Universal Music Posts $2.4B in Quarterly Revenue Ahead of Public Listing

Ahead of its upcoming public listing this fall, Universal Music Group’s revenue skyrocketed to 2.022 billion euros ($2.438 billion) during the second quarter, up 19.6% from 1.69 billion euros ($1.833 billion) in Q2 of 2020.

UMG’s recorded music division enjoyed even larger increases, growing 23.5% to 1.654 billion euros ($1.994 billion) with streaming rising 23.8% to 1.122 billion euros ($1.35 billion) in the second quarter this year versus 906 million euros ($983 million) in the second quarter of 2020. The company cited releases from Justin Bieber and Olivia Rodrigo, and a best-of compilation from BTS as well as continued sales of music from The Weeknd, Pop Smoke and Ariana Grande.

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Moreover, at mid-year UMG claimed eight of the top 10 titles in MRC Data’s year-to-date album consumption chart, the company pointed out.

Physical sales also enjoyed a big gain in the second quarter of this year, growing to 250 million euros ($301.5 million) from 152 million euros in the second quarter of 2020, a 64.5% increase, while licensing and other income streams grew 16.7% in the second quarter to 210 million euros ($253.3 million) from 180 million euros ($195.3 million) in 2020’s Q2.

Music publishing revenue didn’t match the year-earlier period with the company garnering 293 million euros ($353 million) versus 302 million euros ($377.7 million) in the second quarter of 2020 — but that quarter’s revenue was buttressed by a one-time item, according to the company. Meanwhile, merchandising and other income streams grew 54.9% to 79 million euros as compared with 51 million euros in the year-earlier corresponding period.

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In advance of its Sept. 21 listing on Euronext Amsterdam, the company said that it will hold a Capital Markets Day by video conference on Aug. 25.

For the half year period ending June 30, 2021, UMG’s overall revenue was up 10.8% to 3.8 billion euros ($4.6 billion) in the first six months of 2021, from 3.5 billion euros ($3.8 billion) earned in the same period last year. On a constant currency and perimeter basis, the company said revenues increased 17.3%.

Net income, meanwhile, fell 38.5% to 453 million euros ($548.6 million), despite improved performance in key financial metrics. That’s down from 736 million euros ($803.7 million) in the same half year period last year.

If UMG stock were trading, that would be the equivalent of 0.25 euros per share, down from 0.41 euros per share in the first half of 2020.

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That dip comes with asterisks, however: The company absorbed a charge of 170 million euros ($201 million) due to a revaluation of UMG’s holdings in Spotify and Tencent — which itself was partially offset by a 100 million euros ($118 million) gain from selling the company’s interest in Alamo Records. Also, in the first half of 2020, UMG’s earnings was buttressed by a 449 million euros ($531 million) capital gain on financial investments, versus only a 102 million ($121 million) euros capital gain in the first half of 2021.

But if earnings before interest, taxes, depreciation and amortization are considered, UMG produced 822 million euros ($995.4 million) in the first half of 2021 — a 26.7% increase over the 649 million euros ($708.7 million) in EBITDA garnered in the first half of 2020. That means EBITDA margin improved dramatically to 21.5% of revenue, versus the 18.8% of revenue the company had in the year earlier corresponding period.

UMG operations revenue for the first half of 2021:

• Recorded music grew 13.2% to 3.14 billion euros ($3.8 billion) from 2.77 billion euros ($3.0 billion) in H1 2020.
• Music publishing fell 1.6% to 564 million euros ($683 million) from 573 million euros ($626 million) in H1 2020.
• Merch and other income streams grew 14% to 138 million euros ($167 million) from 121 million euros ($132 million) in H1 2020.

Recorded music revenue for the first half of 2021:

• Streaming grew 17.4% to 2.13 billion euros ($2.6 billion) from $1.8 billion euros ($1.98 billion) in H1 2020.
• Downloads fell 35.7% to 153 million euros ($185.3 million) from 238 million euros ($259.9 million) in H1 2020.
• Physical grew 33% to 463 million euros ($560.7 million) from 348 million euros ($380 million) in H1 2020.
• Licensing and other income streams grew 5.45% to 391 million euros ($473.5 million) from €371 million ($405.1 million) in H1 2020.

Recorded music revenue by percentage of revenue:

• Overall digital comprises 72.8% of label revenue, down from 74.1% in H1 2020.
• Streaming comprises 67.8% of recorded music revenue, up from 65.5% in H1 2020.
• Downloads comprise 4.9% of recorded music revenue, down from 8.6% in H1 2020.
• Physical comprises 14.8% of recorded music revenue, up from 12.6% in H1 2020.
• Licensing and other income streams comprise 12.5% of revenue, down from 13.4% in H1 2020.

Recorded music revenue by geography:

• North America: 49.5% of total, up 11.3% to 1.55 billion euros ($1.88 billion), from $1.4 billion ($1.5 billion) in H1 2020.
• Europe: 29.3%, up 9.8% to 920 million euros ($1.1 billion), from 838 million euros ($915 million) in H1 2020.
• Asia: 13.6%, up 12% to $428 million euros ($518.3 million), from 382 million euros ($417 million) in H1 2020.
• Latin America: 3.4%, up 12.6% to 107 million euros ($129.6 million), from 95 million euros ($103.7 million) in H1 2020.
• Rest of the world: 4.1%, up 113.3% to 128 million euros ($155 million), from 60 million euros ($65.5 million) in H1 2020.

(This story uses an exchange rate of 1 euro to $1.206 for the second quarter of 2021 and 1 euro to $1.211 for the first half of 2021. For 2020, the exchanges rates respectively were 1 euro to 1.085 and 1 euro to $1.092, respectively)

This story is developing.