Universal Music Q3 Earnings: Subscription Streaming, Downtown Integration Pay Off

Universal Music Group (UMG) said on Thursday (Oct. 29) that accelerated subscription streaming revenue, margin improvement and the integration of Downtown Music Group helped drive revenue growth of 11.7% revenue growth in the third quarter.

Revenue of €3.39 billion ($3.87 billion), which grew by 5.3% excluding the Downtown acquisition, benefited from 1.81 billion euros in subscription streaming revenue, which rose 17.9% from a year ago. Downtown and its suite of independent businesses contributed 9.5% of that increase in subscription streaming revenue, according to a press release.

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“Downtown is the most important acquisition UMG has made since EMI,” UMG CEO Lucian Grainge said on a call discussing the results. “The numbers are already proving why we made this deal.”

Adjusted earnings before interest, tax, depreciation and amortization rose 9.0% in constant currency or 7% when stripping out the impact of Downtown, to 729 million euros ($831.06 million). Adjusted EBITDA margin expanded by 0.4 percentage points to 21.5%, compared to 22% a year ago, as strength from the recorded music business competed with lower profitability in music publishing and merchandise.

The music company’s third-quarter revenue came in ahead of consensus analyst estimates, which had projected revenue of approximately €3.37 billion, according to MarketWatch

Top sellers in the quarter included Mrs. Green Apple, Olivia Rodrigo, Stray Kids, Ariana Grande and The Beatles. Physical growth was broad-based across North America, Japan and Europe and across both front line and catalog.

Recorded music revenue overall rose by 14.7% in constant currency to 2.56 billion euros ($2.92 billion), boosted by a 19.2% increase in subscription revenue driven by wholesale price increases. Ad-supported streaming revenue grew by 13.5% and physical sales rose by 17.4%. Recorded Music adjusted EBITDA margin excluding Downtown improved to 26.2%, helped by lower A&R spending and tighter cost controls. 

Music publishing revenue grew 7.5% in constant currency, or just 1.5% excluding the Downtown acquisition. Digital publishing revenue rose by 11.8%, but adjusted EBITDA fell 3.5% on a difficult comparison to last year’s quarter.

Merchandise revenue fell by 4.6% on fewer major tours than the third quarter 2025, although strong sales directly to consumers, like through UMG’s storefronts, helped offset this weakness.

UMG recently rolled out another raft of layoffs related to a cost-cutting plan first announced in 2024 that the company says will deliver 250 million euros ($271 million) in annual savings by the end of 2026.

UMG’s stock price was 0.6% higher at 15.84 ($18.06) as of 1:35 p.m. in New York.

“Overall, we’re encouraged by the progress we saw in several areas this quarter, including the acceleration in subscription revenue, continued strength in physical sales, and improved profitability,” UMG CFO Matt Ellis said on the earnings call. “At the same time, we recognize that there is more work ahead of us. That work is underway.”