UMG’s Top-Line Growth Remained Strong in First Half; Streaming Growth Will Stay Robust in Second Half

Universal Music posted a slightly stronger-than-expected first half of 2022 as revenue came in just ahead of and adjusted EBITDA was in line with FactSet projections. Like its peers, UMG’s revenue and growth remain highly dependent on streaming music, which generated 65% of first-half revenue, up from 63% a year ago. The importance of streaming increased despite strong growth in physical, license, and merchandising revenue. Even with the threat of a recession, we expect that streaming will drive continued top-line growth as the demand for affordable entertainment options like streaming music, both subscription and ad-supported, will increase. Additionally, we believe that music will remain the main driver of growth for music streaming platforms even as those platforms add new products like podcasts and audiobooks.