Yesterday, the world’s greatest subscription music streaming service, Spotify, introduced its Q2 outcomes.
Right this moment, it’s the flip of the world’s largest recorded music firm, Common Music Group, whose monetary outcomes for the three months to the top of June and the primary half of the 12 months had been revealed after the shut of the Euronext market in Amsterdam on Wednesday (July 26).
The headline determine from UMG’s Q2 outcomes: the music firm generated revenues of EUR €2.697 billion (USD $2.93bn) in the course of the quarter throughout all of its divisions (together with recorded music, publishing and extra). That Q2 income determine was up 8.8% YoY at fixed forex.
Amongst the opposite key highlights in UMG’s Q2 had been a 13% bounce within the firm’s subscription streaming revenues, and 12.1% progress in its Merchandising and Different income section.
Common’s general recorded music revenues for Q2 2023 (together with streaming plus bodily and so forth.) had been €2.080 billion ($2.26bn), up 10.9% YoY at fixed forex (see under).
Inside the Recorded Music section, UMG’s ‘Subscription and streaming revenues’ (together with ad-supported and subscription streaming revenues) grew 11% YoY at fixed forex to €1.426 billion ($1.55bn) in Q2.
Breaking down UMG’s recorded music streaming determine for Q2 additional reveals that the corporate’s subscription streaming revenues particularly grew 13% YoY at fixed forex to €1.068 billion ($1.16bn).
UMG says that this consequence was “pushed primarily by the expansion in international subscribers in addition to the affect of worth will increase at sure platforms”.
Proof of that international subscriber progress arrived yesterday in Spotify’s personal Q2 outcomes, wherein the platform reported that it added 10 million Premium subscribers to finish the quarter on 220 million paying subs.
When it comes to worth will increase at main streaming platforms, Amazon Music in January raised its normal particular person Amazon Music Limitless month-to-month subscription worth from $9.99 to $10.99 within the US, and Apple Music raised its subscription worth by $1 to $10.99 per 30 days in October 2022.
Spotify introduced this week that its flagship Premium service may also enhance by $1 to $10.99 within the US. SPOT’s management famous yesterday that the “full good thing about the value enhance” gained’t be seen till in This fall.
Boyd Muir, UMG’s EVP, CFO and President of Operations supplied an analogous timeline on UMG’s earnings name. “The fact is you’re probably not going to see something coming by till This fall after which into 2024,” he stated.
In the meantime, Common’s ad-supported recorded music streaming income was up 5.3% YoY at fixed forex (see above) to €358 million ($389.75m) in Q2. UMG notes that it delivered this consequence, “as sure platforms and nations grew, however the efficiency of the broader promoting business was combined”.
Inside Common’s recorded music enterprise, bodily revenues grew 11.3% at fixed forex, pushed by sturdy CD gross sales in Japan, notably from King & Prince, and enhancements in vinyl gross sales, to €326 million ($354.91m).
Talking on the corporate’s earnings name on Wednesday, Sir Lucian Grainge famous that King & Prince was the top-selling artist in Japan for the primary half of the 12 months.
Elsewhere, UMG’s License and different income grew 16.1% at fixed forex to €267 million ($290.68m), because of enhancements in neighboring rights, model promotion and earnings from reside occasions.
“We’re an artist-centric firm.”
Sir Lucian Grainge
UMG’s prime sellers throughout the quarter included releases from King & Prince, Morgan Wallen, SEVENTEEN, Taylor Swift, and Stray Youngsters, whereas prime sellers within the prior-year quarter included BTS, King & Prince, Rammstein, Olivia Rodrigo and INI.
Talking on UMG’s earnings name on Wednesday, Sir Lucian Grainge stated that, UMG is “an artist-centric firm” and that its “persistently stellar efficiency is immediately attributable to the deep and sustaining partnerships we’ve fashioned with our artists”.
He added: “These partnerships with each established artists and new ones are in place all through the world in developed music markets, and ones with excessive progress potential as properly.”
Elsewhere, Common’s Music Publishing division, Common Music Publishing Group, generated revenues of €464 million ($505.15m) in Q2 2023, down 0.6% YoY at fixed forex (see under).
