Universal Music Group N.v. · EURONEXT:UMG
Universal Music — Investor Day (September 2024)
126 slides from Universal Music's investor day presentation, Sep 17, 2024
Slide 1: Universal Music Group Capital Markets Day
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Slide 2: Important Information
Important Information Forward-Looking Statements This presentation contains statements that constitute forward-looking statements relating to the business, financial performance and results of Universal Music Group N.V. (the “Company” or “UMG”) and the industry in which the Company operates. Such fo
Slide 3: Capital Markets Day
Capital Markets Day Sir Lucian Grainge CBE Chairman & Chief Executive Officer
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Slide 9: Streaming is a quantum leap forward in music access and monetization
Fact #1 Streaming is a quantum leap forward in music access and monetization Fact #2 Superfandom will accelerate music industry economics Fact #3 Music is Universal
Slide 10: Fact #1: Streaming is a quantum leap forward
Fact #1 Streaming is a quantum leap forward in music access and monetization
Slide 11: The Value Proposition of Streaming Is Extraordinary
The Value All the World’s Always With Proposition of Music You Streaming Is Extraordinary… Personalized Frictionless Discovery Acquisition … And Will Improve: Shareable Social Streaming 2.0
Slide 12: Our Music Powers an Expanding Number of Platforms
Our Music Powers an Expanding Number of Platforms 2013 2016 2024 Social Download to own Streaming Big “duopoly” 4 streamers Scale regional streamers = ~9.5B combined users 2024 ~5.3B combined users ~0.6B ~0.9B ~0.4B iTunes registered users combined users combined users ~4.2B combined users Note: “MA
Slide 13: Music Subscriber Growth Outlook Historically Underestimated
Music Subscriber Growth Outlook Historically Underestimated Previous Estimates Current Consensus Predicts “ Future subscribers “ “ Paid subscribers will “ in 2023 ~400M rise to 336M in 2025 Wall Street Analyst Report 2016 “State of the Streaming Nation 2” 2017 1B+ Paid subscribers 336M subscribers s
Slide 14: Music powers engagement across a vast ecosystem
Music powers engagement across a vast ecosystem – and we are in business with far more than just a handful of tech partners and DSPs
Slide 15: Fact #2: Superfandom will accelerate music industry economics
Fact #2 Superfandom will accelerate music industry economics
Slide 16: Super Fan Passion Was Evident at Midnight on Release Day
In the 60s-90s, “Super Fan” Passion Was Evident at Midnight on Release Day as Fans Waited in Long Lines
Slide 17: Streaming and Subscription Have Equalized Fan Spending
Streaming and Subscription Have Equalized Fan Spending for Core Music Consumption Download to own superfans spent ~3x = The streaming world equalizes spend between the average customer the average customer and superfans Superfan Average Customer Average Customer Superfan User spend, 2014 User spend,
Slide 18: Superfan passion unlocks economic growth potential
UMG Revenue (€M, 2023) Superfan passion unlocks economic Publishing Paid growth potential € 1,956 Subscription Streaming Downloads & Other € 207 € 4,275 € 1,174 License & Other € 706 Merch Superfan Business € 1,380 € 1,425 Physical Ad-Supported Source: UMG Streaming
Slide 19: Innovating products and experiences to give superfans more opportunities
We are innovating and developing products and experiences to give superfans more opportunities to engage
Slide 20: Fact #3: Music is Universal
Fact #3 Music is Universal
Slide 21: Music Is Fundamental to the Human Experience
Music Is 3+ hours Fundamental to of listening per day the Human Experience ~60%+ listeners actively choose which songs they listen to ~7 different methods of engagement with music Source: IFPI “Engaging with Music” Report (2023)
Slide 22: Music Is Influential
Music Is Of the Top 20 Influential Global Influencers: 10 Musicians 5 4 Media Athletes 1 Actor 7/10 UMG Artists personalities Note: Influencer ranking based on # of Instagram, X, TikTok, and YouTube followers as of August 2024 Source: Instagram, X, TikTok, YouTube
Slide 23: Unique Ability to Identify and Sign the World's Best Artists
Unique Ability to Identify and Sign the World’s Best Artists and Songwriters AFRICA Soolking Rema Ayra Starr DJ Stokie Xolly Mncwango De Mthuda Sam Deep AMERICAS Karol G Noah Kahan Sabrina Carpenter The Weeknd Luke Bryan Billie Eilish Jon Batiste ASIA King & Prince Eason Chan Ado Hanumankind Jay Cho
Slide 24: UMG Is Consistently Home to the World's Best-Selling Recording Artists
UMG Is Consistently Home to the World’s Best-Selling Recording Artists Top 10 Global Artists (’19-’23) 2019 2020 2021 2022 2023 8/10 9/10 8/10 9/10 7/10 Of UMG’s Top 10 Global Artists, U.S./U.K. vs. Non-U.S./U.K. 2/8 Non 3/7 4/9 8/8 9/9 U.S./U.K. 4/7 Non U.S./U.K. U.S./U.K. U.S./U.K. 6/8 Non U.S./U.
