UMG shares slide as subscription, streaming revenue disappoints

Shares in Universal Music Group (UMG) experienced their steepest slide since going public on Thursday, after the Amsterdam-traded company’s subscription and streaming revenue growth failed to meet investor expectations.

The world’s largest record label reported a 6.9% increase in subscription revenue in recorded music in its second quarter, falling short of the 11% growth anticipated by analysts surveyed by Bloomberg.

Chief financial officer Boyd Muir attributed the disappointing results to slowdowns in advertising revenue from major platforms like Spotify and YouTube.

Complications with social media companies also contributed, with Meta Platforms halting premium music video licences in May and a month-long revenue loss from TikTok due to a licensing dispute.

The decline in streaming revenue, which depends heavily on the advertising market, was 4%.

UMG cited “deceleration in growth at key advertising-based platform partners” and delays in renewing certain deals as key factors.

Despite the setbacks, UMG said its merchandising revenue surged by 44%, driven by strong performances from artists like Taylor Swift, Billie Eilish and Morgan Wallen.

Swift's lucrative Eras Tour significantly boosted revenue, as did popular releases from other top artists.

Overall, UMG's total revenue increased for the 12th consecutive quarter, reaching €2.93bn from April to June, exceeding estimates but failing to alleviate concerns about its growth trajectory.

At 1316 CEST (1216 BST), shares in Universal Music Group were down 25.71% in Amsterdam at €21.05.

Reporting by Josh White for Sharecast.com.