Universal Music Group N.V. Reports Financial Results for the Third Quarter and Nine Months Ended September 30, 2022
Universal Music Group reported Q3 2022 revenue of €2,664 million, up 13.3% year-over-year in constant currency, driven by all segments. Recorded Music revenue increased 10.1%, while Music Publishing and Merchandising grew 6.9% and 101.1%, respectively. Adjusted EBITDA reached €553 million, a 9.1% year-over-year rise. Year-to-date, revenue totaled €7,398 million, marking a 15.6% increase, with EBITDA of €1,499 million, up 10.2%. Benefits included a €71 million legal settlement, offset by accounting changes affecting Music Publishing revenues.
- Q3 recorded Music revenue grew 10.1% YoY in constant currency.
- YTD revenue increased 15.6% YoY, demonstrating strong growth.
- Merchandising revenue surged 101.1% YoY in Q3, rebounding from COVID-related declines.
- Adjusted EBITDA rose 9.1% YoY in Q3, reflecting effective cost management.
- Music Publishing revenue negatively impacted by €21 million due to a change in accounting policy.
- EBITDA margin contracted by 0.6pp YoY, signaling potential margin pressure.
Summary Q3 Results1
- Revenue of
€2,664 million increased13.3% year-over-year in constant currency driven by growth across all segments. - Recorded Music revenue grew
10.1% year-over-year in constant currency, Music Publishing revenue grew6.9% year-over-year in constant currency and Merchandising and Other revenue grew101.1% year-over-year in constant currency. - Top sellers for the quarter included BTS, BLACKPINK, Ado, INI and Morgan Wallen.
- Adjusted EBITDA increased
9.1% year-over-year in constant currency driven by the revenue growth.
Summary YTD Results
- Revenue of
€7,398 million increased15.6% year-over-year in constant currency with strong growth across all segments. - Recorded Music revenue grew
10.1% year-over-year in constant currency, Music Publishing revenue grew28.2% year-over-year in constant currency and Merchandising and Other revenue grew80.6% year-over-year in constant currency. - Adjusted EBITDA increased
10.2% year-over-year in constant currency driven by the revenue growth.
HILVERSUM, Netherlands, Oct. 27, 2022 /PRNewswire/ -- Universal Music Group N.V. ("UMG" or "the Company") today announced its financial results for the third quarter and nine months ended September 30, 2022.
"More than ever, we are delivering a diverse and growing range of business and creative opportunities to our recording artists and songwriters," said Sir Lucian Grainge, UMG's Chairman and CEO. "Through our innovation, global reach, and unique understanding of the evolution of the market, we are continually improving the monetization of music and music-related content, generating high-quality revenue and recurring income from more sources than ever before."
Boyd Muir, UMG's EVP, CFO and President of Operations, said, "Our vision of success is about maximizing the long-term value of the business. That requires not only growing revenues but also growing a broad diversity of revenue streams that help drive greater absolute EBITDA and greater value for shareholders."
1 | This press release includes certain alternative performance indicators which are not defined in the International Financial Reporting Standards ("IFRS") issued by the International Accounting Standards Board as endorsed by the EU. The descriptions of these alternative performance indicators and reconciliations of non-IFRS to IFRS measures are included in the Appendix to this press release. | |||||||
UMG Results | ||||||||||||||||
Three Months Ended | % | % | Nine Months Ended | % | % | |||||||||||
2022 | 2021 | YoY | const. | 2022 | 2021 | YoY | const. | |||||||||
(€ millions) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||
Revenue | 23.7 % | 13.3 % | 23.6 % | 15.6 % | ||||||||||||
EBITDA | 26.5 % | 15.4 % | 20.1 % | 12.6 % | ||||||||||||
EBITDA margin | 20.2 % | 19.8 % | 0.4pp | 20.3 % | 20.9 % | (0.6pp) | ||||||||||
Adjusted EBITDA | 20.0 % | 9.1 % | 17.8 % | 10.2 % | ||||||||||||
Adjusted EBITDA margin | 20.8 % | 21.4 % | (0.6pp) | 20.5 % | 21.5 % | (1.0pp) | ||||||||||
Note: | % YoY indicates % change year-over-year; % const. indicates % change year-over-year adjusted for constant currency. Constant currency change is calculated by taking current year results and comparing against prior year results restated at current year rates. |
Revenue for the third quarter of 2022 was
As disclosed in the UMG Annual Consolidated Financial Statements for the year ended December 31, 2021, UMG adjusted its accounting policy in relation to certain revenues that are collected through societies (the "Change in Society Accounting"). In prior years, these revenues were recognized when the relevant collection society notified UMG of the usage by the end customer and collectability was assured. Recognition of that revenue is now based on an accrual for the best available estimate of when the usage occurs and the amount of consideration which is probable to be collected. This has affected the timing of the recognition of certain revenues across financial reporting quarters.
