Universal Music Group N.V. Reports Financial Results for the Second Quarter and Half Year Ended June 30, 2024
Q2 2024 Results Highlights1
- Revenue of €2,932 million increased 8.7% year-over-year, or 9.6% in constant currency, driven by growth across all segments
- Recorded Music revenue grew 5.8% year-over-year, or 6.8% in constant currency, while Music Publishing grew 10.1% year-over-year, or 10.4% in constant currency and Merchandising grew 44.6% year-over-year, or 43.7% in constant currency
- Recorded Music subscription revenue grew 6.5% year-over-year, or 6.9% in constant currency and streaming revenue decreased 4.2% year-over-year, or 3.9% in constant currency, while physical revenue grew 9.5% year-over-year, or 14.4% in constant currency and license and other revenue grew 18.0% year-over-year on both a reported and constant currency basis
- Adjusted EBITDA of €649 million increased 10.0% year-over-year, or 11.3% in constant currency, and Adjusted EBITDA margin expanded 0.2 percentage points to 22.1%
- Recorded Music top sellers included
Taylor Swift , Billie Eilish, SEVENTEEN,Morgan Wallen and Ae! group
H1 2024 Results Highlights1
- Revenue of €5,526 million increased 7.3% year-over-year, or 8.8% in constant currency, driven by growth across all segments
- Recorded Music revenue grew 4.7% year-over-year, or 6.3% in constant currency, while Music Publishing grew 13.4% year-over-year, or 14.3% in constant currency and Merchandising grew 29.2% year-over-year, or 29.7% in constant currency
- Recorded Music subscription revenue grew 8.5% year-over-year, or 9.6% in constant currency and streaming revenue grew 1.8% year-over-year, or 2.5% in constant currency, while physical revenue declined 4.2% year-over-year, but grew 0.3% in constant currency and license and other revenue grew 9.3% year-over-year, or 10.2% in constant currency
- Adjusted EBITDA of €1,240 million increased 11.5% year-over-year, or 13.4% in constant currency, and Adjusted EBITDA margin expanded 0.8 percentage points to 22.4%
- EPS of €0.50 per share compared to €0.34 in the first half of 2023 and Adjusted EPS of €0.44 per share compared to €0.42 in the first half of 2023
- Interim dividend of €439 million, or €0.24 per share
1 |
This press release includes certain alternative performance indicators which are not defined in the International Financial Reporting Standards ("IFRS") issued by the |
HILVERSUM,
UMG´s Chairman and CEO Sir
"Our varied revenue streams, across both emerging and established businesses, allowed us to once again achieve high-single digit revenue growth and double-digit Adjusted EBITDA growth this quarter" said
UMG Results
|
Three Months Ended |
% |
% |
|
Six Months Ended |
% |
% |
||
(in millions of euros) |
2024 |
2023 |
YoY |
const. |
|
2024 |
2023 |
YoY |
const. |
|
(unaudited) |
(unaudited) |
|
|
|
(unaudited) |
(unaudited) |
|
|
Revenue |
2,932 |
2,697 |
8.7 % |
9.6 % |
|
5,526 |
5,148 |
7.3 % |
8.8 % |
EBITDA |
580 |
505 |
14.9 % |
17.4 % |
|
1,069 |
767 |
39.4 % |
43.5 % |
EBITDA margin |
19.8 % |
18.7 % |
1.1pp |
|
|
19.3 % |
14.9 % |
4.4pp |
|
Adjusted EBITDA |
649 |
590 |
10.0 % |
11.3 % |
|
1,240 |
1,112 |
11.5 % |
13.4 % |
Adjusted EBITDA margin |
22.1 % |
21.9 % |
0.2pp |
|
|
22.4 % |
21.6 % |
0.8pp |
|
Operating profit |
|
756 |
591 |
27.9 % |
32.4 % |
||||
Net profit attributable to equity holders of the parent |
|
914 |
625 |
46.2 % |
48.6 % |
||||
Adjusted net profit |
|
809 |
765 |
5.8 % |
|
||||
Net cash provided by operating activities before income tax paid |
|
436 |
703 |
(38.0 %) |
|
||||
Free cash flow |
|
(460) |
(13) |
|
|
||||
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding |
|
1,825 |
1,817 |
|
|
||||
EPS - basic |
|
0.50 |
0.34 |
|
|
||||
EPS - diluted |
|
0.49 |
0.34 |
|
|
||||
Adjusted EPS - basic |
|
0.44 |
0.42 |
|
|
||||
Adjusted EPS - diluted |
|
0.44 |
0.42 |
|
|
|
As at |
% |
|
(in millions of euros) |
|
|
YoY |
|
(unaudited) |
(audited) |
|
Net Debt |
(2,612) |
(1,689) |
54.6 % |
|
Note: % YoY indicates % change year-over-year; % const. indicates % change year-over-year adjusted for constant currency. Constant currency is calculated by taking current year results and comparing against prior year results restated at current year rates. |
Q2 2024 Results
Revenue for the second quarter of 2024 was €2,932 million, an increase of 8.7% year-over-year, or 9.6% in constant currency, driven by growth in the Recorded Music, Music Publishing and Merchandising and Other segments, as discussed further below.