Slide 25: UMG labels and brands
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Slide 26: Strong Track Record of Success
Strong Track Record of Success IPO 2021 €8.5B €1.8B €1.0B Revenue Adjusted EBITDA FCF before investing 40% Average Return on Equity 2023 €11.1B €2.4B €1.7B Revenue Adjusted EBITDA FCF before investing Note: Historical financials are as reported Source: UMG
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Slide 28: Market Outlook & Innovation
Market Outlook & Innovation Boyd Muir EVP, President of Operations & Chief Financial Officer
Slide 29: Music Industry Has Experienced a Return to Growth, Driven by Streaming
The Music Industry Has Experienced a Return to Growth, Driven Primarily by Streaming Global recorded music by revenue stream ($B, ’99-’23, nominal) 28.6 26.0 23.8 22.2 22.0 20.9 20.6 20.1 19.1 19.1 18.6 18.8 18.0 17.4 16.8 15.5 15.8 14.5 14.7 13.7 13.6 13.6 13.5 13.5 13.0 1999 2000 2001 2002 2003 20
Slide 30: Runway for Future Growth; Spending Is ~50% of Peak Levels
Runway for Future Growth; Spending Is ~50% of Peak Levels US recorded music inflation-adjusted revenue per capita ($, indexed to 2023) ~95 ~2x to reach 1999 levels ~50 ~25 1999 2014 2023 Peak physical era spend Digital download era spend Streaming era spend Source: RIAA U.S. Music Revenue Database,
Slide 31: Music Industry Growth Will Be Propelled by Streaming, Superfandom and Ecosystem Expansion
Music Industry Growth Will Be Propelled by Streaming, Superfandom and Ecosystem Expansion Driving Unlocking Powering Growth in Superfandom a Broader Streaming Ecosystem
Slide 32: Subscriber Growth in Established and High-Potential Markets
Subscriber Growth in Both Established and High-Potential Markets Paid subscribers, established and high-potential markets (M, ’19-’23) Established High-potential 84 667 75 91 84 333 ~15% ~24% ~19% Established High-potential Total paid sub paid sub CAGR (’19-’23) paid sub CAGR (’19-’23) CAGR (’19-’23
Slide 33: Significant Headroom for Subscriber Growth
Established and High-Potential Markets Have Significant Headroom for Subscriber Growth Paid music subscriber penetration rate (2023) Established 50% High-potential 42% 38% 30% 23% 22% 13% 13% 10% 3% 1% 1% 1% Sweden USA UK France Japan Italy Remaining Brazil China India Indonesia Nigeria Remaining es
Slide 34: Music Streaming Is Significantly Under-Monetized
Music Streaming Is Significantly Under-Monetized Subscription music is a very low-cost form of entertainment Ad-supported audio streaming is under-monetized Cost per consumption hour ($, 2023) Paid subscription vs. ad-supported audio revenue per user (gross, monthly, 2023) ~$45 ~4x $5.37 ~9x ~$7 $1.
