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Investing.com -- Universal Music Group (AS:UMG) shares rose more than 2% on Friday after the world’s largest music company reported third-quarter 2025 results that came in slightly above expectations, lifted by strong physical sales and steady subscription growth.
Revenue for the quarter reached €3.02 billion, 3% higher than consensus estimates of €2.93 billion and up 10% year over year on a constant-currency basis.
Adjusted EBITDA came in at €664 million, 2% above forecasts, while the adjusted EBITDA margin stood at 22%, compared with 22.2% expected.
Subscription revenue rose 8.7%, slightly ahead of the 8.5% estimate, showing a quarter-on-quarter acceleration despite tougher comparisons.
Physical sales climbed 23%, far above the 3% projection, while merchandising advanced 16% against a 3% estimate.
Ad-supported streaming was flat compared with expectations for a 3% increase, which offset some of the gains from higher-margin categories.
The brokerage noted that “as has often been the case since UMG became public, revenue beat expectations but margin missed.”
EBITDA margin rose 40 basis points year over year but fell short of the 60 basis-point expansion analysts expected.
UMG, which generates about 80% of its revenue from recorded music, 15% from publishing and 5% from merchandising, also announced two new partnerships alongside its results.
The company said it struck a renewed licensing agreement with YouTube, its second-largest client, aligned with its “streaming 2.0” effort to push for higher wholesale pricing.
It also reached what BofA described as “a first of its kind agreement with Udio, an AI music generation platform.” The brokerage said these deals “could support 2026 subscription growth acceleration,” though market forecasts already assume faster growth next year.
The brokerage forecast adjusted diluted earnings per share of €0.99 for 2025, up from €0.96 in 2024. Dividend per share is expected to rise to €0.53 in 2025 from €0.52 in 2024.
While 2025-2027 EPS estimates were raised by 1% on higher physical sales and foreign exchange tailwinds, the report said 2025 free cash flow was cut 6% due to “elevated cash content advances.”