UMG's Recorded Music, Music Publishing and Merchandising and Other segments all contributed to the revenue growth in the quarter, as discussed further below.
EBITDA for the quarter grew
EBITDA and Adjusted EBITDA in the third quarter of 2022 included a
EBITDA and Adjusted EBITDA were also impacted by the timing of certain A&R expenses, which increased in the quarter but remain down year-to-date, and by revenue mix, as revenues were more heavily weighted towards Merchandising and Other revenues, which carry a significantly lower EBITDA margin than the Company's other revenues. Excluding these items, Adjusted EBITDA margin was flat versus the prior-year quarter.
In the nine months ended September 30, 2022, UMG's revenues of
Revenue for the nine months ended September 30, 2022 includes a
For the nine months ended September 30, 2022, EBITDA of
EBITDA and Adjusted EBITDA for the nine months through Q3 2022 benefitted from the Change in Society Accounting (
Recorded Music | ||||||||||||||||
Three Months Ended | % | % | Nine Months Ended | % | % | |||||||||||
2022 | 2021 | YoY | const. | 2022 | 2021 | YoY | const. | |||||||||
(€ millions) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||
Subscription and Streaming Revenue | 19.6 % | 7.7 % | 18.8 % | 10.3 % | ||||||||||||
of which streaming | 18.3 % | 5.2 % | 22.4 % | 12.6 % | ||||||||||||
of which subscription | 20.1 % | 8.7 % | 17.6 % | 9.5 % | ||||||||||||
Downloads and Other Digital Revenue | 67.1 % | 55.7 % | 17.0 % | 9.1 % | ||||||||||||
Physical Revenue | (5.7 %) | (9.6 %) | 8.2 % | 4.6 % | ||||||||||||
License and Other Revenue | 40.4 % | 30.2 % | 23.0 % | 16.3 % | ||||||||||||
Recorded Music Revenue | 20.4 % | 10.1 % | 17.6 % | 10.1 % | ||||||||||||
Note: | % YoY indicates % change year-over-year; % const. indicates % change year-over-year adjusted for constant currency. |
Recorded Music revenues for the third quarter of 2022 were
In the nine months through Q3 2022, Recorded Music revenues were
Physical revenue grew
Music Publishing | ||||||||||||||||
Three Months Ended | % | % | Nine Months Ended | % | % | |||||||||||
2022 | 2021 | YoY | const. | 2022 | 2021 | YoY | const. | |||||||||
(€ millions) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||
Performance | 1.1 % | (4.2 %) | (0.9 %) | (6.4 %) | ||||||||||||
Synchronisation | 18.8 % | 7.5 % | 27.3 % | 18.0 % | ||||||||||||
Digital | 27.2 % | 17.0 % | 65.5 % | 53.9 % | ||||||||||||
Mechanical | (19.4 %) | (21.9 %) | 1.4 % | (1.4 %) | ||||||||||||
Other | 11.1 % | 0.0 % | 0.0 % | (6.1 %) | ||||||||||||
Music Publishing Revenue | 15.2 % | 6.9 % | 36.9 % | 28.2 % | ||||||||||||
Note: | % YoY indicates % change year-over-year; % const. indicates % change year-over-year adjusted for constant currency. |
Music Publishing revenue amounted to
Within Music Publishing, digital revenue grew
Music Publishing revenue amounted to
Within Music Publishing, digital revenue grew
Merchandising and Other | ||||||||||||||||
Three Months Ended | % | % | Nine Months Ended | % | % | |||||||||||
2022 | 2021 | YoY | const. | 2022 | 2021 | YoY | const. | |||||||||
(€ millions) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||||
Merchandising and Other Revenue | 125.0 % | 101.1 % | 96.8 % | 80.6 % | ||||||||||||
Note: | % YoY indicates % change year-over-year; % const. indicates % change year-over-year adjusted for constant currency. |
Merchandising and Other revenue of
Merchandising and Other revenue of
The Company will host a conference call to discuss these results on October 27, 2022 at 6:15PM CET. A link to the live audio webcast will be available on investors.universalmusic.com and a link to the replay will be available after the call.
While listeners may use the webcast, a dial-in telephone number is required for investors and analysts to ask questions. Investors and analysts interested in asking questions can pre-register for a dial-in line at investors.universalmusic.com under the "Financial Reports" tab.
This press release is published by Universal Music Group N.V. and contains inside information within the meaning of article 7(1) of Regulation (EU) No. 596/2014 (Market Abuse Regulation).
