Education
About Us
Working with TipRanks
Follow Us
Universal Music Group (NL:UMG)
:UMG
Top Page
Universal Music Group
(OTC:UMG)
Rating:76Outperform
Price Target:
€30.00
▲(11.15%Upside)
Positive Factors
New Deals and Revenue Growth
The new SPOT and AMZN deals should drive accelerated revenue growth, with Superfan tiers as a potential upside driver.
Partnerships and Monetization
An early renewal of UMG / SPOT's deal signals stronger monetization for UMG and raises questions for SPOT.
Subscription Revenue Growth
UMG posted subscription revenue growth of +7.2% Y/Y, which was ahead of Street expectations, despite recent fears of a slowdown.
Negative Factors
Ad-Supported Streaming Revenues
Ad-supported streaming revenues remained flat year-on-year, falling short of expectations due to monetization challenges.
Streaming Performance
Streaming performance was weaker than expected, which the company anticipates will continue.
Universal Music Group (UMG) vs. iShares MSCI Netherlands ETF (EWN)
Market Cap
$49.36B
Dividend Yield2.08%
Average Volume (3M)1.68M
Price to Earnings (P/E)23.6
Beta (1Y)0.70
Revenue Growth6.54%
EPS Growth64.95%
CountryNL
Employees9,636
SectorCommunication Services
Sector Strength85
IndustryEntertainment
Share Statistics
EPS (TTM)0.23
Shares Outstanding1,834,099,900
10 Day Avg. Volume1,205,669
30 Day Avg. Volume1,684,516
Financial Highlights & Ratios
PEG Ratio0.90
Price to Book (P/B)10.82
Price to Sales (P/S)0.00
P/FCF Ratio20.90
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$30.34Price Target Upside12.40% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering6
Universal Music Group Business Overview & Revenue Model
Company DescriptionUniversal Music Group (UMG) is a global leader in music-based entertainment, operating in various sectors including recorded music, music publishing, and merchandising. UMG represents a vast array of artists from emerging talents to global superstars, providing comprehensive music services such as artist development, marketing, and distribution. It operates renowned labels such as Interscope Geffen A&M, Capitol Music Group, and Republic Records, as well as its music publishing arm, Universal Music Publishing Group.
How the Company Makes MoneyUniversal Music Group generates revenue primarily through several key streams. Recorded music sales serve as a major source of income, encompassing physical sales like CDs and vinyl, digital downloads, and particularly streaming services, which have become increasingly significant. UMG earns from licensing music for use in films, TV, advertisements, and video games, thereby diversifying its income. Music publishing rights also contribute to its revenue, allowing UMG to collect royalties whenever a song it owns is played, performed, or reproduced. Furthermore, UMG engages in artist services and brand partnerships, organizing concerts, merchandise sales, and strategic collaborations with brands that align with its artists and music. These strategic alliances with digital platforms and other media companies enhance its visibility and profitability in the music industry.
Universal Music Group Earnings Call Summary
Earnings Call Date:Apr 29, 2025
(Q1-2025)
| % Change Since: 8.94%|
Next Earnings Date:Jul 31, 2025
Earnings Call Sentiment Positive
Universal Music Group reported a strong start to 2025 with significant revenue growth driven by subscription and physical sales. The global expansion strategy showed impressive results, particularly in key markets. However, challenges remain in monetizing ad-supported streaming and merchandising revenue, with some impact on margins due to repertoire mix.Q1-2025 Updates
Positive Updates
Strong Financial Start
Revenue is up 9.5% and adjusted EBITDA is up 10% for the first quarter of 2025.
Global Expansion and Streaming Growth
Subscription revenue grew by 9.3%, with double-digit revenue growth from four major DSP partners, particularly in markets like Japan, Germany, China, and Mexico.
Significant Artist Achievements
UMG had seven of the top 10 albums in the US, and six of the top 10 albums in the UK for the quarter. Notable artists like Kendrick Lamar, The Weeknd, and Lady Gaga had successful releases.
Japan Market Success
UMG swept main categories at the 39th Annual Gold Disc Award in Japan, highlighting strong regional management and artist roster.
Physical Sales Growth
Physical sales, driven by vinyl, grew by 15% year-over-year.
Negative Updates
Flat Growth in Ad-Supported Streaming
Ad-supported streaming revenue was largely flat, up only 0.3% due to challenges in monetizing short-form content.
Decline in Merchandising Revenue
Merchandising revenue declined by 5%, impacted by a difficult comparison with previous touring merch sales.