Slide 35: High-Potential Market Subscribers Contribute to Subscription Revenue Growth
High-Potential Market Subscribers Have Meaningful Contribution to Subscription Revenue Growth Paid streaming monthly trade ARPU ~6x ~4-5x High-potential markets High-potential markets Established markets (2019) (2023) (2023) Note: Monthly trade ARPU refers to the industry-wide revenue that is solely
Slide 36: Growth Balanced Across Subscriber Growth and Improved Monetization
Growth Will Be Balanced Across Both Subscriber Growth and Improved Monetization Subscriber Penetration Improved Monetization • Demographic tailwinds in established markets (late • Price increases in line with consumer value adoption, streaming habit persistence over time) and inflation • Technology
Slide 37: Subscription Revenue Has Consistently Grown
Subscription Revenue Has Consistently Grown, With Modest “Event” Driven Changes in Momentum Quarterly UMG paid subscriptions revenue (’14-’24) Momentum Spotify price increases Drivers Apple & Amazon Music price increases Price increases for YouTube under-monetized services Music Apple One subscripti
Slide 38: Accelerating Superfan Monetization
Accelerating Superfan Monetization and Building a Scaled, Complementary Business to Streaming UMG physical and merchandise revenue (€M) ~19% CAGR Developing premium music and merchandise collectibles 2,086 D2C 1,484 Creating innovative superfan experiences Non- D2C Expanding our D2C capabilities (cu
Slide 39: Superfan Monetization Increasingly Driven by D2C Capabilities
Superfan Monetization Increasingly Driven by D2C Capabilities Revenue Brand Audience Growth Building Development ~33% 1,300+ ~100M D2C revenue CAGR (’21-’23) UMG owned and operated Global owned audience artist / brand stores in 2023 Note: Historical financials and growth CAGRs are at moving FX. Owne
Slide 40: Market Outlook & Innovation: Global Insight
Market Outlook & Innovation Gabi Lopes SVP, Global Insight
Slide 41: UMG's Unique Research and Insights Capabilities
UMG’s Unique Research and Insights Capabilities Global Insight Team The most extensive Deep understanding Uniquely positioned Global coverage in-house research of consumer behavior to inform future reaches over 100,000 program in the across the ecosystem market trends consumers yearly music industry
Slide 42: Substantial Headroom for Subscriber Penetration Around the Globe
Substantial Headroom for Subscriber Penetration Around the Globe Higher Lower adoption adoption Source: IFPI, World Bank, UMG
Slide 43: ~220M Additional Subscribers in the Consideration Set
Our Research Indicates There Are ~220M Additional Subscribers Already in the Consideration Set Established ~75M markets Today’s subscriber ~220M consideration set High-potential ~145M markets Consumers interested in a music subscription and willing to pay current price Source: UMG
Slide 44: Expanding Adoption of Streaming Provides Headroom for Growth
Expanding Adoption of Streaming Provides Significant Headroom for Growth US penetration by usage (2023) 70% Opportunity to introduce to 5% on-demand subscription Parallel funnels 23% Opportunity to convert to paid subscription 61% of US weekly audiobook listeners currently don’t have a 42% music sub
Slide 45: Opportunity to Convert Non-Subscribers Across Demographics
Opportunity to Convert Non-Subscribers Across All Demographics US penetration by usage by age (2023) Satellite Radio Ad-Funded Streaming Paid Subscribers 90% 89% 4% 86% 5% 5% 80% 20% 20% 8% 25% 31% 55% 6% 25% 66% 64% 56% 41% 24% 13-24 25-34 35-44 45-54 55+ Source: UMG
Slide 46: Subscriber Growth Will Continue as Young Users Age
Subscriber Growth in Established Markets Will Continue as Young Users Age and Retain Streaming Behavior A Adoption increases as B Organic increase in penetration as users age up younger cohorts enter and carry on their behaviors the market US paid subscription penetration by age 5 YRS Today ~13M und
Slide 47: Development of a Super-Premium Tier
