Universal Music Group (UMG) reported sturdy streaming and publishing progress on Thursday (July 31), with complete income reaching 2.98 billion euros ($3.38 billion), up 4.5% in fixed forex (which excludes losses from overseas forex modifications). That was lower than half the primary quarter’s progress fee of 9.5%, and a few components of UMG’s enterprise — particularly bodily music and merchandise — didn’t evaluate nicely to the prior-year quarter.
Listed below are some key takeaways from UMG’s second quarter earnings launch and a convention name with executives.
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Streaming Development Hit the Goal
Streaming progress is the monetary metric that tends to draw probably the most consideration in earnings outcomes, and for good motive. Streaming accounted for about 70% of UMG’s recorded music income within the second quarter, and subscription income is the only most vital determinant of the well being of the music enterprise.
UMG’s recorded music division maintained sturdy subscription progress of 8.5% (in fixed forex) within the second quarter, nicely inside its goal 8% to 10% vary and corresponding to the 9.3% progress fee within the first quarter (additionally in fixed forex). The 8.5% progress additionally compares nicely to 2024’s quarterly subscription progress charges of, so as, 12.5%, 6.9%, 8.2% and 9.0% (all in fixed forex).
It’s vital to notice that UMG’s subscription outcomes don’t mirror its video games licensing offers with Spotify and Amazon, COO Boyd Muir mentioned throughout UMG’s earnings name on Thursday (July 31), which permit UMG to affect worth will increase by means of its setting of wholesale charges. Within the second quarter, progress got here largely from a rise within the variety of subscribers, whereas worth will increase performed a smaller function, in response to Muir.
Advert-supported streaming income improved 9.1% in fixed forex, though as reported (which takes overseas change under consideration), the quarterly numbers haven’t improved a lot not too long ago. From broadcast radio to satellite radio and streaming, promoting revenues have dissatisfied in current quarters. Spotify mentioned as a lot on Tuesday (July 29): “We’ve merely been transferring too slowly,” CEO Daniel Ek mentioned of Spotify’s promoting enterprise throughout the firm’s earnings name.
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UMG’s publishing division doesn’t escape subscription income, however its digital income, which incorporates all streaming earnings, jumped 16.2% to 351 million euros ($398 million) and accounted for 62% of complete publishing income.
International change made the numbers look worse
UMG’s complete income within the second quarter grew 4.5% in fixed forex however simply 1.6% as reported. Billboard’s article on UMG’s earnings went to lengths to distinguish between “as reported” and “in fixed forex” outcomes. That’s as a result of trying solely at numbers as reported would give the reader a warped sense of UMG’s efficiency. By changing outcomes to fixed forex, UMG eliminated the consequences of a weakened U.S. greenback.
Because of the uncertainties created by President Trump’s tariff insurance policies and Trump’s criticism of the U.S. Federal Reserve, it’s been a rough year for the greenback. In 2025, the euro has misplaced 9.3% of its worth in opposition to the greenback and was as soon as down 12.3%. These modifications add nuance to monetary outcomes for firms comparable to UMG, which stories in euros and receives a big portion of its enterprise from the U.S.
Nonetheless, whereas a 4.5% progress fee beats 1.6%, it was lower than half the 9.5% progress within the earlier quarter and the 9.6% progress within the second quarter of 2024.
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Superfan merchandise are delayed, however they’re coming
Labels need to goal superfans, however aside from Tencent Music Leisure, streaming providers have but to launch tiers aimed toward these high-value clients. Alex Norström, Spotify’s chief enterprise officer, defined the wait on Tuesday when he talked about the “very excessive worth requirements” Spotify has for brand spanking new merchandise. “We’re making progress for certain, nevertheless it’s taking time,” he mentioned.
The subject additionally got here up throughout UMG’s earnings name, and executives offered an identical message. “Getting the product proper is extra vital to us than launching it too early,” mentioned CEO Lucian Grainge, whereas Michael Nash, government vp of digital technique, mentioned that UMG is “inspired” by its conversations with streaming providers and “deeply engaged with all of our key companions, together with Spotify.” However every firm goes to maneuver at its personal tempo. “These companions have product roadmaps and enterprise growth necessities round execution, which affect their timing,” Nash added.
Superfan tiers have develop into a sizzling matter as a result of they may very well be a lift for each streaming providers and rights holders. UMG’s inner analysis means that 20% of subscribers would improve to a superfan tier. And wanting fixed worth will increase for all clients, utilizing superfan tiers to generate extra income from a subset of subscribers is a possible method to assist the income progress that firms and traders need to see.
UMG’s Downtown acquisition “will move” the European Fee evaluate
Grainge sounded assured that UMG’s acquisition of Downtown Music Holdings will obtain a inexperienced mild from European Fee regulators, who’re presently reviewing the deal. The way in which Grainge and UMG see it, UMG’s bid for Downtown is essentially totally different from its 2012 acquisition of EMI Music’s recorded music division, which diminished the variety of main label teams from 4 to a few. “As a result of the mixed firm will assist assist the expansion and success of unbiased labels, and there are artists in every single place in what’s a really extremely aggressive artist providers area with greater than 100 firms, we stay assured that the transaction will move that evaluate and will likely be accomplished earlier than the top of the 12 months,” Grainge mentioned.