Universal Music Group saw a nearly 10% revenue spike in constant currency in the third quarter over 2022 as Recorded Music subscription revenue kept rising.

Revenue of €2.75b ($2.9b) was driven by healthy constant currency growth in all segments. Recorded Music subscription revenue was up 13% in constant currency to €1.41b.

Benefits from recent price increases at Spotify and YouTube won’t show up until UMG’s Q4 report.

"Our performance this quarter was marked not only by continued growth across our businesses but also by strong progress on our long-term strategy," said UMG Chairman and CEO Sir Lucian Grainge. "We remain laser-focused on driving sustainable value creation for the company and its stakeholders: identifying and capitalizing on new revenue streams for UMG and our artists, responsibly advancing new technology, and expanding our global footprint."

Adjusted EBITDA of €581m increased 5.1% year-over-year, or 11.3% in constant currency.

Revenue in the third quarter of 2023 included a €53m benefit in Music Publishing from the accrual for a catch-up payment from certain DSPs related to the Copyright Royalty Board Phonorecords III ruling. Revenue in the third quarter of 2022 included a previously disclosed €71m benefit in Recorded Music from the settlement of a copyright infringement lawsuit with an internet service provider. Excluding both of these items, revenue grew 4.1% year-over-year, or 10.6% in constant currency.

Top sellers included Taylor Swift, SEVENTEEN, Morgan Wallen, Olivia Rodrigo and King & Prince.

Recorded Music revenues for the third quarter of 2023 were €2.04b, down 1.1% compared to the third quarter of 2022, but up 5.2% in constant currency. Excluding the legal settlement in 2022, revenues grew by 2.5% year-over-year, or 8.9% in constant currency. Physical sales were up 20% in constant currency to €294m.

Music Publishing revenue amounted to €491m in the third quarter of 2023, up 17.5% year-over-year, or 24.6% in constant currency.

Merchandising and other revenue in the third quarter of 2023 was €227m, an increase of 20.1% year-over-year, or 27.5% in constant currency, driven by growth in direct-to-consumer sales and higher touring merchandise sales.

During a call with stock analysts, Grainge spoke of areas he takes pride in, primarily UMG’s artist-centric approach, A.I. work and distribution, singling out recent deals with Deezer, YouTube, Bandlab and BMG, growth in Africa and China, and the chart success of Taylor Swift and Olivia Rodrigo.

UMG EVP/CFO and President of Operations Boyd Muir said, "For the ninth consecutive quarter as a stand-alone public company, we once again reported strong growth in revenue and Adjusted EBITDA. Even as we deliver current results, we continue to execute on the growth prospects that lie ahead for UMG."

Muir told analysts the company is conducting a review of the current cost base and UMG expects to unveil a cost savings plan in 2024.

“Cost savings will lead to improvement in margins,” Muir said. “It’s about how you best align the business to take advantage of the opportunities we see.”