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Universal Music Group N.V. (NL:UMG)
:UMG
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Universal Music Group
(OTC:UMG)
Rating:73Outperform
Price Target:
€27.00
▲(8.78% Upside)
Positive Factors
Strategic Deals and Partnerships
The new SPOT and AMZN deals should drive accelerated revenue growth in late '25 / early '26, with Superfan tiers as a potential upside driver.
Subscription Revenue Growth
UMG posted subscription revenue growth of +7.2% year-over-year, which was ahead of Street expectations, despite recent fears of a slowdown.
Negative Factors
Ad-supported Revenue Challenges
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
€45.39B
Dividend Yield2.1%
Average Volume (3M)1.65M
Price to Earnings (P/E)17.4
Beta (1Y)0.78
Revenue Growth6.12%
EPS Growth67.59%
CountryNL
Employees9,636
SectorCommunication Services
Sector Strength80
IndustryEntertainment
Share Statistics
EPS (TTM)0.48
Shares Outstanding1,834,099,900
10 Day Avg. Volume2,159,801
30 Day Avg. Volume1,649,331
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)0.00
Price to Sales (P/S)0.00
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
€30.56Price Target Upside23.13% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering8
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:Jul 31, 2025
(Q2-2025)
| % Change Since: -2.51%|
Next Earnings Date:Oct 23, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong financial performance and significant achievements in artist success and international growth. However, challenges in merchandising and the monetization of short-form content were notable lowlights. Despite these challenges, the positive aspects significantly outweighed the negatives, especially with the strategic advancements in AI and cost-saving measures.Q2-2025 Updates
Positive Updates
Strong Financial Performance
For the first half of the year, UMG's revenue increased by 7% and adjusted EBITDA grew by 8.5%.
Record Artist Success
UMG had 8 of the top 10 best-selling albums in the U.S. and all of the top 6 most streamed tracks, including artists like Morgan Wallen, Kendrick Lamar, and Lady Gaga.
International Growth
Significant international success with artists in Japan, the UK, and Germany, including Mrs. GREEN APPLE being the first JPop act to exceed 10 billion total streams in Japan.
AI and Health & Wellness Initiatives
UMG's partnership with Apple on Sound Therapy and the development of proprietary AI technologies to enhance music consumption experiences.
Successful Cost-Saving Measures
EUR 125 million in cost savings achieved from Phase 1 of strategic redesign, with Phase 2 on track for additional savings.
Negative Updates
Merchandising Revenue Decline
Merchandising revenue fell by 12.7% in the quarter and 10% in the first half, with challenges from higher manufacturing and freight costs.
Physical Revenue Challenges
Physical revenue declined by 12.4% in the quarter due to difficult comparisons with prior year releases.
Underperformance in Short-Form Content Monetization
Short-form content is not yet adequately monetized, impacting ad-supported streaming revenue.
Company Guidance
During Universal Music Group's second quarter and first half 2025 earnings call, management provided guidance highlighting a robust financial performance. Revenue for the first half of 2025 increased by 7%, and adjusted EBITDA rose 8.5%, with margins expanding by 30 basis points to 22.7%. In the second quarter alone, revenue grew by 4.5%, while adjusted EBITDA saw a 7.3% increase, expanding margins by 60 basis points. The company anticipates continued high single-digit growth in subscription revenue, underpinned by strategic Streaming 2.0 partnerships. Despite challenges in physical and merchandising revenue, UMG is optimistic about future opportunities, including AI integration and super premium tiers, aiming for long-term strategic growth and efficiencies.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
Negative
24.82
Price Trends
26.79
Negative
26.13
Negative
25.44
Negative
Market Momentum
-0.64
Positive
35.26
Neutral
33.88
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NL:UMG, the sentiment is Negative. The current price of 24.82 is below the 20-day moving average (MA) of 26.23, below the 50-day MA of 26.79, and below the 200-day MA of 25.44, indicating a bearish trend. The MACD of -0.64 indicates Positive momentum. The RSI at 35.26 is Neutral, neither overbought nor oversold. The STOCH value of 33.88 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for NL:UMG.
Universal Music Group Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Performance Comparison
NL:UMG
Universal Music Group
24.82
2.94
13.45%
NL:BNJ
Banijay Group N.V. Class A
8.85
0.25
2.91%
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.