Development of a Super-Premium Tier Represents Significant Opportunity Meaningful proportion of paid Various levers: Age profile of those interested and subscribers interested in an fandom-centric and functional willing to pay for enhanced features enhanced offer Features of highest appeal Early acc
Slide 48: Market Outlook & Innovation: Michael Nash
Market Outlook & Innovation Michael Nash EVP, Chief Digital Officer
Slide 49: UMG's Innovation Promotes Industry Growth and Development
UMG’s Innovation Promotes Industry Growth and Development Cornerstone partnership for launch of Landmark partnership to develop Launch partner for the YouTube Music subscription service Dolby Atmos YouTube Music AI Incubator First music company to commercially Expanded livestream agreements Exclusiv
Slide 50: Propelling Market Through Artist-Centric Initiatives
Propelling Market Through Artist-Centric Initiatives Artist-Centric Phase 1: Model Innovation Artist-Centric Phase 2: Product Innovation Collaborative development Embedding artist-centric and implementation principles across of artist-centric models services landscape Super-premium tier Super VIP ti
Slide 51: SVOD Market Development Supports Music Subscription Opportunity
SVOD Market Development Supports Opportunity for Music Subscription Growth, Monetization and Innovation SVOD has already surpassed SVOD household monetization SVOD evolution demonstrates 1B individual subscribers is >4x that of music x innovation potential x Avg. US monthly household subscription sp
Slide 52: Ad-Supported Revenues Fortified by Social & Video
Ad-Supported Revenues Fortified by Social & Video Complement Subscription Balanced growth across Complementary revenue stream ad-funded audio and Key drivers of growth social & video UMG ad-supported revenue (1H24) • Secular migration of advertising spend from Audio analog to digital channels • Sign
Slide 53: Streaming 2.0: Next Era of Streaming Growth
Streaming 2.0: Next Era of Streaming Growth Streaming 1.0 Streaming 2.0 Achieving scale Maximizing customer value Simple compelling proposition Segmented customer propositions Volume over value Artist-Centric principles Scale digital monetization Broader and deeper monetization Established market fo
Slide 54: Rapidly Expanding Superfan Monetization
Rapidly Expanding Superfan Monetization by Developing Innovative New Products and Experiences for Fans Physical Premium Live Digital Collectibles Merchandise Experiences
Slide 55: Monetizing Superfans by Delivering Personalized Experiences
Monetizing Superfans by Delivering Personalized Experiences Rolling Stones Virtual Store Zedd x Roblox Beat Galaxy Exclusive virtual merchandise Game featuring lead single “Lucky” Source: UMG, Roblox
Slide 56: Music Powers an Expanding Ecosystem
Music Powers an Expanding Ecosystem Social Media Health and Wellness Gaming
Slide 57: Amplifying and Protecting Our Artists on Social Media
Amplifying and Protecting Our Artists on Social Media Renewal of landmark Broadened scope to Significant Gen AI agreement pioneered incorporate WhatsApp safeguards in 2017 Multi-dimensional agreement Development and Strategic collaboration on AI with enhanced monetization deployment of artist-centri
Slide 58: Embracing Responsible AI to Advance Innovation
Embracing Health and wellness Gen AI content, attribution and Responsible AI soundscapes Social music creation compensation solutions to Advance Innovation • Enhancing artists’ ability to experiment and boost creativity • Defending artistry and right to fair compensation Voice-to-voice, Principles f
Slide 59: Patented AI-Enabled Technologies to Predict Virality
Patented Three AI-Enabled Technologies to Predict Virality and Enhance Our Marketing Capabilities 1st Identifies efficiency of a marketing Patent opportunity using AI Multiple patents granted or pending for digital 2nd Analyzes and predicts likelihood of distribution, stem-based Patent audience enga
Slide 60: Five Big Shifts Driving Streaming 2.0
