Is Universal Music Group going to post a $2bn EBITDA profit this year?

Universal Music Group has announced its first quarterly financials as a public company – and everything is very much still moving in the right direction.

Across all of its divisions (including recorded music, publishing and more) the world’s biggest music rightsholder posted revenues in the three months to end of September (Q3) of €2.153 billion.

That was up 17.4% YoY at constant currency, and up by 6.5% on the €2.022 billion revenues UMG posted in the prior quarter (Q2).

Surprise surprise, the key performer within UMG’s Q3 results was streaming.

Recorded music streaming revenues were up 15.2% YoY at constant currency in Q3, reaching €1.131 billion in the quarter.

Overall recorded music revenues (inc streaming plus physical etc.) were up 16.9% YoY at constant currency to €1.711 billion.



The most sparkly stat singing out from UMG’s latest results, though, is its EBITDA (earnings before interest, taxes, and depreciation) – the key measure of profitability at the company.

UMG’s overall adjusted EBITDA in Q3 – across all of its divisions – weighed in at €461 million (approx $535m), up 20.7% YoY.

Yes: Universal Music Group is now comfortably posting profits in excess of half a billion US dollars each quarter.

That adjusted EBITDA figure (‘adjusted’ because it doesn’t discount one-time costs associated with Universal’s recent Amsterdam listing) translated into a 21.4% profit margin in Q3.

UMG’s adjusted EBITDA in the first nine months of this year came in at €1.286 billion – a profit margin of 21.5%.

If, in Q4, Universal can repeat or better the €461 million adjusted EBITDA it posted in Q3, Universal’s annual adjusted EBITDA in 2021 will – at current exchange rates, anyway – just manage to surpass USD $2 billion.

(Cue artists and their managers/lawyers out there thinking: ‘Hmm – should we be getting more of that margin?’ And cue Bill Ackman and fellow UMG investors thinking: ‘Hmm – how do we make that margin even bigger?’ We can expect such musings to run and run, considering UMG is aiming for a 25% EBITDA margin in the next few years.)


Universal’s recorded music results for Q3 2021

Interestingly, Universal says that its recorded music division saw strong YoY growth in both subscription and ad-supported streaming revenues in Q3.

“Ad-supported streaming was particularly strong, due to the ongoing improvement in ad-based monetization and new and enhanced deals in social media,” UMG told investors.

Sir Lucian Grainge, UMG’s Chairman and CEO, commented on the results: “Our operational and financial performance this quarter – our first as an independent, publicly traded company – demonstrates both why UMG is the world’s most successful music company, as well as how our commitment to artists’ career development and fostering innovation promotes growth across the music ecosystem.”

Boyd Muir, EVP, CFO and President of Operations of Universal Music Group, added: “Our results this quarter demonstrate the continued strength of our artist roster and catalogue, the increasingly diversified revenue streams of our business, and our ability to deliver growth for our shareholders.”

Universal’s physical recorded music revenue grew 11.6% YoY at constant currency in Q3, driven by strong vinyl demand as well as growth in direct-to-consumer sales.

The firm’s biggest global recorded music sellers for the quarter included new releases from Billie Eilish, King & Prince and Drake, as well as continued sales of BTS and Olivia Rodrigo.


It’s also interesting to look at UMG’s music publishing division – Universal Music Publishing Group – separate to the rest of the music giant.

UMG’s music Publishing revenue amounted to €363 million in the third quarter of 2021, up 21.4% YoY at constant currency.

UMG said of its publishing division in the quarter: “Revenues benefited from the continued growth in subscription and streaming, the timing of certain society distributions and from an improvement in synchronization.

“While performance revenue experienced the delayed impact of last year’s COVID-related slowdown, this was more than offset by revenue from catalog acquisitions.”


Universal’s music publishing results for Q3 2021

Universal Music Group’s overall revenues in the first nine months of 2021 amounted to €5.984 billion, up 17.4% YoY at constant currency.Music Business Worldwide