Universal Music Group’s Q3 2023 financial report showcases noteworthy achievements. During this quarter, the music industry giant reported revenues of EUR €2.752 billion (USD $2.995 billion), reflecting a robust 9.9% year-on-year growth when accounting for currency fluctuations.
UMG’s diversified portfolio, including Recorded Music, Music Publishing, Merchandising, and other segments, played significant roles in this quarter’s revenue expansion. Sir Lucian Grainge, UMG’s Chairman and CEO, emphasized the company’s growth and long-term strategic progress, with a strong focus on creating sustainable value and exploring new revenue streams.
The Q3 results also benefited from a €53 million boost in Music Publishing due to catch-up payments from certain Digital Service Providers (DSPs) related to the Copyright Royalty Board Phonorecords III ruling in 2023. Additionally, UMG’s Q3 revenue included a €71 million increase in Recorded Music, resulting from the resolution of a copyright infringement lawsuit with an internet service provider.
Excluding these specific items, UMG reported impressive 10.6% year-on-year growth at constant currency rates.
Examining the Q3 figures closely, Universal’s overall recorded music revenues in 2023, encompassing streaming and physical sales, reached €2.037 billion ($2.21 billion), indicating a strong 5.2% year-on-year growth at constant currency.
In the Recorded Music segment, UMG’s ‘Subscription and streaming revenues’ showed a solid 10.9% year-on-year growth at constant currency, reaching €1.414 billion ($1.53 billion) in Q3. A detailed analysis reveals that subscription streaming revenues grew by 13% year-on-year at constant currency, amounting to €1.057 billion ($1.15 billion). This growth was primarily driven by the increasing number of global subscribers.
Furthermore, ad-supported recorded music streaming revenue experienced a 5% year-on-year rise at constant currency, totaling €357 million ($388.55 million) in Q3.
Within Universal’s recorded music business, physical revenues witnessed a remarkable 20% year-on-year growth at constant currency, totaling €294 million ($319.98 million). This surge was attributed to strong vinyl sales, particularly in the US and Europe, and multi-format physical growth in Japan.
Universal Music Group’s Music Publishing division, known as Universal Music Publishing Group, demonstrated its financial prowess in the third quarter of 2023. Revenues reached an impressive €491 million ($534.40 million), marking a substantial 24.6% year-on-year growth at constant currency rates.
Breaking down the performance within Music Publishing, Digital revenue surged by 33.6% year-on-year at constant currency, reaching €294 million ($319.98 million) during Q3. Performance revenue exhibited a strong 21.8% year-on-year growth at constant currency, totaling €106 million ($115.37 million) in the same period. Synchronization revenue saw a steady increase of 3.8% year-on-year at constant currency, reaching €55 million ($59.86 million).
Universal’s ‘Merchandising and Other’ revenue also displayed remarkable growth in Q3, with figures reaching €227 million ($247.06 million). This represented an impressive 27.5% year-on-year growth at constant currency, driven primarily by increased sales in direct-to-consumer channels and higher touring merchandise sales.
In Q3 2023, UMG’s EBITDA (earnings before interest, taxes, and depreciation) experienced a modest decline of 5.9% year-on-year at constant currency rates, amounting to €478 million ($520.25 million). The EBITDA margin settled at 17.4%, showing a slight decrease compared to 20.2% in the third quarter of 2022.
UMG attributed the impact on its EBITDA and EBITDA margin to non-cash share-based compensation expenses, which amounted to €103 million during Q3 2023, contrasting with €14 million in the third quarter of 2022.
Despite these variations, Universal reported an Adjusted EBITDA of €581 million ($632.36 million) for Q3, marking an 11.3% year-on-year growth at constant currency rates. The Adjusted EBITDA margin improved to 21.1% in Q3, surpassing the 20.8% recorded in Q3 2022.