We’re Streaming 1.0: Achieving Scale Streaming 2.0: Maximizing Customer Value Driving Five Big Merchandise for Fans Superfan Collectibles and Experiences Shifts Establishing Scaling and Monetizing D2C Infrastructure D2C Channel Engaging Direct, Personalized Fans Relationships with Fans Building the
Slide 61: Agenda
Agenda Sir Lucian Grainge CBE Company Introduction & Preview of the Day Boyd Muir, Gabi Lopes & Michael Nash Market Outlook & Innovation Jody Gerson Universal Music Publishing Group Monte Lipman & John Janick US Recorded Music Labels Frank Briegmann Central Europe Recorded Music Adam Granite High-Po
Slide 62: Universal Music Publishing Group
Universal Music Publishing Group Jody Gerson Chairman & Chief Executive Officer Marc Cimino Chief Operating Officer JW Beekman Chief Financial Officer
Slide 63: UMPG Is a Global Leader in Music Publishing
UMPG Is a 9 of the 3 of the 11 of the Global Leader in Top 10 Spotify Global Top 5 Billboard Hot 100 Top 15 Spotify Artists are Music Albums of 2023 Songwriters of 2023 UMPG songwriters* Publishing 48 Offices in 40 850+ Total employees ~5M Owned and countries providing North America ~370 administere
Slide 64: UMPG Represents a World-Class Catalog
UMPG Represents a World-Class Catalog Filled With Recognizable and Enduring Songs Like a Rolling Stone West Side Story I Want to Hold Your Liv Livin’ On A Prayer Hand Sweet Home Alabama Don’t Worry Be Happy Blowin’ in the Wind Pump Up The Jam I Will Survive Piano Man All I Want for Christmas Staying
Slide 65: We Innovate and Diversify How Songs Generate Revenue
We Innovate and Diversify How Songs Generate Revenue 1971 1991 2001 2023 35x “Tiny Dancer” revenue breakdown 3.5x 1x Mechanicals Mechanicals Mechanicals Performance Performance Performance Audio Streaming Video Streaming Synch Downloads Digital Lyrics Print Print Other Digital Synch Note: Historical
Slide 66: UMPG Maximizes Revenue Across Many Rights Categories
UMPG Maximizes Revenue Across Many Different Rights Categories Digital Public Synch Mechanical Performance Licensing Streaming Radio / TV Film Vinyl Broadcast SVOD Hospitality Commercials CDs Social Concerts Gaming Lyrics Media
Slide 67: Our Songs Are Everywhere, Our People Are Everywhere
Our Songs Are Everywhere, Our People Are Everywhere UMPG office Sweden-Catalog Germany-Catalog Sweden “Dancing Queen” “Rock You Like A Hurricane” UK-Catalog “Barbie World” ABBA Scorpions US “Sweet Dreams (Are Nicki Minaj & “Anti-Hero” Made Of This)” Ice Spice Taylor Swift Eurythmics Japan UK Germany
Slide 68: UMPG Songwriters Signed to UMG Labels
UMPG Songwriters Signed to UMG Labels Taylor Swift Post Malone Ariana Grande Eminem Tupac Justin Bieber Metallica Shania Twain The Weeknd Sabrina Drake Maroon 5 ABBA Elton John J Balvin Bee Gees Guns N’ Roses Sting Carpenter Lil Baby Bon Jovi Billie Eilish Ice Spice Neil Diamond Mumford & Sons Carin
Slide 69: UMPG Songwriters Signed to Non-UMG Labels
UMPG Songwriters Signed to Non-UMG Labels Megan Thee Adele Coldplay Harry Styles H.E.R. Jack White Alicia Keys Fred again.. Alejandro Sanz Stallion Justin Steve Lacy Baby Keem Van Halen Mariah Carey A$AP Rocky ROSALÍA Linkin Park Idris Elba Timberlake Elvis Presley SZA Billy Joel Bob Dylan Bad Bunny
Slide 70: UMPG Songwriters / Producers Contribute to Global Hits
UMPG Songwriters / Producers Contribute to Global Hits Bernie Taupin Louis Bell Metro Boomin Mark Ronson Nicholas Britell Blake Slatkin Nija Charles Kid Harpoon Daytrip Steve Mac Melanie Fontana Aaron Dessner Finneas Michael Uzowuru Hit-Boy Benny Blanco Omer Fedi Jack Antonoff
Slide 71: We Invest in the Songwriters and Markets of the Future
We Invest in the Songwriters and Markets of the Future “Inside UMPG’s Unlikely K-Pop Global K-Pop Hit Factory” Camp We help songwriters create UMPG Nashville x Bridging the gap between American iconic songs Mexico Writers’ country music and regional Mexican through Camp music curated Writers’ Camps
Slide 72: UMPG Creates Value for Our Songwriters and Partners
UMPG Creates Value for Our Songwriters and Partners Deep industry Best-in-class Innovative tech relationships services and data Creative partnerships Premier creative, sync Cutting-edge technology throughout the global and administration and services music community teams around the world Direct par
