Universal Music on target to hit a record $6.2b in revenue for 2017, streaming contributes over $2.6b

The two top executives from Universal Music Group UMG)’s parent company Vivendi are bullish about the major record company’s full calendar 2017 achievements even as it released the July—September figures.

According to Vivendi chairman and CEO Arnaud de Puyfontaine and CFO Hervé Philippe, total UMG revenues in the first nine months of 2017 – including publishing, recorded music and other activities – reached €3.99 billion (A$6.2 billion), up 10.9% year-on-year.

Recorded music in this period was up 12.1% to €3.14bn ($4.89 billion), and publishing up 9.6% to €642 million ($1 billion).

That puts the recorded music division’s revenue to nudge $7.92 billion for all 12 months.

Of this, streaming is expected to contribute over $2.6 billion to the total.

It already generated over €1.44bn ($2.24 billion) for the first nine months – up 40.8% on the same period in 2016. Streaming revenues from July to September were €481million ($749.2 million).

Estimates work out that streaming made UMG $59.4 million a week for the first nine months of 2017.

During Q4 it will generate a further $660.5 million—$792.6 million from streams.

Universal Music Group, therefore, is on target to hit a record €5.2 billion ($8.1 billion) for the full 2017.

Arnaud de Puyfontaine in a conference call with investors said, “We feel comfortable to announce today that UMG revenues should go by around 10% and EBITDA by close 20% into 2017.

He added, “In music, Universal Music Group has confirmed its dynamic growth over the last nine months, largely driven by the significant increase in subscription and streaming revenues and continuous investment in talent”

Over the nine months, streaming and subscription revenues were growing fast, plus 41%, while download revenues declined by 18% and physical sales by just 6%.

The buoyancy over the fourth period is that it will include Taylor Swift’s Reputation album.

After shifting over 700,000 units on the first day of sale in America, and 1.1 million in six days (the 1989 album sold 10 million) and 27 million streams, according to Buzz Angle Music.

Major sales so far this year were from Kendrick Lamar, Drake, The Weeknd and The Beatles.

Hervé Philippe pointed out, “UMG guided a solid growth in Q3.

“Streaming and subscription revenues continued to grow at fast pace over the quarter.

“In Q3, streaming and subscription revenues represented close to 50% of Universal Music’s recorded revenue on more than three-quarters of its digital revenues.

“It is worth highlighting that Universal Music face a tough comparable quarter as Q3, 2016 revenues up 11.2%, which were by far the strongest growth recorded for many years.

“Q3 2016 benefitted also from the recognition of two positive one-time items. Excluding these one-time items, recorded revenue grew 9.5% organically in Q3 2017, EBITDA increased by 6.2% and margins were nearly flat.

“Looking forward to the fourth quarter, even the transition to streaming can change the seasonality.

“We are excited about the strong release schedule, including, in particular, new albums from Taylor Swift released on November 10^th with already more than 1 million copies, which is number one in 111 countries and on iTunes.

“We’ll have also Sam Smith, which was number one in the U.S. and UK when released, and we will have also later YouTube.

“The first nine months (for UMG) showed impressive transition in the music industry coupled with the strong release schedule.

“Overall, Universal Music’s revenues were up 10.9% organically.

“Solid releases, mainly during the first half of the year and the continued growth in streaming and subscription revenues, led to organic growth in recorded music of 12.8%, excluding the one-time items recognized in 2016, and despite a decline in physical sales and downloads.

“Music publishing revenues were up 9.6% and benefited from the positive momentum of music consumption, thanks to subscription and streaming.

“Merchandising and other revenues, which make up a small portion of the Universal Music’s total revenues, declined by 2.8% due to lower touring activities than in 2016. Income from operation was up 20.9% organically, mainly benefitting from the revenues growth and EBITDA grew by 25.5%.”