AceShowbiz - Universal Music Group reported stable first-quarter revenue of 2.9 billion euros ($3.33 billion), with results tempered by currency fluctuations and a strong performance comparison from the previous year.

Based in the Netherlands, UMG commonly reports earnings on a constant currency basis, which eliminates the effects of foreign exchange volatility. On this basis, the company’s total revenue actually increased by 8.1% during the quarter ending March 31.

Despite the overall revenue holding steady, earnings before interest, tax, depreciation and amortization (EBITDA) declined 5.3% to 571 million euros ($655.7 million). Adjusted EBITDA also fell 3.8% to 636 million euros ($730.3 million) compared to the same period last year. However, on a constant currency basis, EBITDA rose by 2.1% and adjusted EBITDA grew 3.9%, marking the 19th consecutive quarter of growth in both revenue and adjusted EBITDA, according to UMG chairman and CEO Lucian Grainge.

"We're comparing against a very successful quarter last year," Grainge noted, urging caution in evaluating UMG's release schedule based solely on a 90-day window. "Artists are human beings. They make music and they create and they deliver according to when they're ready." He emphasized the complexities involved in deciding release timing amid various operational considerations.

In response to recent challenges, UMG's board approved doubling the maximum share buyback program from 500 million euros to 1 billion euros. This move comes amid a prolonged period of underperformance in the company’s share price and following an unsolicited acquisition proposal from investment firm Pershing Square.

Pershing Square founder and billionaire investor Bill Ackman proposed merging UMG into a new publicly listed U.S. company and suggested selling UMG's stake in Spotify. In alignment with this, UMG announced that its board has approved plans to sell half of its Spotify shares. A portion of the proceeds will be distributed to the company’s artists, while the remainder will be allocated to the share buyback program.

Following the earnings report, UMG shares dipped slightly by less than 1%, trading at 19.38 euros ($22.25) in after-hours trading on the Euronext Amsterdam exchange, where the company is listed.

UMG's recorded music revenue rose modestly by 0.5%, or nearly 9% on a constant currency basis, reaching 2.3 billion euros ($2.6 billion). Growth was driven by subscription and physical music sales, which offset declines in license revenue, downloads, and other digital streams.

Subscription and streaming revenue climbed 2.3% to 1.6 billion euros ($1.9 billion). Subscription revenue alone increased 4.1%, or 12.5% in constant currency, compared to the same quarter last year, totaling 1.3 billion euros. Streaming revenue accounted for 339 million euros ($389 million), down 4%, but up 5% when adjusted for currency.

Adjusted EBITDA for recorded music slipped 1.7%, or rose 6% on a constant currency basis, to 565 million euros during the quarter. Grainge described the core record label business as "very healthy, growing year after year at attractive rates, whilst also expanding margins."

Music publishing revenue fell slightly by 0.5%, or increased 7% in constant currency, totaling 552 million euros ($633.8 million). This growth was supported by digital and performance revenues. Digital revenue declined 3.2%, yet rose 4.8% adjusted for currency, amounting to 328 million euros ($376.6 million). Performance revenue increased by nearly 1%, or 6.5% in constant currency, to 115 million euros ($132 million).

Synchronization revenue contributed 68 million euros ($78 million), an increase of 6.3%, or 15.3% in constant currency. Adjusted EBITDA for the music publishing segment rose 3.8%, or 11.6% on a constant currency basis, reaching 135 million euros ($155 million).

This quarter marked the first full reporting period following UMG's acquisition of Downtown into its Virgin Music Group division. The company began breaking out overall and segment earnings including and excluding Downtown’s revenue contribution from February 20 through March 31. Chief Financial Officer Matt Ellis confirmed that this comparative reporting will continue throughout the rest of the year.

UMG's financial results reflect a complex interplay of market dynamics, currency headwinds, and strategic corporate maneuvers, highlighting the challenges and opportunities in the global music industry landscape.