Slide 73: Expanding Our IP
EXPANDING OUR IP Tony Award-Winner Emmy Award-Winner Emmy Award-Nominated Emmy Award-Nominated
Slide 74: We Generate High Top and Bottom-Line Growth
We Generate High Top and Bottom-Line Growth UMPG Commercial Film & TV Production Operating Music Studios Music Leverage and Growth Drivers Subscription, Public Performance Advertising, Film and Economies of Diversified portfolio of verticals, rights Streaming, Public and SVOD TV clients types and ge
Slide 75: REPUBLIC Corps
REPUBLIC Corps Monte Lipman Founder & Chairman, REPUBLIC Avery Lipman Founder & Vice Chairman, REPUBLIC Jim Roppo President & Chief Operating Officer, REPUBLIC Corps
Slide 76: Interscope Capitol Labels Group
Interscope Capitol Labels Group John Janick Chairman & Chief Executive Officer Steve Berman Vice Chairman Michelle An President & Head of Creative Strategy
Slide 77: Central Europe Recorded Music
Central Europe Recorded Music Frank Briegmann Chairman & Chief Executive Officer
Slide 78: UMG Is a Leader in Central Europe
UMG Is a Leader in Central Europe With Strong Local Repertoire and 85% #1 35% Interconnected Spotify Top 100 represented by Leading position across Central Local repertoire revenue share Teams majors over the last 3 years Europe EUROPEAN! for UMG Central Europe Note: Leading position based on physic
Slide 79: An Integrated Team of Local Market Experts
An Integrated Team of Local Market Experts, Collaborating to Support the Top Artists Across Central Europe Our roster spans 33 countries in Central Europe Sweden Germany Regional Synergies Helene Fischer Luciano Shirin David ABBA Benjamin Veronica Ingrosso Maggio Operational • D2C regional center of
Slide 80: Excel at Catering to Diverse Local Demand
Excel at Catering to Diverse Local Demand Locally-Oriented Markets International-First Markets Case Study: Germany Case Study: Switzerland Top 100 artists on #1 Top 100 artists on #1 Spotify (2023) Leading Position Spotify (2023) Leading Position • Held all Top 10 album chart spots in • #1 Album of
Slide 81: Combining Local Knowledge and Repertoire With Scale
Combining Deep Local Knowledge and Leading Local Repertoire With Scale to Build Local and Global Superstars #1 Billie Eilish (USA) Global Artists #1 album in 15+ Central European markets Superfan event and revival of “Billie spot” in Berlin Live radio on air album premiere Sfera Ebbasta (Italy) Sele
Slide 82: Case Study: Germany Billie Eilish Spot and Fan Event
Case Study: Germany Billie Eilish “Spot” and Fan Event Lead to Always-On Activation Billie Eilish at her spot – a “temple” for Exclusive fan event via D2C 50M+ impressions through superfans built in 2019 campaign in Berlin invited creators Event promoted on nationwide TV and Flagship interview and Q
Slide 83: Enhancing the Artist-Superfan Relationship Through Innovation
Enhancing the Artist-Superfan Relationship Through Innovation ABBA is one of UMG’s Our partnership extends Voyage is a most legendary artists well beyond music first-of-its-kind project ~400M albums sold worldwide 25+ year partnership spanning recorded Unique virtual concert format in a music and pu
Slide 84: Continuing to Drive Growth Through Superfan Products and Experiences
Continuing to Drive Growth Through Superfan Products and Experiences Voyage helped fuel a 500%+ increase in streams over 5 years Avg. Daily Spotify Streams 64% of listeners below age 34, 55% of overall Comeback Comeback Voyage Show Call ABBA Rumors Announcement Opening Campaign growth coming from th
Slide 85: Building an Owned Audience to Expand Our Business
Building an Owned Audience to Expand Our Business Lean-forward consumption CRM activities to engage D2C activities strengthen through owned audiences with superfans business model Owned playlist brands and social media Brand and artist campaigns key to Superfan monetization with presence generate ow
Slide 86: Well-Positioned to Continue Driving Growth in the Region