EBITDA for the quarter improved 14.9% year-over-year, or 17.4% in constant currency, to €580 million. EBITDA margin was 19.8%, compared to 18.7% in the second quarter of 2023. EBITDA and EBITDA margin were impacted by non-cash share-based compensation expenses of €69 million during the second quarter of 2024, compared to €85 million during the second quarter of 2023. Excluding non-cash share-based compensation expenses, Adjusted EBITDA for the quarter was €649 million, up 10.0% year-over-year, or 11.3% in constant currency, and Adjusted EBITDA margin improved to 22.1%, compared to 21.9% in the second quarter of 2023, as a result of revenue growth and cost savings from the previously announced strategic organizational redesign, partially offset by the unfavourable impact of revenue mix resulting from a greater proportion of merchandising and physical sales.
H1 2024 Results
In the half year ended
Cost of revenues, consisting of artist and product costs, increased by €302 million to €3,113 million in H1 2024, reflecting higher revenue. Cost of revenue as a percentage of revenue increased to 56.3% in H1 2024 from 54.6% in H1 2023 primarily driven by a greater proportion of Music Publishing and Merchandising and Other revenues, which have a higher cost of revenues compared to Recorded Music, and in particular by higher product costs. Artist costs increased by €199 million to €2,584 million in H1 2024 from €2,385 million in H1 2023 driven by the increase in sales. As a percentage of revenues, artists costs increased to 46.8% in H1 2024 from 46.3% in H1 2023 on higher relative costs from both Music Publishing and Merchandising and Other. Product costs increased by €103 million to €529 million in H1 2024 from €426 million in H1 2023 reflecting the growth in revenues. Product costs as a percentage of revenues increased to 9.6% from 8.3% driven primarily by the higher proportion of merchandising sales.
EBITDA of €1,069 million improved 39.4% year-over-year, or 43.5% in constant currency, and EBITDA margin was 19.3% compared to 14.9% in H1 2023. EBITDA and EBITDA margin were impacted by non-cash share-based compensation expenses of €171 million during H1 2024 and €345 million during H1 2023. Excluding these amounts, Adjusted EBITDA was €1,240 million, up 11.5% year-over-year, or 13.4% in constant currency, and Adjusted EBITDA margin expanded 0.8pp year-over-year to 22.4% driven by revenue growth and cost savings from the previously announced strategic organizational redesign, partially offset by the higher cost of revenues discussed above.
Operating profit improved 27.9% year-over-year, or 32.4% in constant currency, to €756 million due to the improved revenues and lower non-cash share-based compensation expenses in H1 2024 compared to H1 2023 as discussed above. This was partially offset by the increase in restructuring charges that were €113 million in H1 2024 compared to €15 million in H1 2023 as a result of the strategic organizational redesign.
Net profit attributable to equity holders of the parent in H1 2024 amounted to €914 million compared to €625 million in H1 2023, resulting in EPS of €0.50 in H1 2024, compared to €0.34 in H1 2023. The improvement in net profit attributable to equity holders of the parent was due to the improvement in operating profit and the variance in revaluation of investments in listed and other companies (including
Net cash provided by operating activities before income tax paid decreased 38.0% to €436 million compared to €703 million in H1 2023 due predominately to the increase in royalty advance payments, net of recoupments, which was €315 million in H1 2024 compared to €95 million in H1 2023, due to the timing of certain major artist deal renewals and extensions, partially offset by the increase in recoupment.
Cash paid for catalogue acquisitions was €96 million in H1 2024 compared to €89 million in H1 2023 and included the completion of a catalogue acquisition for which the cash had been previously paid into escrow. In addition, the Company continued to strategically invest in the long-term growth of the business, with the previously disclosed investments in
In line with UMG's dividend policy to pay a dividend of at least 50% of adjusted net profit, UMG's Board of Directors declared an interim dividend for H1 2024 of €439 million, or €0.24 per share. The ex-dividend date will be on
Net debt at the end of H1 2024 was €2,612 million compared to €1,689 million at the end of 2023. The increase in net debt was primarily used to fund investing activities and dividends partially offset by cash generated by operating activities.
