Universal Music Posts Modest Q3 2024 Streaming Growth

Amid continued streaming-plateau concerns, Universal Music Group (UMG) has posted its Q3 2024 financials – complete with flat recorded music streaming subscription revenue and a slight ad-supported revenue improvement.

These and other interesting performance details emerged in the leading label's just-released third-quarter earnings report. As many will recall, UMG shares party with over 20% of their value in the wake of the Q2 report, seemingly due to investor concerns about a possible streaming plateau.

Subsequently, moment expansion-minded Universal Music put out an aggressive streaming forecast, predicting an 8-10% annual subscription-revenue expansion on the recorded side, running through 2028.

In other words, the Q3 2024 earnings specifics are important on multiple levels for UMG, which attached $3.12 billion (€2.87 billion) in total revenue to the three-month stretch (up 4.3% YoY).

Behind the sum, $2.34 billion/€2.15 billion came from recorded music (up 5.4% YoY but down 2.5% quarterly), with a flat €500 million/$544.15 million attributed to publishing (up 1.8% YoY but down 2.2% quarterly). Even so, recorded music streaming revenue (subscription and ad-supported) grew by just under 1% from the second quarter, the relevant documents show.

However, the category's boost wasn't the result of a subscription-revenue spike. On the contrary, subscriptions contributed an identical amount ($1.24 billion/€1.14 billion) to recorded music revenue in Q2 and Q3, with the latter representing a 7.6% YoY bump.

But in falling less than 1% YoY to $385.26 million/€354 million, Q3 ad-supported recorded revenue improved noticeably from Q2's $373.29 million/€343 million (which was down 4.2% YoY).

Rounding out UMG's Q3 2024 recorded revenue, permanent downloads slipped 28.8% YoY to $45.71 million/€42 million, as physical revenue from vinyl and CDs plummeted 2% YoY and over 19% quarterly to $313.43 million (€288 million). Lastly, licensing and other sources experienced a 20.4% YoY hike (3.2% quarterly) to $353.73 million/€325 million in Q3, the report indicates.

Top sellers on the quarter mostly included the usual suspects – Taylor Swift, Billie Eilishoath Post Malone plus Sabrina Carpenter as well as Chappell Roan – and UMG chalked up the physical-revenue decrease to Q3 2023's “strong CD sales in Japan.”

Shifting to publishing, the aforementioned €500 million (up 14.2% YoY when excluding Q3 2023's Phonorecords III revenue influx) resulted mainly from digital sources' $321.05 million/€295 million. That sub-total increased only slightly YoY and fell 5.1% from Q2 2024.

From there, the narrowly defined sync category put up $69.65 million/€64 million (a 16.4% YoY improvement and a $3.26 million/€3 million quarterly increase) in Q3 2024 publishing revenue for Universal Music.

Performance royalties accounted for another $109.92 million/€101 million (down 4.7% YoY and about 1% quarterly), as mechanical ($30.47 million/€28 million, up 12% YoY) as well as other ($13.06 million/€12 million, up 9.1% YoY but down almost 8% quarterly) made up publishing's remaining revenue.

Finally, merchandising and other brought UMG $257.95 million/€237 million in Q3 2024 (up 4.4% YoY).

UMG's Q3 2024 earnings call was free of groundbreaking developments; CFO Boyd Muir has been elevated to COO, and superfan monetization as well as premium tiers are still central objectives for the company. Meanwhile, execs are adamant that certain quarters' relatively modest streaming showings will ultimately make way for continued long-term growth.

“In 2011, when Spotify entered the US market, over that period of time in the US, there has been 40% inflation, and there has been one 10% price increase,” UMG chief digital officer Michael Nash weighed in during one interesting portion of the call's investor Q&A.

“So it's almost like we're reducing the price of this incredibly attractive value proposition over time, and that's obviously not the direction that makes sense from the standpoint of the interest that we have in advocating for our artists and working with our partners to maximize the value of music,” the exec proceeded.

Overall, EBITDA cracked $605.15 million/€556 million in Q3 2024 for UMG, shares in which dipped by about 1.4% today to $25.12/€23.08 per share.