Well-Positioned to Continue Driving Growth in the Region Local high-performer Overall #1 with a strong and growing local frontline Culturally diverse Thriving on working with a diverse artist and fan base Innovative Diversifying through new formats and owned audiences
Slide 87: High-Potential Markets
High-Potential Markets Adam Granite EVP, Market Development
Slide 88: High-Potential Markets Represent a Significant Opportunity for UMG
High-Potential Markets Represent a Significant Opportunity for UMG High-potential markets represent The music industry in these China and India have had ~85% of the global population markets is growing quickly differentially higher growth High-potential markets High-potential markets Global ranking
Slide 89: High-Potential Markets: Greater China
High-Potential Markets Timothy Xu Chairman & Chief Executive Officer, Greater China
Slide 90: China: Significant Runway for Penetration and ARPU Growth
China: Significant Runway for Further Penetration and ARPU Growth China is the largest paid subscriber ARPU has been increasing through Opportunity to further increase market, with significant headroom product innovation ARPU via pricing tiers UMG and China subscription Tencent renewal; ARPU Tencent
Slide 91: High-Potential Markets: India & South Asia
High-Potential Markets Devraj Sanyal Chairman & Chief Executive Officer, India & South Asia
Slide 92: India: Large Market with Immense Growth Potential
India: Large Market with Immense Growth Potential Market potential Meaningful ad-supported Longer-term subscription growth opportunity #1 1.4B by population total population $200M+ revenue from ad-supported India 2023 1% penetration audio in 2023 #2 >1T by volume annual streams 2.5X #1 464B ad-suppo
Slide 93: Repeatable, Successful Model to Scale Quickly
Repeatable, Successful Local Build best-in-class local Model to Scale A&R teams A&R team to develop local repertoire into global success Quickly in High-Potential Markets Distribution Capture value from the through large independent sector Virgin Music through label services Gain scale in attractive
Slide 94: UMG In-Market A&R Teams Have Local Expertise
UMG In-Market A&R Teams Have Local Expertise to Sign and Develop Talent Greater China India SEA Middle East & Africa Eason Chan Anuv Jain Zack Tabudlo Rema • Hong Kong • Singapore • Taiwan • Vietnam Mavin Records • Beijing • Thailand • Shanghai • Indonesia • Shenzhen • Malaysia • Philippines
Slide 95: Expanding Presence in High-Potential Markets With Attractive Financials
Expanding Presence in High-Potential Markets With Attractive Financials High growth and attractive margins Example markets: Since 2015 – 8x Revenue Growth, 25x EBIT Growth, 50%+ of ~15-35% Local Top 50 Chart Indonesia Revenue CAGR (’21-’23) in high-potential markets 50% market share increase since 2
Slide 96: Music Is a Global Business
Music Is a K-Pop Global Business +90.4B total on-demand global streams from the top 100 K-Pop artists Globalization of music is expanding the TAM for UMG Latin Turning Local Indie artists and labels view UMG + 19.4B on-demand audio streams Artists Into as the best possible partner to achieve global
Slide 97: Deploy Model and Playbook Across High-Potential Markets
Deploy Model and Playbook Across an Increasing Number of High-Potential Markets Key High-Potential Investments and Partnerships Organic A&R Distribution M&A Aggressively TF Entertainment JVR Music invest in (China) (China) Oriental Star Music (South Asia) TM Ventures (India) high-potential markets M
Slide 98: Virgin Music
Virgin Music Nat Pastor Co-Chief Executive Officer JT Myers Co-Chief Executive Officer
Slide 99: Our Mission: Support Creative Entrepreneurs to Achieve Global Success
HYBE Clairo Records Dirty Hit Records Total Pleasure TXT Clairo Beabadoobee St. Vincent Sofi Tukker LLC Socios Music SM Entertainment Disparate / Virgin Music Sofi Tukker Carin Leon AESPA Zaho de Sagazan Our Mission: Support Creative Entrepreneurs to SALXCO UAM Sumerian Records Bad Omens Achieve Glo
Slide 100: What Is Independent?
