{"id":1479397,"date":"2024-07-25T11:45:00","date_gmt":"2024-07-25T15:45:00","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1479397"},"modified":"2024-07-25T11:45:00","modified_gmt":"2024-07-25T15:45:00","slug":"create-some-unwelcome-noise-universal-music-crashes-30-on-streaming-revenue-woes","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/create-some-unwelcome-noise-universal-music-crashes-30-on-streaming-revenue-woes\/1479397\/","title":{"rendered":"“Create Some Unwelcome” Noise:\u00a0Universal Music Crashes 30% On Streaming Revenue Woes\u00a0\u00a0"},"content":{"rendered":"

“Create Some Unwelcome” Noise:\u00a0Universal Music Crashes 30% On Streaming Revenue Woes\u00a0\u00a0<\/span><\/p>\n

\n

Shares of Universal Music Group plummeted up to 30% in Amsterdam on Thursday after the world’s largest record label, representing top artists like Taylor Swift, Billie Eilish, Drake, Adele, and Ariana Grande, reported disappointing second-quarter earnings. The report fell short of investor expectations regarding\u00a0subscription and streaming revenue growth.\u00a0<\/p>\n

Universal’s second-quarter report showed\u00a0subscription revenue in recorded music\u00a0grew 6.5% year-over-year<\/strong>, or 6.9% in constant currency, missing the Bloomberg estimate of surveyed analysts for growth of 11%<\/strong>.<\/p>\n

Recorded Music subscription revenue grew 6.5% year-over-year<\/strong>, or 6.9% in constant currency and streaming revenue decreased 4.2% year-over-year, or 3.9% in constant currency, while physical revenue grew 9.5% year-over-year, or 14.4% in constant currency and license and other revenue grew 18.0% year-over-year on both a reported and constant currency basis<\/p>\n

On an earnings call,\u00a0Chief Financial Officer Boyd Muir told investors that Spotify and YouTube’s weak advertising revenue growth were some of the major drivers of softer sales<\/strong>. He said there are emerging roadblocks with social media platforms becoming major music distributors.\u00a0\u00a0<\/p>\n

Universal Music has been pushing for platforms to compensate artists fairly and has advocated for a new streaming royalty model. The company started pulling its music from ByteDance Ltd.-owned TikTok in February after talks to extend a licensing deal failed. In May, it reached a deal with TikTok that included better pay for songwriters and artists, new promotional agreements and protections against AI-generated music. -Bloomberg<\/em><\/p>\n

Here’s a snapshot of second-quarter results:\u00a0<\/p>\n

Revenue EU2.93 billion, +8.7% y\/y, estimate EU2.88 billion (Bloomberg Consensus)<\/em><\/p>\n

Recorded Music revenue EU2.20 billion, estimate EU2.22 billion<\/em><\/p>\n

Music Publishing revenue EU511 million, estimate EU519.9 million<\/em><\/p>\n

Merchandising & Other revenue EU227 million, estimate EU165.4 million<\/em><\/p>\n

Ebitda EU580 million, estimate EU591.4 million<\/em><\/p>\n

Adjusted Ebitda EU649 million, estimate EU641.4 million<\/em><\/p>\n

Adjusted Ebitda margin 22.1%, estimate 22.3%<\/em><\/p>\n

Revenue in constant currency +9.6%, estimate +8.14% <\/em><\/p>\n

Recorded Music revenue in constant currency +6.8%, estimate +7.05% <\/em><\/p>\n

Music Publishing revenue in constant currency +10.4%, estimate +11.2%<\/em><\/p>\n

Merchandising & Other revenue in constant currency +43.7%, estimate +6.24%<\/em><\/p>\n

Net income EU625.0 million<\/em><\/p>\n

Here are first-half results:<\/p>\n

Ebitda EU1.07 billion, estimate EU1.08 billion<\/p>\n

Recorded Music Ebitda EU959 million, estimate EU942 million<\/p>\n

Music Publishing Ebitda EU229 million, estimate EU238.4 million<\/p>\n

Merchandising & Other Ebitda EU18 million, estimate EU21.9 million (2 estimates)<\/p>\n

Shares in\u00a0Amsterdam plunged as much as 30% today.<\/p>\n

<\/a><\/p>\n

Citi analysts told clients that the results “undermine” what had been seen as defensive growth credentials. Citi, Barclays, and Guggenheim removed positive stances on the company, while Kepler Cheuvreux downgraded.<\/p>\n

<\/a><\/p>\n

More from Wall Street analysts (courtesy of Bloomberg):\u00a0<\/p>\n

Citi (neutral vs buy)<\/strong><\/p>\n

Analyst Thomas Singlehurst says the mix was radically different from expectations, with 2Q Streaming & Subscription constant currency growth meaningfully below<\/em>
\n\tMain concerns are unprecedented level of volatility between different revenue lines, and that cash conversion appears to have got worse <\/em>
\n\tWhile sources of volatility may only be temporary, sentiment may be hit until there is evidence of re-acceleration in growth and inflection in cash flow<\/em>
\n\tResults undermine defensive growth credentials<\/em><\/p>\n

Cowen (buy)<\/strong><\/p>\n

Results beat on revenue and profitability, but subscription streaming growth a meaningful miss and ad-supported streaming performance also disappointed, analyst Doug Creutz writes<\/em>
\n\tWhile still confident in the long-term growth trajectory, the 2Q results “create some unwelcome” noise<\/em><\/p>\n

Morgan Stanley (overweight)<\/strong><\/p>\n

Analyst Ed Young says revenue miss, and unexpected deceleration, in Subscription and Streaming within Recorded Music likely to be key focus <\/em>
\n\tThis was offset by revenue beats elsewhere, which does highlight diversified sources of growth<\/em><\/p>\n

Meanwhile, Bill Ackman’s\u00a0Pershing Square holds a 10% stake as the second largest shareholder of the music group.\u00a0<\/p>\n

<\/a><\/p>\n

Oops.\u00a0<\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nThu, 07\/25\/2024 – 07:45<\/span><\/p>\n

\u200bhttps:\/\/www.zerohedge.com\/markets\/create-some-unwelcome-noise-universal-music-crashes-30-streaming-revenue-woes<\/a>\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

“Create Some Unwelcome” Noise:\u00a0Universal Music Crashes 30% On Streaming Revenue Woes\u00a0\u00a0 Shares of Universal Music Group plummeted up to 30% in Amsterdam on Thursday after…<\/p>\n","protected":false},"author":0,"featured_media":1479398,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1479397","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","wpcat-1-id"],"_links":{"self":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1479397","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/comments?post=1479397"}],"version-history":[{"count":0,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1479397\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media\/1479398"}],"wp:attachment":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media?parent=1479397"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/categories?post=1479397"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/tags?post=1479397"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}