Taylor Swift, Other Megastars Help Boost Universal Music Group's Outlook
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Taylor Swift performs on stage at the Paris La Defense Arena as part of her The Eras Tour, in Nanterre, France, on May 9, 2024.In This Article:
Key Takeaways
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Universal Music Group on Tuesday gave strong long-term guidance on gains in subscriptions, "superfan monetization," and partnerships.
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The label behind music superstars such as Taylor Swift and Drake anticipates that through 2028, its compound annual revenue growth rate will be at least 7%.
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Universal sees its subscription annual revenue growth rate of 8% to 10%.
Call it the "Taylor Swift Effect."
Universal Music Group (UMGNF), the music label of Swift and other megastars including Billie Eilish, Ariana Grande, and Drake, on Tuesday predicted strong profit and sales on increases in subscriptions, "superfan monetization," and partnerships.
UMG announced ahead of its Capital Markets Day in London its outlook through fiscal 2028, where it sees a revenue compound annual growth rate (CAGR) of at least 7% and subscription revenue CAGR of 8% to 10%. It predicts adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) CAGR to be at least 10%, and free cash flow conversion rate (before investing activity) between 60% and 70%.
Universal Recently Announced Expanded Licensing Deal With Meta
Last month, Universal and Meta Platforms (META) expanded their global music licensing deal, now including WhatsApp for the first time. The companies said they plan to fight unauthorized artificial intelligence (AI)-generated content so artists are fairly compensated.
In July, Universal reported second-quarter revenue jumped 8.7% year-over-year to 2.93 billion euros ($3.26 billion), including subscription sales that rose 6.5% to 1.38 billion euros ($1.53 billion).
At the time, Chief Executive Officer (CEO) Lucian Grainge explained that the company's unique structure "enables us to support our recording artists and songwriters with an ever-expanding array of revenue sources, reinforced by new products and the exciting next phase of development of streaming services."
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