‘Supercharged’ royalties, Downtown’s margins, and more cost cuts: What I learned from UMG’s Q3 earnings call

Universal Music Group reported higher revenue and profit in the third quarter, with subscription income growing faster than analysts expected. Its shares rose as much as 15% after the results, signalling improved investor confidence, although analysts said further strong quarters may be needed.

Revenue for the three months to the end of September rose 11.7% year on year at constant currency to €3.394 billion, while adjusted EBITDA increased 9% to €729 million. Excluding Downtown, subscription revenue grew 9.5%, compared with analysts’ 8.2% forecast. Chief executive Lucian Grainge backed changing streaming payment agreements so royalties better reflect the value of different content, including human-made music; Downtown added €195 million in revenue and €13 million in adjusted EBITDA, a 6.7% margin.