Recorded Music
|
Three Months Ended |
% |
% |
|
Six Months Ended |
% |
% |
||
(in millions of euros) |
2024 |
2023 |
YoY |
const. |
|
2024 |
2023 |
YoY |
const. |
|
(unaudited) |
(unaudited) |
|
|
|
(unaudited) |
(unaudited) |
|
|
Subscriptions and streaming |
1,480 |
1,426 |
3.8 % |
4.1 % |
|
2,945 |
2,755 |
6.9 % |
7.9 % |
of which streaming |
343 |
358 |
(4.2 %) |
(3.9 %) |
|
685 |
673 |
1.8 % |
2.5 % |
of which subscription |
1,137 |
1,068 |
6.5 % |
6.9 % |
|
2,260 |
2,082 |
8.5 % |
9.6 % |
Downloads and other digital |
48 |
61 |
(21.3 %) |
(18.6 %) |
|
94 |
116 |
(19.0 %) |
(16.8 %) |
Physical |
357 |
326 |
9.5 % |
14.4 % |
|
612 |
639 |
(4.2 %) |
0.3 % |
License and other |
315 |
267 |
18.0 % |
18.0 % |
|
539 |
493 |
9.3 % |
10.2 % |
Recorded Music revenues |
2,200 |
2,080 |
5.8 % |
6.8 % |
|
4,190 |
4,003 |
4.7 % |
6.3 % |
|
|
|
|
|
|
|
|
|
|
EBITDA |
|
959 |
698 |
37.4 % |
41.4 % |
||||
EBITDA margin |
|
22.9 % |
17.4 % |
5.5pp |
|
||||
Adjusted EBITDA |
|
1,065 |
969 |
9.9 % |
11.9 % |
||||
Adjusted EBITDA margin |
|
25.4 % |
24.2 % |
1.2pp |
|
|
Note: % YoY indicates % change year-over-year; % const. indicates % change year-over-year adjusted for constant currency. |
Q2 2024
Recorded Music revenue for the second quarter of 2024 was €2,200 million, up 5.8% compared to the second quarter of 2023, or 6.8% in constant currency. Subscription revenue grew 6.5% year-over-year, or 6.9% in constant currency, driven primarily by the growth in global subscribers as well as the impact of certain price increases. Streaming revenue declined 4.2% year-over-year, or 3.9% in constant currency, due to a deceleration in growth at key advertising-based platform partners as well as shortfalls on certain platforms related to the timing of deal renewals. Physical revenue increased by 9.5% year-over-year, or 14.4% in constant currency, due to a favorable release schedule driving vinyl sales in the
H1 2024
Recorded Music revenue in H1 2024 was €4,190 million, up 4.7% compared to H1 2023, or 6.3% in constant currency.
Subscription revenue grew 8.5% year-over-year, or 9.6% in constant currency. Streaming revenue grew 1.8% year-over-year, or 2.5% in constant currency. Physical revenue declined 4.2% year-over-year, but grew 0.3% in constant currency. Downloads and other digital revenue decreased by 19.0% year-over-year, or 16.8% in constant currency. License and other revenue improved 9.3% year-over-year, or 10.2% in constant currency. Top sellers for H1 2024 included
Recorded Music EBITDA of €959 million improved 37.4% year-over-year, or 41.4% in constant currency, while Recorded Music EBITDA margin increased 5.5pp to 22.9% from 17.4% in H1 2023. Recorded Music EBITDA and EBITDA margin were impacted by non-cash share-based compensation expenses of €106 million in H1 2024 and €271 million in H1 2023. Excluding non-cash share-based compensation, Recorded Music Adjusted EBITDA in H1 2024 was €1,065 million, up 9.9% year-over-year, or 11.9% in constant currency, and Recorded Music Adjusted EBITDA margin improved 1.2pp to 25.4% from 24.2% in H1 2023 driven by the growth in revenue, operating leverage and cost savings from the strategic organizational redesign.
