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1. Company Snapshot

1.a. Company Description

Universal Music Group N.V. operates as a music company worldwide.It operates through Recorded Music, Music Publishing, and Merchandising & Other segments.The Recorded Music segment discovers and develops recording artists, as well as markets and promotes their music across various formats and platforms; and engages in the live events, sponsorship, film, and television operations.


The Music Publishing segment discovers and develops songwriters, as well as owns and administers the copyright for musical compositions used in recordings, public performances, and related uses, such as films and advertisements.The Merchandising & Other segment produces and sells artist and other branded products through various sales channels, including fashion retail, concert touring, and internet, as well as offers brand rights management services.The company has approximately 3 million recordings, 4 million owned and administered titles, and 250 artists/brands, as well as owns approximately 50 labels covering various music genres.


The company was incorporated in 2020 and is headquartered in Hilversum, the Netherlands.

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1.b. Last Insights on UMG

Universal Music Group's recent performance was negatively impacted by disappointing earnings and cash flow, which missed expectations despite a strong first quarter. The company's high hopes were dashed, leading to a decline in investor confidence. Additionally, the EU antitrust regulators' pending decision on Universal's acquisition of Downtown Music has created uncertainty, while the company's confidential submission for a US listing has added to the complexity.

1.c. Company Highlights

2. Universal Music Group's Q3 Earnings: A Symphony of Growth

Universal Music Group reported a robust Q3, with revenue growing 10.2% year-over-year, while adjusted EBITDA of EUR 664 million grew 11.6%. The company's EPS came in at 0.4882, beating estimates of 0.4414. The adjusted EBITDA margin expanded by 40 basis points to 22.0%, driven by revenue growth, operating leverage, and cost savings from Phase 2 of the realignment plan. The company's financial performance was characterized by strong subscription growth, with recorded music revenue growing 8.3% in the quarter.

Publication Date: Nov -01

📋 Highlights
  • Revenue & EBITDA Growth:: Q3 revenue rose 10.2% YoY to EUR 3.05B, while adjusted EBITDA grew 11.6% to EUR 664M, with 22.0% margin (up 40 bps).<br><b>Streaming & Subscription Momentum:</b> Subscription revenue grew 8.7%, driven by 10%+ subscriber expansion, alongside strong K-pop and top artists like Taylor Swift and Morgan Wallen.<br><b>Physical Sales Surge:</b> Physical revenue jumped 23% YoY, led by Japan (Mrs. GREEN APPLE, Fujii Kaze) and Taylor Swift's "The Life of a Showgirl" vinyl shipments.<br><b>AI Strategic Partnerships:</b> Executed agreements with Udio and Stability AI to develop AI-driven music consumption, hyper-personalization tools, and professional AI music creation platforms.<br><b>Streaming 2.0 Expansion:</b> Finalized third major deal with YouTube for recorded music and publishing, securing AI content guardrails and enhanced monetization for artists.

Revenue Streams

The company's revenue streams were diversified, with strength in physical revenue, up 23%, driven by Japan and initial shipments of Taylor Swift's latest album, "The Life of a Showgirl." Touring merch revenue also saw strength, driven by artists such as The Weeknd, Morgan Wallen, Lady Gaga, and Nine Inch Nails. However, D2C sales declined due to the timing of product releases.

Strategic Advances

Universal Music Group made significant strategic advances, including securing a strategic agreement with Udio to collaborate on an innovative new commercial music consumption, interaction, and hyper-personalization streaming product. The company also entered into an agreement with Stability AI to codevelop professional AI music creation tools for creators of video, images, and music. These partnerships are expected to drive future growth and enhance the consumer experience in music appreciation, discovery, and contextual listening.

Valuation

With a P/E Ratio of 16.36 and an EV/EBITDA of 11.1, the company's valuation appears reasonable, considering its growth prospects. The company's ROE of 55.39% and ROIC of 12.49% indicate strong profitability. Analysts estimate next year's revenue growth at 8.0%, which suggests a continued upward trajectory. The company's dividend yield of 2.23% provides a relatively stable return for investors.

Outlook

The company is optimistic about its future prospects, driven by its diversified revenue streams, strategic partnerships, and investments in the business. With a strong roster of artists and a focus on innovation, Universal Music Group is well-positioned to capitalize on emerging trends in the music industry. The company's guidance suggests that it expects to see continued growth in the physical business, particularly in vinyl and merchandise sales.

3. NewsRoom

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Is Weakness In Universal Music Group N.V. (AMS:UMG) Stock A Sign That The Market Could be Wrong Given Its Strong Financial Prospects?

