Universal Music Group (UMG), the world’s largest record company, suffered an off-the-cliff stock dip last Thursday following the company’s earnings call. The hinge point? unexpectedly low streaming revenue.
Below is the UMG stock chart:
Most headlines (including ours) target streaming revenue as the undermining culprit. But the truth is, UMG’s streaming revenue increased in Q2 … just not as much as the company had led investors to expect — a classic case of projections underming reality. Streaming revenue rose 6.9% year-over-year in Q2, but analysts had, by whatever calculations, called for 11% growth.
Other metrics were likewise upbeat:
- Overall revenues leaped up 9.6%YoY (at constant currency), beating analyst expectations;
- Adjusted EBITDA grew 11.3% YoY, up to EUR €649 million (USD $699m). This was also ahead of analyst projections, according to Visible Alpha consensus;
- Net profit soared 46% YoY in the first half of 2024, to EUR €914 million (USD $991 million), or €0.50 per share, compared to €0.34 in the first half of 2023.
(The numbers above from Music Business Worldwide.)