Universal Music Reports Flat Quarterly Revenue of $3.3 Billion on Light Release Schedule
UMG's board approved plans to double its share buyback program to 1 billion euros ($1.16 billion) and sell half of UMG's stake in Spotify.
Black News 
Universal Music Group reported revenue was flat at 2.9 billion euros ($3.33 billion) for the first quarter as the success of K-pop supergroup BTS‘s first new album in years was offset by foreign currency fluctuations and a tough year-ago comparison.
Earnings before interest, tax, depreciation and amortization (EBITDA), which is a popular measure of a business’s core operating performance and profitability minus certain costs, fell 5.3% to 571 million euros ($655.7 million) for the quarter ending March 31 compared to the same period a year ago. Adjusted EBITDA also fell 3.8% to 636 million euros ($730.3 million).
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Headquartered in the Netherlands, UMG favors measuring its earnings on a constant currency basis, which strips out fluctuations in foreign currency markets like those that negatively impacted its dollar-denominated earnings once converted to euros. On a constant currency basis, overall revenue rose 8.1%, EBITDA rose 2.1% and adjusted EBITDA rose 3.9%, which UMG Chairman and Chief Executive Officer Lucian Grainge makes it the company’s 19th straight quarter of increasing revenue and adjusted EBITDA.
“We’re comparing against a very successful quarter last year,” Grainge said, cautioning against measuring UMG’s “release schedule through the prism of 90 days.”
“Artists are human beings. They make music and they create and they deliver according to when they’re ready, and our frontline record companies are looking at a multitude of operational issues about when to release.”
UMG said its board recently approved doubling its maximum share buybacks from 500 million euros to 1 billion euros, as the company faces a sustained underperforming share price and recently an unsolicited offer from Pershing Square to merge UMG into a new, U.S. listed company.
As part of its offer, Pershing Square founder, billionaire investor Bill Ackman said it would sell UMG’s investment in Spotify. Grainge announced UMG’s board has approved plans to sell half of UMG’s stake in Spotify, with a portion distributed to UMG artists and the remainder put toward UMG’s share buyback program.
UMG’s stock was down by less than 1% at 19.38 euros ($22.25) in after-market trading on the Euronext Amsterdam exchange, where UMG is listed.
UMG’s recorded music revenue rose by half a percent, or nearly 9% in constant currency, to $2.3 billion euros ($2.6 billion), as increased revenue from subscriptions and physical music outweighed declining revenue from license and other revenue and downloads and other digital revenue. Subscription and streaming revenue rose 2.3% to 1.6 billion euros ($1.9 billion), driven by 1.3 billion euros of subscription revenue, which rose by 4.1% or 12.5% in constant currency, compared to the first quarter last year. Streaming revenue contributed 339 million euros ($389 million), down 4% compared to last year, or up 5% in constant currency. Recorded music adjusted EBITDA declined 1.7%, or rose 6% in constant currency, from a year ago to 565 million euros.
“Our core record label business is very healthy, growing year after year at attractive rates, whilst also expanding margins,” Grainge said on the call.
Music publishing revenue fell half a percent, or rose 7% on constant currency, to 552 million euros ($633.8 million), driven by digital and performance revenue. Digital revenue was down 3.2%, or up 4.8% in constant currency, to 328 million euros ($376.6 million), and performance revenue rose by nearly a percent or 6.5% in constant currency to 115 million euros ($132 million). Synchronization revenues contributed 68 million euros ($78 million), an increase of 6.3%, or 15.3% in constant currency. Adjusted EBITDA for the division rose by 3.8%, or 11.6% in constant currency, to 135 million euros ($155 million).
This marks the first quarter since UMG acquired Downtown into its Virgin Music Group, and the company broke out overall and segment earnings including and excluding Downtowns’ revenue contribution since Feb. 20 through March 31. UMG Chief Financial Officer Matt Ellis said the company will continue to include those comparisons in the company’s quarterly financial results for the remainder of this year.
