.

“2021 was yet another historic year for UMG. We helped our artists achieve extraordinary success – including 8 of the IFPI’s top 10 global artists of the year, UMG chairman and CEO Sir Lucian Grainge said in a statement. “Our success in all these efforts showed in our financial performance – revenues increased by 17% on a constant currency basis, Adjusted EBITDA margin expanded and Free cash flow improved significantly. Going forward, we see the industry continuing to grow and – with our unique experience, our deep understanding of the business and the vast artist relationships and global creative networks – we expect to further strengthen our position as the industry leader as we continue to break new artists and build on our world-class catalogue.”

Top sellers for the year included music from Olivia Rodrigo, BTS, Justin Bieber, Morgan Wallen, ABBA and Taylor Swift as well as continued sales of The Weeknd and Billie Eilish.

2021 Highlights (Year-Over-Year)

  • Total revenue:  $10.12 billion, up 14.4% (or 17% in constant currency)
  • Recorded music revenue: $8.12 billion, up 14.3%
    • Streaming + Subscriptions: $5.33 billion, up 16.9%
    • Physical: $1.33 billion, up 18.6%
    • Licensing: $1.07 billion, up 15.5%
  • Music publishing revenue: $1.59 billion, up 12.6%
  • Merchandising revenue: $432.2 million, up 24.3%
  • EBITDA: $2.01 billion, up 13.4%
  • Operating income: $1.58 billion, up 14.6%

Looking at profit margins, the company’s gross margin declined slightly to 45.8% of revenue due to a nearly 700 million euros increase in cost of goods to 4.6 billion euros ($5.5 billion), up from 3.92 billion euros ($4.43 billion) in 2020. But operating margin grew slightly, from 16.4% to 16.5%, as operating income hit nearly 1.4 billion euros ($1.66 billion), up 14.6% from 2020’s 1.2 billion euros ($1.38 billion). Even better, adjusted EBITDA margin grew by almost a full percentage point to 21% of revenue, up from 2020’s 20.1%.

During the year, the company generated 638 million euros ($760 million) in free cash flow compared to negative 158 million euros ($155.9 million) in 2020.

“We are generating robust free cash flow even as we continue to opportunistically and selectively invest in artists and catalogues that will be additive to the long-term health of our business,” UMG executive VP/CFO/ president of operations Boyd Muir said in a statement.

Unsurprisingly, streaming drove revenue for the company as a whole and recorded music in particular. In 2021, UMG garnered 4.48 billion euros ($5.33 billion) from streams as compared with 3.8 billion euros ($4.33 billion) in 2020, or a 16.9% increase.

“In addition to strong performance in streaming, we drove new areas of opportunity for our artists – ranging from merchandise to brand management, sponsorship, e-commerce, and film & television,” Grainge added in a statement.

Overall, the recorded music company grew 14.3% to 6.82 billion euros ($8.12 billion) from 5.97 billion euros ($6.7 billion), while Universal Music Publishing Group grew by nearly 150 million euros to 1.335 billion euros ($1.59 billion) from 1.19 billion euros ($1.34 billion), or a 12.6% increase. The latter company’s revenue intake was boosted by a full year of owning the Bob Dylan catalog, which it bought at the end of 2020 for slightly more than $400 million according to sources. That catalog generates anywhere from $10 million to $15 million a year in revenue. Next year will benefit from the acquisition of the Sting publishing catalog, which Billboard estimates it paid $300 million for, as well as the Neil Diamond publishing catalog. That deal also included the Diamond recorded masters, and Billboard estimates UMG paid about $145 million to acquire both sides of Diamond’s music assets.

Both operations also improved profitability with recorded music generating 1.6 billion euros ($1.92 billion) in earnings before interest, taxes, depreciation and amortization in 2021, or a 12.6% increase over the 1.28 billion euros ($1.45 billion) produced in 2020. Meanwhile, UMPG’s EBITDA grew almost the same amount by 14.1% to 307 million euros ($365.5 million) from 2020’s 269 million euros ($303 million).

Meanwhile, the company’s merchandising operation Bravado made a comeback with revenue growing 24.3% to 363 million euros ($432 million) from the pandemic-scarred prior year when revenue totaled 292 million euros ($330 million). But it still trails the 489 million in euros ($549 million) the operation tallied in 2019.

Looking at recorded music revenue by format, streaming comprised 65.7% of revenue, versus the prior year when it was 64.2% of revenue. The other formats break out like this:

  • Physical tallied 1.21 billion euros ($1.33 billion), up 18.6% from the prior year’s total of 945 million euros ($1.07 billion). Physical now comprises 16.4% of recorded music revenue, versus 15.8% in 2020. The company attributed the growth in physical due to releases from Taylor Swift, ABBA and The Beatles.
  • Downloads declined 21.5% to 324 million euros ($385.7), down from 413 million euros ($467 million). Downloads now comprise 4.8% of the segment’s revenue, down from 2021’s 6.9%.
  • Licensing and other income streams rang up 896 million ($1.07 billion), a 15.5% increase over 2020’s 776 million euros ($877 million). As a percentage of revenue, licensing increased a tick to 13.1%, up from 2020’s 13%.

Moving over to the company’s balance sheet, net debt totaled 2.01 billion euros ($2.28 billion), up from 1.87 billion ($2.39 billion) at the end of 2020; while net royalty advances totaled 364 million euros ($433 million), down from the prior year’s 588 million euros ($664 million).

For the fourth quarter, UMG reported 438 million euros ($503 million) in EBITDA, on revenues of 2.52 billion euros ($2.9 billion). That represents a 4.2% decrease in that profit margin from the prior year when the company produced 457 million euros ($537 million) in EBITDA. But the revenue growth in the fourth quarter of 19% was even greater than the 14.3% for the year. Moreover, on an adjusted basis, 2021’s EBITDA totaled 503 million euros ($578 million), or a 9.8% increase over the 458 million euros ($539 million) produced in 2020. (For the fourth quarter, this story uses one euro to $1.1494 exchange for 2021 and a one euro to $1.1764 for 2020.)

Top sellers for the quarter included releases from ABBA, Taylor Swift, The Beatles, Drake and BTS, according to the company.

Added Muir in a statement, “Our core business is well positioned for a strong 2022.”

Q4 Highlights (Year-Over-Year)

  • Total revenue:  $2.9 billion, up 19%
  • Recorded music revenue: $2.56 billion, up 15.2%
    • Streaming + Subscriptions: $1.4 billion, up 18%
    • Physical: $435.6 million, up 11%
    • Licensing: $331 million, up 11.6%
  • Music publishing revenue: $469, up 28.3%
  • Merchandising revenue: $162 million, up 45%
  • EBITDA: $503.4 million, down 4.2%