Music Publishing
|
Three Months Ended |
% |
% |
|
Six Months Ended |
% |
% |
||
(in millions of euros) |
2024 |
2023 |
YoY |
const. |
|
2024 |
2023 |
YoY |
const. |
|
(unaudited) |
(unaudited) |
|
|
|
(unaudited) |
(unaudited) |
|
|
Performance |
100 |
97 |
3.1 % |
4.2 % |
|
214 |
187 |
14.4 % |
15.7 % |
Synchronisation |
61 |
60 |
1.7 % |
1.7 % |
|
124 |
129 |
(3.9 %) |
(3.1 %) |
Digital |
311 |
264 |
17.8 % |
17.4 % |
|
595 |
495 |
20.2 % |
20.7 % |
Mechanical |
26 |
29 |
(10.3 %) |
(10.3 %) |
|
51 |
52 |
(1.9 %) |
(1.9 %) |
Other |
13 |
14 |
(7.1 %) |
0.0 % |
|
24 |
26 |
(7.7 %) |
0.0 % |
Music Publishing revenues |
511 |
464 |
10.1 % |
10.4 % |
|
1,008 |
889 |
13.4 % |
14.3 % |
|
|
|
|
|
|
|
|
|
|
EBITDA |
|
229 |
186 |
23.1 % |
23.8 % |
||||
EBITDA margin |
|
22.7 % |
20.9 % |
1.8pp |
|
||||
Adjusted EBITDA |
|
241 |
216 |
11.6 % |
12.1 % |
||||
Adjusted EBITDA margin |
|
23.9 % |
24.3 % |
(0.4pp) |
|
|
Note: % YoY indicates % change year-over-year; % const. indicates % change year-over-year adjusted for constant currency. |
Q2 2024
Music Publishing revenue in the second quarter of 2024 was €511 million, up 10.1% year-over-year, or 10.4% in constant currency. Digital revenue improved 17.8% year-over-year, or 17.4% in constant currency due to the growth in streaming and subscription revenue and the timing of deals. Performance revenue grew 3.1% year-over-year, or 4.2% in constant currency and Synchronization revenue improved 1.7% year-over-year on both a reported and constant currency basis. Mechanical revenue declined 10.3% both year-over-year and in constant currency as a result of the industry's continued shift towards digital formats.
H1 2024
Music Publishing revenue amounted to €1,008 million in H1 2024, up 13.4% year-over-year, or 14.3% in constant currency, as a result of the continued organic growth in streaming and subscription revenue and improvement in performance revenue.
Music Publishing EBITDA of €229 million improved 23.1% year-over-year, or 23.8% in constant currency, while Music Publishing EBITDA margin increased 1.8pp to 22.7% from 20.9% in H1 2023. Music Publishing EBITDA and EBITDA margin were impacted by non-cash share-based compensation expenses of €12 million in H1 2024 and €30 million in H1 2023. Excluding non-cash share-based compensation, Music Publishing Adjusted EBITDA was €241 million in H1 2024, up 11.6% year-over-year, or 12.1% in constant currency. Music Publishing Adjusted EBITDA margin declined 0.4pp to 23.9% from 24.3% in H1 2023 driven by revenue and repertoire mix.
Merchandising and Other
|
Three Months Ended |
% |
% |
|
Six Months Ended |
% |
% |
||
(in millions of euros) |
2024 |
2023 |
YoY |
const. |
|
2024 |
2023 |
YoY |
const. |
|
(unaudited) |
(unaudited) |
|
|
|
(unaudited) |
(unaudited) |
|
|
Merchandising and other revenues |
227 |
157 |
44.6 % |
43.7 % |
|
341 |
264 |
29.2 % |
29.7 % |
|
|
|
|
|
|
|
|
|
|
EBITDA |
|
18 |
17 |
5.9 % |
5.9 % |
||||
EBITDA margin |
|
5.3 % |
6.4 % |
(1.1pp) |
|
||||
Adjusted EBITDA |
|
18 |
20 |
(10.0 %) |
(10.0 %) |
||||
Adjusted EBITDA margin |
|
5.3 % |
7.6 % |
(2.3pp) |
|
|
Note: % YoY indicates % change year-over-year; % const. indicates % change year-over-year adjusted for constant currency. |
Q2 2024
Merchandising and Other revenue in the second quarter of 2024 was €227 million, up 44.6% year-over-year, or 43.7% in constant currency, driven by growth in direct-to-consumer sales and higher touring merchandise sales as a result of strong touring activity in the period.
H1 2024
Merchandising and Other revenue grew to €341 million in H1 2024, up 29.2% year-over-year, or 29.7% in constant currency, driven by the growth in touring merchandise sales and direct-to-consumer sales.
Merchandising and Other EBITDA of €18 million grew 5.9%, year-over-year on both a reported and constant currency basis, while Merchandising and Other EBITDA margin declined 1.1pp to 5.3% from 6.4% in H1 2024. Merchandising and Other EBITDA and EBITDA margin were impacted by non-cash share-based compensation expenses of €3 million H1 2023. Merchandising and Other Adjusted EBITDA in H1 2024 was €18 million, down 10.0% year-over-year on both a reported and constant currency basis and Merchandising and Other Adjusted EBITDA margin decreased by 2.3pp to 5.3% as a result of higher relative artist costs due to artist mix.
Conference Call Details
The Company will host a conference call to discuss these results on
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.
Cautionary Notice
This press release is published by
Forward-looking statements
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 are described in our 2023 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.
Alternative Performance Indicators
This press release includes certain alternative performance indicators which are not defined in IFRS issued by the
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