Universal Music Posts Strong First Quarter Earnings, With Encanto and Weekend
While year-over-year growth following a global pandemic is an unprecedented measure for the music industry, Universal Music Group reported a strong first quarter of 2022, with revenue up 21.6% (16.5% in constant currency) to 2.199 billion euros. ($2.31 billion). Many of these raises are at least partly the result of the gradual reopening of the global economy following the pandemic lockdown.
Music publishing revenue increased 32.5%, recorded music revenue 11.3%, and merchandising and other revenue increased 69.8% year-over-year in currency constant.
The company’s adjusted EBITDA increased 14.0% year over year in constant currency.
Recorded Music revenue for the first quarter of 2022 was €1,721 million, up 16.0% compared to the fourth quarter of 2021, or 11.3% at constant currencies . Subscription and streaming revenue increased 19.9% year-over-year, or 14.6% in constant currency, with subscription revenue up 18.3% year-on-year on the other, or 13.4% in constant currency, and ad-supported streaming revenue up 25.1% year-on-year. over one year, or 18.4% in constant currency. Physical revenue posted another quarter of strong growth, increasing 11.3% year-over-year, or 8.7% in constant currency, driven by improved CD and vinyl sales, led by King & Prince, Fujii Kaze, Ado, Stromae and Taylor Swift.
Downloads and other digital revenue were down 16.0% year-over-year, or 20.0% in constant currency, as download sales continued their industry-wide decline. Licensing and other revenue increased 14.4% year-over-year, or 10.1% in constant currency, driven by improved synchronization revenue.
Top sellers in the quarter included “Encanto” soundtrack releases from Disney, King & Prince, the Weeknd, Fujii Kaze and Ado, while top sellers in the prior year quarter included King & Prince, Morgan Wallen, the Weeknd, Justin Bieber and Ariana Grande.
Music Publishing revenue was €375 million in the first quarter 2022, up 38.4% year-on-year, or 32.5% at constant rate. constant exchange rate, although UMG has adjusted its accounting policy in relation to certain revenues collected through companies; this primarily affected digital, performance, and mechanical music publishing revenue. The unit’s digital revenue grew 51.6% year-over-year, or 44.7% in constant currency, reflecting continued streaming and subscription growth, as well as the shift in accounting. Performance revenue increased 19.7% year over year, or 16.7% in constant currency, reflecting the change in accounting. Sync revenue was up 34.8% year-over-year, or 29.2% in constant currency, due to higher advertising and cinema revenue. Mechanical sales increased 27.8% year-over-year, or 21.1% in constant currency, driven by the recent rebound in physical sales industry-wide, as well as to the change in accounting.
Merchandising and other revenue reached €107 million, up 81.4% year-on-year, or 69.8% in constant currency, while tour-related merchandising revenue rebounded following a COVID-related slowdown in live touring, according to the announcement.
According to the announcement, EBITDA for the quarter increased 14.9% year-on-year, or 14.1% in constant currency, to 454 million euros, driven by revenue growth. EBITDA margin was 20.6%, compared to 21.8% in the first quarter of 2021. EBITDA and EBITDA margin were impacted by €1 million of non-cash compensation in during the first quarter of 2022 and the first quarter of 2021. these items, Adjusted EBITDA for the quarter was €455 million, up 14.9% year-on-year, or 14.0% at constant exchange rates, thanks to revenue growth. Adjusted EBITDA margin was 20.7%, compared to 21.9% in the first quarter of 2021.
“As important as the company’s positive performance this quarter is its breadth and strength,” said UMG Chairman and CEO Lucian Grainge. “Our strategic portfolio approach – creative, geographic, technological and across a wide range of artists, partners, formats, companies and revenue streams – not only produces results now, but, in the long term, we believe it will deliver even better and more stable performance while delivering incredible value to our artists and shareholders.
Boyd Muir, Executive Vice President, Chief Financial Officer and President of Operations, added, “With this quarter’s results, we continue to deliver on our commitment to long-term growth across the company’s core business units and across its multiple growing sources of revenue, including advertising-supported revenue. streaming, subscription, physical, licensing, music publishing and merchandising, among others,” said for UMG. “We remain excited about the broad-based revenue growth our strategy is delivering.”