Negative Repertoire Mix Impact
The revenue and repertoire mix negatively impacted margins due to strong growth in lower-margin segments like physical sales.
Company Guidance
In Universal Music Group's first quarter earnings call for 2025, Sir Lucian Grainge and Boyd Muir highlighted several key metrics showcasing the company's robust performance. Revenue increased by 9.5% to €2.9 billion, while adjusted EBITDA rose by 10% to €661 million. Subscription revenue grew by 9.3%, with significant contributions from developed markets like the U.S. and Japan, as well as emerging markets such as China and Mexico. The company also saw double-digit revenue growth from four major DSP partners. Recorded music revenue climbed by 10.3%, driven by subscription, physical sales, and licensing. Meanwhile, music publishing revenue was up by 9.5%, fueled by a 17% rise in digital revenue. Despite a 5% decline in merchandising revenue, UMG's strategic initiatives, including streaming 2.0 and global expansion, continue to support its midterm financial objectives, with plans for an additional €125 million in cost savings as part of its organizational redesign.Universal Music Group Financial Statement Overview
Summary
Universal Music Group demonstrates strong financial performance with significant revenue growth and solid profit margins. Effective cash flow management is evident, although high leverage poses a risk. Growth in equity indicates financial stability.Income Statement
Universal Music Group shows strong revenue growth with a consistent upward trend, increasing from €7.16 billion in 2019 to €11.83 billion in 2024. Gross profit margin and EBIT margin are solid, indicating efficient operational management. However, net profit margin has fluctuated slightly, suggesting room for improvement in cost management. Overall, the company demonstrates robust income generation capabilities.85
Very Positive
Balance Sheet
The balance sheet reveals a stable increase in stockholders' equity, although the debt-to-equity ratio is relatively high, indicating significant leverage. The absence of total assets and liabilities data for 2024 limits detailed analysis, but previous years show a stable equity ratio, suggesting prudent asset management. Despite the higher leverage, the company's equity growth is a positive indicator.70
Positive
Cash Flow
Universal Music Group's cash flow statement reflects healthy free cash flow generation, with a positive trajectory in operating cash flow. The free cash flow to net income ratio is strong, reflecting effective cash management. However, recent fluctuations in investing and financing cash flows highlight potential volatility in cash usage, posing a risk to liquidity management.78
Positive
| Breakdown | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 11.83B | 11.11B | 10.34B | 8.50B | 7.43B |
| Gross Profit | 5.09B | 4.52B | 4.59B | 3.90B | 3.52B |
| EBITDA | 3.47B | 2.22B | 1.35B | 1.49B | 2.07B |
| Net Income | 2.09B | 1.26B | 782.00M | 886.00M | 1.37B |
Balance Sheet | |||||
| Total Assets | 17.86B | 13.09B | 11.64B | 12.09B | 10.99B |
| Cash, Cash Equivalents and Short-Term Investments | 553.00M | 504.00M | 66.00M | 585.00M | 327.00M |
| Total Debt | 1.90B | 2.51B | 2.67B | 3.10B | 3.53B |
| Total Liabilities | 13.31B | 10.11B | 9.29B | 10.06B | 9.55B |
| Stockholders Equity | 4.53B | 2.96B | 2.35B | 2.03B | 1.43B |
Cash Flow | |||||
| Free Cash Flow | 1.31B | 1.59B | 1.64B | 1.08B | -69.00M |
| Operating Cash Flow | 1.75B | 1.89B | 1.73B | 1.14B | -3.00M |
| Investing Cash Flow | -1.05B | -622.00M | -520.00M | -391.00M | -46.00M |
| Financing Cash Flow | -552.00M | -1.20B | -1.35B | -1.34B | 217.00M |
Universal Music Group Technical Analysis
Positive
26.99
Price Trends
27.19
Negative
26.20
Positive
25.27
Positive
Market Momentum
-0.05
Negative
51.25
Neutral
80.35
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NL:UMG, the sentiment is Positive. The current price of 26.99 is above the 20-day moving average (MA) of 26.91, below the 50-day MA of 27.19, and above the 200-day MA of 25.27, indicating a neutral trend. The MACD of -0.05 indicates Negative momentum. The RSI at 51.25 is Neutral, neither overbought nor oversold. The STOCH value of 80.35 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for NL:UMG.
Universal Music Group Peers Comparison
Overall Rating
UnderperformOutperform
Sector (66)
Financial Indicators
Performance Comparison
NL:UMG
Universal Music Group
26.99
-0.55
-2.00%
NL:BNJ
Banijay Group N.V. Class A
9.00
0.30
3.45%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.