Universal Music Group (UMG) wrapped up 2024 with impressive results, showing a 7.2% year-over-year (YoY) revenue increase in the final quarter, despite some turbulence in ad-supported streaming.
The strong performance was largely driven by growth in subscription-based streaming services, underscoring UMG’s ability to adapt to the evolving music industry landscape.
UMG’s total recorded streaming revenue increased by 4.6% YoY to $1.73 billion (approximately €1.60 billion) in Q4. However, the growth was not uniform.
While ad-supported streaming saw a decline of 5.1% YoY, falling to $404.53 million (around €375 million), subscription revenue surged by 7.9%, reaching $1.32 billion (approximately €1.23 billion).
This disparity highlights the growing importance of paid listening services for UMG’s bottom line, especially as streaming growth faces potential stagnation.
Subscription-based streaming remains a crucial revenue driver for UMG, with the company projecting an 8-10% compound annual growth rate (CAGR) for subscription revenue through 2028.
CEO Lucian Grainge emphasized the importance of this sector in navigating the potential plateau of streaming growth, signaling UMG’s ongoing commitment to expanding its paid subscriber base.
While UMG posted solid results, there were a few challenges during the quarter. Executives pointed to “weakness from fitness platforms” as a factor contributing to slower-than-expected streaming growth in Q4.
Despite these hurdles, UMG managed to secure $21.58 million (around €20 million) in “catch-up income” from digital service providers (DSPs), providing a boost to the company’s overall financial performance.
Additionally, UMG benefitted from a pair of legal settlements, one related to a joint venture exit and the other to a copyright lawsuit.
These settlements added a combined $43.18 million (approximately €40 million) in revenue for Q4, with $34.53 million (around €32 million) classified as recorded revenue.
Notably, UMG’s settlement with ISP Altice in August 2024, part of a copyright dispute, played a significant role in these results.
Aside from streaming, UMG’s other revenue categories also demonstrated healthy growth. Physical sales reached $494.15 million (about €458 million), up 2.5% YoY. Licensing and other income, including the legal settlement windfall, grew by 12.7%, amounting to $498.46 million (approximately €462 million).
In publishing, total revenue for Q4 reached $661.40 million (around €613 million), up 6.4% YoY, while digital publishing saw an 11.5% YoY increase, reaching $407.84 million (approximately €378 million). Merchandise sales were another bright spot, with a notable 22.8% YoY increase to $284.84 million (about €264 million).
UMG’s success wasn’t limited to Q4. For the entirety of 2024, the company posted a 6.5% YoY revenue increase, reaching $12.77 billion (around €11.83 billion). EBITDA soared by 29% YoY, amounting to $2.52 billion (about €2.33 billion).
The growth in recorded paid-streaming revenue, which rose by 8.2% YoY to $4.99 billion (approximately €4.62 billion), was a major contributor to this overall performance.
During the earnings call, UMG executives outlined their forward-looking strategies, emphasizing their commitment to the “Streaming 2.0” initiative and the monetization of superfan engagement.
Chief digital officer Michael Nash revealed that UMG is in discussions with streaming partners about the introduction of “Super Premium” subscription tiers, which could offer additional revenue opportunities. Furthermore, UMG confirmed the next phase of its cost-savings program, signaling continued operational efficiency efforts.
UMG’s Q4 results and full-year performance reflect a company that is not only navigating the challenges of a potentially plateauing streaming market but is also strategically positioning itself for future growth.
With a strong emphasis on subscription revenue, digital innovation, and superfan engagement, UMG is well-placed to capitalize on emerging opportunities while mitigating risks from weaker ad-supported streaming performance.
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