(UMG notes that, as beforehand disclosed in its Annual Consolidated Monetary Statements for the 12 months ended December 31, 2021, it adjusted its accounting coverage in relation to sure revenues which might be collected by societies. Of specific notice, in response to UMG, “the €98 million affect related to the Change in Society Accounting within the second quarter of 2022 mirrored a one-time catch-up for the receipt of upper earnings than was accrued on the finish of 2021”.)
Excluding this one-time, prior-year profit, Common experiences that its Music Publishing revenues grew 25.7% at fixed forex, “pushed by the continued progress in streaming and subscription income and enchancment in efficiency earnings”.
For H1, Music Publishing income grew 4.8% at fixed forex, regardless of the Change in Society Accounting (see under). Excluding this one-time merchandise within the prior 12 months, Common’s Music Publishing revenues grew 18.5% YoY at fixed forex in H1.
Inside Music Publishing, Digital income declined 22.6% YoY at fixed forex to €264 million ($287.41m) in Q2 as a result of Change in Society Accounting, however was partly offset by progress in streaming and subscription income.
Efficiency income grew 185.3% at fixed forex to €97 million ($105.60m) in Q2, as a result of Change in Society Accounting that had a adverse affect within the prior 12 months “in addition to higher than anticipated receipts following the COVID restoration”, in response to Common.
Synchronization income grew 5.3% YoY at fixed forex to €60 million ($65.32m).
Mechanical income was up 31.8% YoY at fixed forex to €29 million ($31.57m), because of enhancements in bodily gross sales.
Common’s Merchandising and Different income section generated €157 million ($170.92m) within the second quarter of 2023, up 12.1% at fixed forex, and was “pushed by progress in direct-to-consumer gross sales and regardless of a decline in touring merchandise gross sales on decrease touring exercise in comparison with the prior-year quarter”.
Talking on the corporate’s earnings name on Wednesday, Boyd Muir, UMG’s EVP, CFO and President of Operations famous that UMG noticed “progress in direct-to-consumer income, fueled by a powerful efficiency from Taylor Swift, greater than offsetting and decline and touring income”.
In Q2 2023, UMG’s EBITDA (earnings earlier than curiosity, taxes, and depreciation) rose 2.2% YoY at fixed forex, to €505 million ($549.79m).
EBITDA margin was 18.7%, in comparison with 20% within the second quarter of 2022 (see under).
UMG notes that “as anticipated, EBITDA was impacted by non-cash share-based compensation bills of €85 million ($92.53m) in the course of the second quarter of 2023, because the Firm rolled out its first international fairness compensation plan, which started within the fourth quarter of 2022”.
Common experiences that, excluding the non-cash share-based compensation expense, its Adjusted EBITDA for Q2 was €590 million ($642.33m), up 19.2% at fixed forex.
Adjusted EBITDA margin improved to 21.9% in Q2, in comparison with 20% in Q2 2022.
“As an artist-centric firm, we’re not solely pleased with our continued sturdy efficiency, however we’re additionally notably excited that it allows us to speed up our technique to advertise a more healthy streaming enterprise.”
Sir Lucian Grainge, UMG
UMG´s Chairman and CEO Sir Lucian Grainge, stated: “As an artist-centric firm, we’re not solely pleased with our continued sturdy efficiency, however we’re additionally notably excited that it allows us to speed up our technique to advertise a more healthy streaming enterprise — one which rewards actual artists and actual music—and drive progress alternatives for the broader music ecosystem.”
“Our sturdy progress in revenues, Adjusted EBITDA and working money circulate has enabled our continued strategic funding within the enterprise, additional driving long-term shareholder worth as we proceed to execute on our imaginative and prescient.”
Boyd Muir, UMG
Boyd Muir, UMG’s EVP, CFO and President of Operations, added: “Our sturdy progress in revenues, Adjusted EBITDA and working money circulate has enabled our continued strategic funding within the enterprise, additional driving long-term shareholder worth as we proceed to execute on our imaginative and prescient.”
All references to YoY percentages on this story, whether or not acknowledged as such or not, are in fixed forex. All EUR-USD conversions made on the common fee of the related interval in response to the European Central Financial institutionMusic Enterprise Worldwide