Universal Music Group delivered a strong earnings report for the second quarter of 2022, with revenue of approximately $2.7 billion, an increase of 17.3% year-over-year in constant currency, a gain carried over during the first half of the full year. the year.
Recorded music revenue increased 16.2% (9% in constant currency) to approximately $1.96 billion, with revenue from streaming subscriptions increasing 14.6% to $986 million. Subscription revenue saw a boost from a “DSP compensation payment” (perhaps from the Copyright Board’s confirmation of the 2018 streaming publisher rate increase) of nearly $42 million in revenue and $26 million in both EBITDA and adjusted EBITDA. Ad-supported broadcast revenue increased nearly 25% to $355 million.
Physical revenue up a whopping 21.2%, driven by BTS and King & Prince; Other top sellers include Rammstein, Olivia Rodrigo and INI.
Music publishing revenue came to $486 million, up 62.5% year over year, or 50.6% in constant currency, thanks to a change in community accounting, up 29% from 2021.
“Our strong performance across diversified revenue streams is fueled by the successful partnerships we have formed with our artists – new and established – in markets around the world,” said Chairman/CEO Lucien Grange. He mentioned BTS, Drake, Olivia Rodrigo, and Frank Zappa (whose catalog was acquired by the company earlier this year) and examples of the “many different forms” that the company’s partnerships can take.
He also mentioned that UMG has signed a new agreement with Facebook’s parent company Meta that expands revenue sharing opportunities (earlier this week, Kobalt removed nearly 700,000 songs from Meta platforms).
Cost of revenue, consisting of artist and product costs, increased 27.4% to €2,608 million in the first half of 2022, reflecting higher revenue and revenue mix. Cost of revenue as a percentage of revenue increased to 55.1% from 53.4% driven by rising artist costs from a larger proportion of music publishing revenue in the first half of 2022 as well as the impact of the DSP Catch-Up Payment and the previously revealed exceptional recovery of pre-save and release Historic royalties (“extraordinary redemption and release”) in the first quarter of 2021 (with an impact of €20 million) benefited all artists in relation to revenue in the prior year period.
Operating profit improved 11.8% year over year, or 6.7% in constant currency, to €765 million in the first half of 2022 driven by revenue growth. EBITDA was €960 million, an increase of 16.8%, or 11.1% in constant currency, compared to the first half of 2021, also as a result of revenue growth.
EBITDA margin and EBITDA margin was affected by €2 million of equity-based compensation during the first half of 2022 and by €3 million of expenses related to the listing of UMG in Euronext Amsterdam during the first half of 2021. Excluding these amounts, adjusted earnings were EBITDA for the first half of 2022 €962 million, up 16.6% compared to the first half of 2021, or 11.0% in constant currency, driven by revenue growth. Adjusted EBITDA margin contracted 1.2pp yoy to 20.3%.
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