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Universal Music’s Revenue Grew 17%, Even Amid Economic Slowdown

Recorded music subscription revenue was up 12.1% in the second quarter of 2022 at constant currency, while ad-supported climbed 15.6%.

Universal Music Group’s revenue in the second quarter of 2022 grew 17.3% at constant currency to 2.54 billion euros ($2.65 billion using the June 30, 2022 conversion rate), the company announced Wednesday (July 27).

The dollar’s strengthening against the euro — UMG’s reporting currency — caused large differences between reported financial numbers and what those figures would have been without exchange rate fluctuations. As reported, UMG’s revenue increased 25.4% year over year compared to 17.3% at constant currency. EBITDA (earnings before interest, taxes, depreciation and amortizatio) rose 18.7% as reported versus 8.8% at constant currency. The euro-to-dollar exchange rate fell 11.9% from 1.1856 on June 30, 2021 to 1.0444 on June 30, 2022.


In the recorded music segment, subscription revenue was up 12.1% at constant currency in the second quarter (excluding a catch-up payment from a digital service in the prior-year quarter) while ad-supported climbed 15.6% at constant currency. “The social and video segments of the ad market have continued to perform well,” said Boyd Muir, executive vp, CFO and president of operations, during the earnings call. Muir noted that UMG has not seen a negative change in advertising revenue from softness in the online ad market, where alarm bells sounded this week after social media company Snap warned of an ad market slowdown and Google spoke of uncertainty in the global ad market.

UMG highlighted the growing importance of Meta, with which it signed a new licensing deal in the second quarter. Meta is now one of UMG’s top 10 most valuable digital partners, revealed CEO Lucian Grainge. Executive vp of digital strategy Michael Nash said the deal provides “new opportunities for revenue sharing” and “extends our partnership with Meta on their product roadmap.”

Physical revenue grew 17.4% at constant currency to 303 million euros ($316 million) aided by what Muir called “a very conscious decision to develop products for super fans.” Downloads and other digital revenue fell 12.7% at constant currency to 69 million euros ($72 million).

Latin America was UMG’s fastest-growing region for recorded music revenues in the first half of 2022 (UMG did not break out revenues by region for the second quarter) with 27% growth year over year. The rest of the world averaged 15% growth — North America at 7%, Europe at 13% and Asia at 10%.

Music publishing revenue grew 50.6% at constant currency to 476 million euros ($497 million). Excluding the effect from a change in accounting method, publishing revenues still improved 19.6% at constant currency. UMG attributed the improvement to “healthy growth” in streaming and subscription revenues, “the broadening monetization of publishing rights,” improved physical sales and “initial contributions from catalog acquisitions made in prior years.”

Adjusted EBITDA climbed from 429 million euros ($448 million) to 507 million euros ($530 million), although EBITDA margin fell 1.2 percentage points to 20.0%. UMG attributed the margin erosion to a change in the revenue mix.

UMG spent 264 million euros ($276 million) on catalog investments in the first half of the year. Muir said UMG’s acquisition of Sting‘s catalog was the most significant deal of the period. As for dealmaking in the second half of the year, Muir would not predict if UMG would further dip into its 1.54 billion euros ($1.56 billion) cash stockpile. “We have seen, and we’re likely to continue to see, IP assets going up for sale,” said Muir. “But we’re very, very selective in what we look at. We’re only interested in the best of the best.”


This story is updating.