• Full Year Revenue Growth: 8% in constant currency.
• Adjusted EBITDA Growth: 14% in constant currency.
• Adjusted EBITDA Margin: 22.5%, up 1.2 percentage points from 2023.
• Earnings Per Share (EPS): EUR1.14, up from EUR0.69 in 2023.
• Adjusted Diluted EPS: EUR0.96, up from EUR0.88 in 2023.
• Cost Savings Achieved: EUR75 million in 2024, with an expected additional EUR50 million in 2025.
• Fourth Quarter Revenue Growth: 7.9% in constant currency.
• Fourth Quarter Adjusted EBITDA Growth: 19.1% in constant currency.
• Recorded Music Revenue Growth: 6.4% for the year in constant currency.
• Subscription Revenue Growth: 9.1% for the year.
• Ad Supported Streaming Revenue: Flat for the year.
• Physical Revenue Growth: 1.1% for the year.
• License and Other Revenue Growth: 13.5% for the year.
• Music Publishing Revenue Growth: 9% for the year.
• Merchandising Revenue Growth: 19.3% for the year.
• Net Profit for 2024: EUR2.09 billion, up from EUR1.26 billion in 2023.
• Free Cash Flow Before Investing Activities: EUR1.6 billion in 2024.
• Net Debt: EUR2.1 billion at the end of 2024.

• Warning! GuruFocus has detected 8 Warning Signs with UMGNF.

Release Date: March 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Universal Music Group NV (UMGNF) reported a full year revenue growth of 8% and adjusted EBITDA growth of 14% in constant currency for 2024.
• The company achieved double-digit adjusted EBITDA growth for each year since becoming a stand-alone public company in 2021.
• UMGNF had nine out of the top 10 of the world's most commercially successful recording artists in 2024, including Taylor Swift at number 1.
• The company successfully implemented its streaming 2.0 strategy, securing major deals with Amazon Music and Spotify to enhance artist-centric initiatives and revenue growth.
• UMGNF expanded its global footprint with strategic partnerships and acquisitions, including a majority stake in A-Sketch in Japan and a strategic distribution agreement with Modern Sky in China.

Negative Points

• Ad-supported streaming revenue declined by 4.1% in the fourth quarter and was flat for the year, due to a shift from better monetized video platforms to short-form platforms.
• The company faced a decline in merchandising adjusted EBITDA by 6.5% due to higher manufacturing and distribution costs.
• Free cash flow before investing activities decreased to EUR1.6 billion in 2024 from EUR1.7 billion in 2023, largely due to increased cash restructuring charges and royalty advance payments.
• UMGNF's net cash provided by operating activities before income taxes paid declined due to increased cash restructuring charges and net royalty advance payments.
• The company expects a slight decline in merchandising business in 2025 due to the timing of major artist tours.

Q & A Highlights

Q: Can you explain the pace of recorded music subscription streaming revenue growth in the quarter and any drivers behind it? A: Michael Nash, Executive Vice President and Chief Digital Officer, explained that the subscription growth was strong, aligning with their guidance range. The growth was primarily driven by volume rather than price increases. The company expects a CAGR of 8% to 10% over the midterm, supported by their Streaming 2.0 strategy and recent deals with Amazon and Spotify.

Q: What progress has been made towards launching super fan and super premium tiers, and what might these include? A: Michael Nash noted that the deals with Amazon and Spotify are paving the way for super premium tiers. These tiers are expected to include enhanced features and be offered at higher price points. The company is in discussions with partners about these tiers, which are expected to target about 20% of the current subscriber base.

Q: With new deals incorporating streaming 2.0 concepts, how do you expect product innovation to accelerate? A: Lucian Grainge, CEO, highlighted that bundling and the stickiness of music will improve ARPU globally. The evolution of streaming 2.0 and investment in local artists will enhance relationships with DSPs, leading to better product offerings and ecosystem improvements.

Q: Can you provide more details on the subscription streaming growth outlook and potential variability? A: Boyd Muir, CFO, stated that while subscription growth is expected to average 8% to 10% CAGR from 2023 to 2028, it may not be linear and could come in waves. The company remains cautious on ad-funded streaming growth due to evolving advertising products.

Q: Should we expect similar levels of investment in strategic initiatives in the coming years? A: Boyd Muir confirmed that the company plans to continue investing at similar levels to 2024, focusing on strategic M&A in evolving geographies and initiatives that intersect music with culture and commerce.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.