Universal Music Group reported better than expected first quarter sales on Tuesday, driven by 20% growth in subscription and streaming revenue.
UMG, the largest of the big three record labels ahead of Warner (WMG.O) and Sony Music, expects a continuation of the boom in music streaming that was led by Spotify and revived the industry’s fortunes in the late 2010s.
A statement from CEO Lucian Grainge said the quarter was remarkable for UMG’s strength across artists, geographical regions, and formats.
UMG represents stars and collects royalties for artists such as Taylor Swift, Billie Eilish and Korean pop stars BTS.
“Top sellers for the quarter included releases from Disney’s ‘Encanto’ soundtrack, King & Prince, The Weeknd, Fujii Kaze and Ado,” the company said.
First-quarter revenue rose 22% year on year, or 16.5% at constant currencies, to 2.2 billion euros ($2.3 billion), with streaming income up 25% and subscription income up 18.3%, offsetting falls in downloads.
Core profit, meanwhile, was in line with expectations, rising to 455 million euros from 396 million euros, as margins dipped slightly.
In addition to subscription revenue from Spotify and Apple Music (AAPL.O), UMG has struck revenue-sharing deals with ad-supported social media platforms such as TikTok and YouTube for their use of its artists’ music, though terms are not public.
UMG was spun out of France’s Vivendi (VIV.PA) last September in the largest European stock market listing of 2021, with shares initially surging from 18.50 euros to 25 euros. They have since retreated and are down about 9.5% in 2022, closing at 22.21 euros on Tuesday.
In March, the company declined to give a specific forecast for 2022, saying it would have a “strong” year that would be in line with a mid-term target of double-digit revenue growth. Reuters