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Universal Music Group (NL:UMG)
:UMG
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Universal Music Group
(OTC:UMG)
Rating:72Outperform
Price Target:
€28.00
▲(12.00% Upside)
Positive Factors
Strategic Deals
The new SPOT and AMZN deals should drive accelerated revenue growth with Superfan tiers as a potential upside driver.
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
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
$45.34B
Dividend Yield2.08%
Average Volume (3M)1.58M
Price to Earnings (P/E)17.8
Beta (1Y)0.80
Revenue Growth6.12%
EPS Growth67.59%
CountryNL
Employees9,636
SectorCommunication Services
Sector Strength90
IndustryEntertainment
Share Statistics
EPS (TTM)0.48
Shares Outstanding1,834,099,900
10 Day Avg. Volume1,117,837
30 Day Avg. Volume1,576,683
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
P/FCF RatioN/A
Enterprise Value/Market Cap1.20
Enterprise Value/Revenue4.58
Enterprise Value/Gross Profit11.12
Enterprise Value/Ebitda13.72
Forecast
1Y Price Target
$30.51Price Target Upside22.02% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering9
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: |
Next Earnings Date:Oct 23, 2025
Earnings Call Sentiment Positive
Overall, the earnings call highlighted UMG's strong financial performance and global artist successes, along with strategic innovations and growth in subscription revenue. However, challenges remain in the areas of physical sales and merchandising profitability.Q2-2025 Updates
Positive Updates
Strong Financial Performance
UMG reported a 7% increase in revenue and an 8.5% increase in adjusted EBITDA for the first half of 2025. Adjusted EBITDA margin expanded by 60 basis points to 22.7%.
Artist and Songwriter Successes
UMG had 8 of the top 10 best-selling albums in the U.S. and top 6 of the biggest selling album debuts including artists like Morgan Wallen, Drake, and Lady Gaga. The company also had the top 6 most streamed tracks in the first half of the year.
Global Achievements
UMG achieved significant successes across various international markets, including Japan, the UK, Germany, and China, with multiple top charting albums and singles.
Innovations in Health and Wellness
UMG launched Sound Therapy in collaboration with Apple, using proprietary technologies to enhance listening experiences for relaxation and focus.
Advancements in AI and Technology
UMG has filed 15 patents in various fields including AI threat protection and music administration, and partnered with Liquidax Capital to accelerate product introductions.
Subscription and Streaming Growth
UMG's subscription revenue grew 8.5% in the quarter, supported by growth in established markets and double-digit growth in markets like Mexico and Brazil.
Negative Updates
Decline in Physical and Merchandising Revenue
Physical revenue declined 12.4% in the quarter, and merchandising revenue fell 12.7% due to difficult comparisons and higher manufacturing costs.
Challenges with Short Form Content Monetization
Monetization of short-form content remains a challenge due to difficulties in effective ad placement and broader industry issues.
Merchandising Profitability Issues
Merchandising adjusted EBITDA declined, resulting in a negative EUR 3 million due to lower revenue and increased manufacturing and freight costs.
Company Guidance
During Universal Music Group's second quarter earnings call for 2025, the company reported robust financial results, with a 7% increase in revenue and an 8.5% rise in adjusted EBITDA for the first half of the year. The adjusted EBITDA margin expanded by 60 basis points to 22.7% in the second quarter. The company's recorded music segment saw a 7% revenue growth for the half year, with subscription revenue rising by 8.9%, driven primarily by an increase in subscribers and some price hikes. Music publishing revenue grew by 12.1%, although this was slightly offset by a 90 basis point margin contraction. The call also highlighted significant achievements in streaming, with UMG outperforming its peers, and discussed the strategic evolution of the company, including its advancements in AI and health and wellness initiatives. Despite a decline in physical and merchandising revenues, the company is optimistic about its long-term strategy and ongoing cost-saving measures, which are on track to deliver EUR 250 million in run rate cost savings by the end of 2026.Universal Music Group Financial Statement Overview
Summary
Universal Music Group demonstrates strong financial performance with significant revenue growth and solid profit margins. The company effectively manages its cash flow, maintaining healthy free cash flow levels. Despite a high leverage ratio, the growth in equity indicates financial stability. Overall, the company is well-positioned within the entertainment industry, though careful management of debt levels and cash flow volatility is advisable.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
Neutral
25.00
Price Trends
26.02
Negative
26.08
Negative
25.55
Negative
Market Momentum
-0.33
Negative
46.70
Neutral
61.66
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NL:UMG, the sentiment is Neutral. The current price of 25 is above the 20-day moving average (MA) of 24.70, below the 50-day MA of 26.02, and below the 200-day MA of 25.55, indicating a neutral trend. The MACD of -0.33 indicates Negative momentum. The RSI at 46.70 is Neutral, neither overbought nor oversold. The STOCH value of 61.66 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for NL:UMG.
Universal Music Group Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Performance Comparison
NL:UMG
Universal Music Group
25.00
2.10
9.18%
NL:BNJ
Banijay Group N.V. Class A
8.75
-0.14
-1.57%
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.