Universal Music subscription and streaming revenue up 20% in first quarter

The Universal Music Group logo is seen in this illustration taken May 3, 2022. REUTERS/Dado Ruvic/Illustration

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AMSTERDAM, May 3 (Reuters) – Universal Music Group (UMG.AS) (UMG) reported better-than-expected first-quarter revenue on Tuesday, driven by 20% growth in subscription and streaming revenue.

UMG, the largest of the Big Three ahead of Warner (WMG.O) and Sony Music (6758.T), expects a continued boom in music streaming led by Spotify (SPOT.N) and which revived the makeshift industry in the late 2010s.

A statement from CEO Lucian Grainge said the quarter was notable for UMG’s strength across artists, geographies and formats.

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UMG represents stars and collects royalties for artists such as Taylor Swift, Billie Eilish and Korean pop stars BTS.

“Top sellers in the quarter included releases from Disney’s ‘Encanto’ soundtrack, King & Prince, The Weeknd, Fujii Kaze and Ado,” the company said.

First-quarter revenue increased 22% year-on-year, or 16.5% at constant currencies, to €2.2 billion ($2.3 billion), with revenue of streaming up 25% and subscription revenue up 18.3%, offsetting lower downloads.

Core profit, meanwhile, was in line with expectations, rising from 396 million euros to 455 million euros, as margins fell slightly.

In addition to subscription revenue from Spotify and Apple Music (AAPL.O), UMG has entered into revenue sharing agreements with ad-supported social media platforms such as TikTok and YouTube for their use of music from its artists, although the conditions are not public.

UMG spun off from France’s Vivendi (VIV.PA) last September in Europe’s biggest stock market listing of 2021, with shares initially dropping from 18.50 euros to 25 euros. They have since retreated and are down around 9.5% in 2022, closing at 22.21 euros on Tuesday. Read more

In March, the company declined to give a specific forecast for 2022, saying it would have a “strong” year that would be in line with a medium-term goal of double-digit revenue growth. Read more

($1 = 0.9494 euros)

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Reporting by Toby Sterling Editing by Jason Neely and David Goodman

Our standards: The Thomson Reuters Trust Principles.

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