Universal Music Group's revenue reached 3.21 billion euros ($3.45 billion) in the final period of 2023, up 9% year-on-year (up 15.6% in constant currency), as subscription-free streaming growth company's growth slowed again, and its labels got a boost from strong physical sales and licensing.
Spotify's price hike helped its recorded music division's subscription revenue rise 8.9% (up 15% in constant currency, which strips out the effects of exchange rates) to €1.14 billion (€1.22 billion dollars). As a percentage of recorded music revenue, subscription revenue increased to 47% from 46.7% in the previous quarter.
However, non-subscription streaming revenue fell 1.3% as reported (up 5.6% in constant currency) in the quarter. This followed a 1.4% decline (up 5% in constant currency) in ad-supported streaming revenue in the third quarter. Ad-supported streaming 'remains strong' but ad market recovery 'has not been smooth' and UMG is 'cautious' about near-term growth, CFO Boyd Muir he said during Wednesday's earnings call. Soft streaming revenue was unaffected by UMG's decision in early February to pull its catalog from TikTok, which accounts for 1% of UMG's annual revenue.
However, sales were strong elsewhere in the recorded music division. Physical revenue of €447 million ($481 million) was up 10.6% (up 17.0% in constant currency). Licensing and other revenue of €410 million ($441 million) was up 26.5% (up 34.0% at constant currency). Downloads and other digital revenue fell 49.2% (45.8% in constant currency), but at 32 million euros ($34) they accounted for just 1.3% of recorded music revenue in the quarter.
Universal Music Publishing Group's fourth-quarter revenue of 576 million euros ($620 million) rose 8.7% (up 15.4% in constant currency). Digital revenue of €339 million ($365 million) was up 26.0% (36.1% in constant currency). Sync revenue of €70 million ($75 million) was up 18.6% (up 25.0% in constant currency). Engineering revenue of €31 million ($33 million) was up 24.0% (up 29.2%). Performance revenue fell 19.1% (15.8%) to 123 million euros ($132 million).
Top sellers in the quarter were Taylor Swift, The Rolling Stones, Drake, Jung Kook and Stray Kids.
For the whole year, UMG's revenue of €11.1 billion ($12 billion at average exchange rates for the year), up 7.4% as reported and up 11.1% at constant currency which strips out the effects of exchange rates. This is similar to the 13.6% constant currency revenue growth reported in 2022, but well below the 21.6% growth reported as reported, which includes the foreign exchange transaction.
Adjusted EBITDA of €2.37 billion ($2.6 billion) was up 11% (up 14.6% at constant currency). Unadjusted EBITDA of €1.81 billion ($2 billion) was down 10.8% (down 7.8% at constant currency).
In the recorded music segment, total revenue of €5.7 billion ($6.2 billion) increased by 6.6% (up 10.2% in constant currency) and physical revenue of €1.38 billion ($1.49 billion dollars) increased by 14.3% (up 19.4% in constant currency). License revenue of €1.17 billion ($1.27 billion) was up 9.5% (up 13.6% in constant currency).
Full-year publishing revenue of €1.96 billion ($2.12 billion) was up 8.7% (up 12.3% at constant currency). Digital revenue of €1.13 billion ($1.22 billion) was up 8.5% (up 12.5% in constant currency). Mechanical revenue of €108 million ($117 million) was up 11.3% (up 14.9% in constant currency). Performance revenue of €416 million ($450 million) was up 12.1% (up 15.9% in constant currency).
In constant currency, UMG's fourth-quarter improvement was similar to the other two major music groups. Warner Music Group rose 17.5 percent to $1.75 billion and Sony Music rose 16 percent to 358.2 billion yen ($2.5 billion). Smaller companies have similar growth rates.
