Universal Music Shares Jump After 2Q Revenue Beats Forecasts

   By Mauro Orru

Shares of Universal Music Group surged in early European trading Thursday after the record label behind the Weeknd, Billie Eilish and Taylor Swift posted revenue growth ahead of analysts' expectations for the second quarter, marked by the return of growth in streaming.

At 0735 GMT, Universal Music shares traded 12% higher at EUR24.43.

The world's largest music company said Wednesday that overall revenue climbed to 2.70 billion euros ($2.99 billion) from EUR2.54 billion in last year's second quarter. Revenue from subscriptions grew 13% at constant currency to EUR1.07 billion, while streaming revenue rose 5.3% to EUR358 million.

The development in streaming revenue marks a departure from the 2.2% contraction of the first quarter, but it shows that strong growth seen at the height of the pandemic is confined to the past. Streaming services boomed as listeners turned to digital when coronavirus restrictions brought live concerts to a standstill, though the pace of growth declined in recent months.

"Results were a decent amount better than both Citi and consensus expectations," Citi analysts wrote in a research note. Overall revenue exceeded Visible Alpha consensus of EUR2.56 billion, and streaming growth of 5.3% beat an expected 1.2% contraction.

Physical revenue, which includes CD and vinyl sales, jumped 11.3% to EUR326 million. King & Prince, Morgan Wallen, SEVENTEEN, Taylor Swift, and Stray Kids were among the top sellers for the quarter.

Adjusted earnings before interest, taxes, depreciation, and amortization--a key profitability metric for Universal--increased to EUR590 million from EUR507 million, generating a 21.9% margin.

Write to Mauro Orru at mauro.orru@wsj.com; @MauroOrru94

(END) Dow Jones Newswires

July 27, 2023 03:57 ET (07:57 GMT)

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