Universal generated $2.6bn in Q1, as subscription streaming revenues jumped over 10% YoY

Popular music group announced its Q1 2023 financial results on Wednesday (April 26), for the three months to the end of March.

The headline figure from the result: The company that generated Q1 revenue is EUR €2.451 billion (USD $2.62 billion) on all its divisions (including recorded, published, and more music).

Q1 revenue numbers increased 9.3% annual with constant currency, driven by growth in Recorded Music and Music Publishing.

As you’ll read in our analysis below, UMG’s Q1 highlights include 10.3% grew the company’s subscription streaming revenue and strong hard disk sales in the world’s second-largest recorded music market, Japan.

RECORD MUSIC

Universal’s total recorded music revenue for Q1 2023 (including streaming plus physical, etc.) €1.923 billion ($2.06 billion), upward 9.6% annual in constant currency (see below).

In the Recorded Music segment, UMG’s ‘Streaming and Subscriptions Revenue’ (including subscription and ad-supported streaming revenue) increased 7.1% annual in constant currency to €1.329 billion ($1.42 billion).

Breaking down UMG’s recorded music streaming numbers further shows that the company register Streaming revenue especially increased 10.3% annual in constant currency to €1.014 billion ($1.08 billion).

It is worth noting that two prominent music streaming services, apple music And amazon musicraised the prices of their top personal premium offerings in the second half of 2022. This is likely to have a positive impact on recorded music revenue globally in Q1 2023 compared to Q1 year 2022.

However, UMG didn’t point to this as a factor, saying its subscription streaming revenue results in Q1 were boosted, “primarily due to global subscriber growth”.

This fact has been proven by Spotify resultspublished yesterday (April 25), revealing that their own Premium Subscriber base has grown 15% Year-on-year, to reach a total of 210 million paying users – 3 million more than the company expected for the quarter.

Universal advertising support Meanwhile, recorded music streaming revenue fell 2.2% annual in constant currency (see above) to €315 million ($337.99 million). “The advertising industry continues to be impacted by the difficult economic environment,” UMG said.

In Universal’s recorded music business, physical sales have increased 32.6% annual in constant currency to €313 million ($335.84 million).

UMG said that this growth was driven by “strong CD and DVD sales in Japan and improvements in vinyl sales”.

As emphasized by the President and CEO of UMG Sir Lucian Grainge During a company call with analysts on Wednesday (April 26), Japanese pop stars King & Prince, one of UMG’s best-selling singles of the quarter, sold more than 1 million their CD singles. life goes on in its first week. Grainge noted that it was “the first time in three years that the sales threshold has been surpassed”.

Elsewhere in UMG’s Recorded Music segment, ‘Licenses and Other Revenue’ increased 8.1% annual in constant currency to €226 million ($242.49 million).

In addition to King & Prince, the bestsellers for the quarter included releases by Morgan Wallen, Taylor Swift, TOMORROW X TOGETHER, and re-issues.

UMG’s revenue generated from ‘sales and other revenue’ revenue in Q1 2023 is €107 million ($114.81 million), reduced 3.6% in fixed currency.

Universal said that the drop was “due to the difficulty of comparing touring merchandise sales with last year’s pent-up touring demand following the post-Covid reopening, as well as the drop in retail sales, which was offset by a drop in sales.” offset by an increase in consumer sales”.

Discussing the company’s earnings call results, Boyd Muir, EVP, CFO and President of Operations of UMG, noted that the result was “partially offset by strong sales in [UMG’s] selling directly to consumers”.

After the call, Muir pointed to factors that affect merchandise sales, including touring schedules, and noted that Q1 “was the quietest quarter for touring.”

“If you look at this with a sufficiently long-term lens, we are sure to see significant future growth for our sales business,” he added.

Music publishing

Elsewhere, Universal’s Music Publishing division, Universal Music Publishing Group, generated revenue €425 million ($456.02 million) in the first quarter of 2023.

It’s up 11.5% annual in fixed currency.

In Music Publishing, Digital Revenue Grows 19.1% annual in constant currency to 231 million euros ($247.86 million)fueled, according to UMG, “by continued growth in streaming and subscriptions”.

Consistent revenue growth 7.8% annual in constant currency to 69 million euros ($74.03 million), due to “the continued growth in sync opportunities for music,” according to UMG.

Mechanical revenue unchanged year-on-year in constant currency, at 23 million euros ($24.67 million).

“Our strong start to the year demonstrates our consistency in developing great artists and presenting their music to fans around the world.”

Sir Lucian Grainge, UMG

Sir Lucian Grainge, President and CEO of UMG said: “Our strong start to the year proves our consistency in developing great artists and showcasing their music. to fans around the world.

“We look forward to building on this momentum and further enhancing our track record in turning disruptive technologies into opportunities to advance our business for artists, our fans and shareholders.”

EBITDA, etc.

In the first quarter of 2023, UMG’s EBITDA (earnings before interest, taxes and depreciation) decrease 43.4% annual in constant currency, to €261 million ($280.05 million).

The old EBITDA margin was 10.6%compare to 20.6% in the first quarter of 2022 (see below).

According to UMG, “this decline is due to the cost of compensation based on non-cash shares of €261 million ($280.05 million) in the first quarter of 2023, compared with €1 million ($1,121 million) in cashless stock-based compensation costs in the first quarter of 2022″, after the company launches its first global equity compensation plan, which begins in the fourth quarter of 2022.

Excluding non-cash stock-based compensation, UMG reports that Q1 adjusted EBITDA is €522 million ($560.1 million)upward 13% in constant currency, and its adjusted EBITDA margin increased 0.6 percentage points to 21.3%compare to 20.7% in the first quarter of 2022, as a result of revenue growth, operating leverage and cash compensation savings of 9 million euros associated with the implementation of the equity plan.

“With revenue up 9% and adjusted EBITDA up 13%, we are encouraged in the first quarter and continue to be on track to meet our plans for the year.”

Boyd Muir, UMG

Boyd Muir, EVP, CFO and Executive Chairman of UMG added: “Our results reflect the continued evolution of our business towards consistent and predictable revenue. from a growing variety of sources.

Boyd Muir, EVP, CFO and Executive Chairman of UMG added: “Our results reflect the continued evolution of our business towards consistent and predictable revenue. from a growing variety of sources.

All EUR-USD conversions in this report for 1Q2023 have been taken as quarterly average rates determined by the European Central Bank.Global Music Business