Nov -02

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Samsung, Netflix, Disney: Trending stocks

Oct -31

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Universal Music Q3 revenue rises 5% on strong publishing, physical sales

Oct -30

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Universal Music Logs Higher Revenue Despite Slowdown in Subscriptions and Streaming Growth

Oct -30

Source: wsj.com

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Universal Music Settles With AI Firm Udio

Oct -30

Source:

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With 33% institutional ownership, Universal Music Group N.V. (AMS:UMG) is a favorite amongst the big guns

Oct -16

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Universal Music Group N.V. to Announce Financial Results for the Third Quarter Ended September 30, 2025

Oct -06

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Taylor Swift Released Her New Album Today. Why It’s Good News for Powell and the Fed.

Oct -03

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.30%)

6. Segments

Recorded Music

Expected Growth: 9.0%

As the music industry continues to shift towards streaming, recorded music sales are expected to grow at a faster rate than the overall industry growth rate, driven by the increasing popularity of streaming services and the growth of emerging markets.

Music Publishing

Expected Growth: 7.5%

While music publishing is a more stable segment, it is expected to grow at a slower rate than recorded music due to the maturation of the market and increasing competition from independent publishers.

Merchandising and Other

Expected Growth: 8.5%

Merchandising and other revenue is expected to grow at a rate close to the overall industry rate, driven by the increasing popularity of live events and the growth of e-commerce platforms.

Elimination of Intersegment Transactions

Expected Growth: 0.0%

As this segment only represents the elimination of intersegment transactions, it is not expected to grow or decline.

7. Detailed Products

Recorded Music

Universal Music Group N.V. is one of the largest recorded music companies in the world, with a vast catalog of music from popular artists across various genres.

Music Publishing

Universal Music Publishing Group is one of the largest music publishers in the world, representing a vast catalog of songs from popular artists and songwriters.

Merchandise

Universal Music Group N.V. offers a range of merchandise products such as T-shirts, posters, and other items featuring popular artists and bands.

Live Events

Universal Music Group N.V. produces and promotes live events such as concerts, festivals, and tours featuring popular artists and bands.

Brand Partnerships

Universal Music Group N.V. partners with brands to create branded content and experiences that connect artists and fans with brands.

Artist Services

Universal Music Group N.V. provides a range of services to artists, including marketing, promotion, and distribution.

8. Universal Music Group N.V.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Universal Music Group N.V. faces moderate threat from substitutes, as consumers have alternative options for music consumption, such as streaming services and independent artists.

Bargaining Power Of Customers

Universal Music Group N.V. has a diverse customer base, and individual customers have limited bargaining power, reducing the threat of customer bargaining power.

Bargaining Power Of Suppliers

Universal Music Group N.V. relies on a network of suppliers, including artists, producers, and distributors, which can exert some bargaining power, but the company's size and market position mitigate this threat.

Threat Of New Entrants

The music industry has high barriers to entry, including significant capital requirements and established relationships with artists and distributors, making it difficult for new entrants to compete with Universal Music Group N.V.

Intensity Of Rivalry

The music industry is highly competitive, with several major players, including Sony Music Entertainment, Warner Music Group, and independent labels, which creates a high level of rivalry and competition for Universal Music Group N.V.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 42.51%
Debt Cost 6.12%
Equity Weight 57.49%
Equity Cost 8.50%
WACC 7.49%
Leverage 73.94%

11. Quality Control: Universal Music Group N.V. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Orange

A-Score: 7.2/10

Value: 6.3

Growth: 3.9

Quality: 4.4

Yield: 9.4

Momentum: 9.5

Volatility: 9.7

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Atresmedia

A-Score: 7.1/10

Value: 7.0

Growth: 3.9

Quality: 7.0

Yield: 10.0

Momentum: 7.0

Volatility: 7.7

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Vodafone

A-Score: 6.1/10

Value: 9.4

Growth: 1.2

Quality: 2.0

Yield: 8.8

Momentum: 7.5

Volatility: 8.0

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Universal Music

A-Score: 5.7/10

Value: 3.0

Growth: 6.7

Quality: 7.4

Yield: 3.8

Momentum: 6.0

Volatility: 7.3

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Publicis Groupe

A-Score: 5.6/10

Value: 6.1

Growth: 5.7

Quality: 6.1

Yield: 6.9

Momentum: 2.0

Volatility: 7.0

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Vivendi

A-Score: 2.7/10

Value: 4.8

Growth: 1.7

Quality: 3.3

Yield: 4.4

Momentum: 0.0

Volatility: 2.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

21.8$

Current Price

21.8$

Potential

-0.00%

Expected Cash-Flows