Universal Music shares plunge 23% as subscription growth slows

Universal Music Group shares plunged 23 percent on Friday after Q2 subscription revenue growth slowed to 6.7 percent excluding acquisitions, raising streaming momentum concerns.

"We're delivering on our strategic plan, and working to further sharpen our execution, while capitalizing on the opportunities presented by new technologies and the ever-evolving music ecosystem," Chairman and CEO Sir Lucian Grainge said.

UMG reported total Q2 revenue of €3.294 billion ($3.83 billion), up 13.3 percent year over year at constant currency, driven by the consolidation of Downtown Music Holdings and pricing benefits from Streaming 2.0 agreements. Excluding Downtown, revenue grew 6.4 percent. Recorded music subscription revenue reached €1.368 billion ($1.59 billion), up 16.6 percent including Downtown but just 6.7 percent on an organic basis. Adjusted EBITDA came in at €674 million ($783.8 million), a margin of 20.5 percent, down from 22.7 percent in the prior-year quarter.

The 23 percent decline erased roughly a quarter of UMG's market value, reflecting investor concern that music streaming subscription penetration is maturing. The company declared an interim dividend of €432 million, or €0.24 per share, payable October 27.

Recorded Music revenue rose 16.2 percent to €2.516 billion ($2.93 billion), with physical revenue up 15.9 percent to €342 million and license and other revenue up 34.9 percent to €379 million. Downloads fell 43.3 percent to €38 million after a previously disclosed ISP settlement. Music Publishing revenue grew 9.8 percent to €616 million, with digital revenue up 13.6 percent to €392 million. Merchandising and Other revenue declined 10.7 percent to €167 million, reflecting weaker touring income.

Downtown Music Holdings contributed €202 million in total revenue in its first full quarter under UMG ownership, with €162 million from Recorded Music and €40 million from Music Publishing. Downtown's Adjusted EBITDA was €10 million, a 5.0 percent margin.

Financial net debt stood at €4.131 billion at the end of June, up 72.8 percent from €2.390 billion at the end of 2025, reflecting the Downtown acquisition, €734 million of stock repurchases, and €514 million of dividend payments. The company also received €379 million from selling half of its Spotify stake.

"Our focus is on building our market leadership, while driving top and bottom-line growth, improving efficiency, and continuing to invest where we see the greatest returns," CFO Matt Ellis said.

The selloff shows investors are questioning whether Streaming 2.0 pricing benefits can offset slowing subscriber growth as the market matures. UMG's next catalyst is the H1 2026 dividend payment on October 27, with investors watching for further subscription growth data in Q3 results.

This article is for informational purposes only and does not constitute investment advice.