This press release may contain statements that constitute forward-looking statements with respect to UMG's financial condition, results of operations, business, strategy and plans. Such forward-looking statements may be identified by the use of words such as 'profit forecast', 'expect', 'estimate', 'project', 'anticipate', 'should', 'intend', 'plan', 'probability', 'risk', 'target', 'goal', 'objective', 'will', 'endeavour', 'optimistic', 'prospects' and similar expressions or variations on such expressions. Although UMG believes that such forward-looking statements are based on reasonable assumptions, they are not guarantees of future performance. Actual results may differ materially from such forward-looking statements as a result of a number of risks and uncertainties, many of which are related to factors that are outside UMG's control, including, but not limited to, UMG's inability to compete successfully and to identify, attract, sign and retain successful recording artists and songwriters, failure of streaming and subscription adoption or revenue to grow or to grow less rapidly than anticipated, UMG's reliance on digital service providers, UMG's inability to execute its business strategy, the global nature of UMG's operations, UMG's inability to protect its intellectual property and against piracy, UMG's inability to attract and retain key personnel, changes in laws and regulations and the other risks that have been described in UMG's 2021 annual report. Accordingly, UMG cautions readers against placing undue reliance on such forward-looking statements. Such forward-looking statements are made as of the date of this press release. UMG disclaims any intention or obligation to provide, update or revise any such forward-looking statements, whether as a result of new information, future events or otherwise.
This press release includes certain alternative performance indicators which are not defined in IFRS issued by the International Accounting Standards Board as endorsed by the EU. The descriptions of these alternative performance indicators and reconciliations of non-IFRS to IFRS measures are included in the Appendix to this press release.
At Universal Music Group (EURONEXT: UMG), we exist to shape culture through the power of artistry. UMG is the world leader in music-based entertainment, with a broad array of businesses engaged in recorded music, music publishing, merchandising and audiovisual content. Featuring the most comprehensive catalogue of recordings and songs across every musical genre, UMG identifies and develops artists and produces and distributes the most critically acclaimed and commercially successful music in the world. Committed to artistry, innovation and entrepreneurship, UMG fosters the development of services, platforms and business models in order to broaden artistic and commercial opportunities for our artists and create new experiences for fans. For more information on Universal Music Group N.V. visit www.universalmusic.com
Contacts
Media
James Murtagh-Hopkins - communicationsnl@umusic.com
Investors
Erika Begun - investorrelations@umusic.com
Appendix
Reconciliation of Adjusted EBITDA | ||||||||||||||
Three Months Ended | % | Nine Months Ended | % | |||||||||||
2022 | 2021 | YoY | 2022 | 2021 | YoY | |||||||||
(€ millions) | (unaudited) | (unaudited) | (unaudited) | (unaudited) | ||||||||||
EBITDA | 539 | 426 | 26.5 % | 1,499 | 1,248 | 20.1 % | ||||||||
Non-cash share-based compensation expense | 14 | 20 | 16 | 20 | ||||||||||
One time direct-listing related expenses | - | 15 | - | 18 | ||||||||||
Adjusted EBITDA | 553 | 461 | 20.0 % | 1,515 | 1,286 | 17.8 % | ||||||||
In this press release, UMG presents certain financial measures when discussing UMG's performance that are not measures of financial performance or liquidity under IFRS ("non-IFRS"). These non-IFRS measures (also known as alternative performance measures or indicators) are presented because management considers them important supplemental measures of UMG's performance and believes that they are widely used in the industry in which UMG operates as a means of evaluating a company's operating performance and liquidity. UMG believes that an understanding of its sales performance, profitability, financial strength and funding requirements is enhanced by reporting the following non-IFRS measures. All non-IFRS measures should be considered in addition to, and not as a substitute for, other IFRS measures of operating and financial performance as described in this press release. In addition, it should be noted that other companies may have definitions and calculations for these non-IFRS measures that differ from those used by UMG, thereby affecting comparability.
UMG considers EBITDA and EBITDA margin, non-IFRS measures, to be relevant measures to assess the performance of its operating segments as reported in the segment data. It enables UMG to compare the operating performance of operating segments regardless of whether their performance is driven by the operating segment's organic growth or by acquisitions. EBITDA margin is EBITDA divided by revenue. To calculate EBITDA, the accounting impact of the following items is excluded from the income from Operating Profit:
- amortization of intangible assets;
- impairment losses on goodwill and other intangibles;
- other income and expenses related to transactions with shareowners (except when directly recognized in equity);
- depreciation of tangible assets including right of use assets;
- (gains)/losses on the sale of tangible assets, including right of use assets and intangible assets;
- (income)/losses from equity affiliates;
- restructuring expenses; and
- other non-recurring items.
The difference between EBITDA and Adjusted EBITDA consists of share-based compensation expenses and certain one-time items that are deemed by management to be significant and incidental to normal business activity, including but not limited to professional fees and listing fees related to UMG's listing on Euronext Amsterdam. Adjusted EBITDA margin is Adjusted EBITDA divided by revenue. UMG considers Adjusted EBITDA and Adjusted EBITDA margin, non-IFRS measures, to be relevant measures to assess performance of its operating activities excluding items that may be incidental to normal business activity.
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SOURCE Universal Music Group N.V.
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