UMG Q2 revenue beat offset by subscription and streaming headwinds
Recasts with subscription slowdown, termination of Meta deal
July 24 (Reuters) -Universal Music Group UMG.AS, the label representing Taylor Swift, BTS and Drake, on Wednesday recorded higher than expected second quarter sales, which was offset by a slowdown in the subscription and streaming segment.
Recorded music subscription revenue grew 4.1% in the second quarter, compared with a 13% growth a year ago, in constant currency.
The group also announced the termination of a partnership with Meta META.O for the streaming of premium music videos.
WHY IT'S IMPORTANT
UMG is the leading music label worldwide, with rights to around one third of the world's repertoire.
KEY QUOTE
"In terms of platform specific pressure, we have a change in our licensing agreement with Meta. Meta had previously offered premium music videos on Facebook. This product offering was less popular with Facebook's user base than other music products, and as a result, Meta is no longer licensing premium music videos from us as of May this year," said group CFO Boyd Muir during an analyst conference.
CONTEXT
Swedish audio-streaming giant Spotify SPOT.N beat its premium subscriber guidance on Tuesday, recording a 12% growth year-on-year to 246 million subscribers. The group also forecast third quarter operating income, at 405 million euros, ahead of 301.7 million euros consensus.
BY THE NUMBERS
Universal recorded subscription revenue of 1.137 billion euros for the second quarter, below Visible Value consensus of 1.179 billion euros.
Streaming revenues came in below expectations, at 343 million euros, while analysts expected 387 million euros, according to Visible Value consensus quoted by ING. The segment fell 4.2% year-over-year or 3.9% in constant currency, "due to a deceleration in growth at key advertising-based platform partners as well as shortfalls on certain platforms related to the timing of deal renewals," the company said.
Second-quarter revenue totalled 2.93 billion euros, up 9.6% year-on-year in constant currency terms, beating the 2.89 billion euros expected by analysts, according to a Visible Alpha consensus.
Reporting by Alban Kacher. Editing by Jane Merriman and David Evans
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