What Is “Independent”? Entrepreneurial labels… …and the companies that support them
Slide 101: Independents and Majors Are Complementary Segments
Independents and Majors Are Complementary Segments That Have Both Participated in Dramatic Industry Growth Global recorded music revenues (’21-’23) Majors Independents CAGR ~7% CAGR ~11% 2021 2023 2021 2023 Source: MIDiA
Slide 102: Virgin Music Is a Leading Provider of Independent Services
Virgin Music Is a Leading Provider of Independent Services, Enabling UMG to Participate in Growing Sector Fully Independent Independent Aggregators / Digital Labels Services Distributors • Small scale / niche focus • Premium services (e.g., marketing, financing, promotion, international, royalty • I
Slide 103: Independent Services Is the Largest Segment of the Global Independent Sector
Independent Services Is the Largest Segment of the Global Independent Sector… Share of global streaming revenue (1H24) Virgin Music’s core markets Majors Independent services Fully independent labels Aggregators / digital distributors Note: Majors are UMG, Sony, Warner (excluding The Orchard, Virgin
Slide 104: Higher Representation in High-Potential Markets
…And Has Higher Representation in High-Potential Markets Established markets High-potential markets streaming revenue (1H24) streaming revenue (1H24) Virgin Music’s core markets Virgin Music’s core markets Majors Independent services Fully independent labels Aggregators / digital distributors Note:
Slide 105: Virgin Music Brings Valuable Capabilities and Economies of Scale
Virgin Music Brings Valuable Capabilities and Economies of Scale to Independents – Beyond Just Distribution Basic Distribution Value-Add Services Digital Sales & Marketing Financing Distribution Commercial Strategy Marketing Physical Catalog TV & Film Digital Marketing & Distribution Marketing Synch
Slide 106: Attractive, Low-Risk Returns by Providing Services to Independent Labels
Virgin Music Generates Attractive, Low-Risk Returns by Providing Services to Established Independent Labels Majority of both traditional frontline and independent services deals generate attractive risk-adjusted returns Typical Virgin Music deal structures Distribution of artist / label deal returns
Slide 107: Why Independents Choose Virgin Music
Why Independents Choose Virgin Music Standalone global Allows independent sector to benefit from scale and resources of infrastructure world’s largest music company Run by music Better understanding of the needs of the independent sector entrepreneurs We are a world-class services organization desig
Slide 108: Strategic Importance to UMG
Strategic Importance to UMG Capital-light way to Profitably accelerate growth Pipeline to participate in in high-potential entrepreneurial $10B TAM markets with a talent large independent sector
Slide 109: Virgin Music Provides Best-in-Class Services to Creative Entrepreneurs
Virgin Music Mavin Records Provides Best-in-Class Context Activity Services to • Well-regarded label in critical • Financed and collaborated on a global Rema Creative high-potential market, Nigeria campaign, starting with hit single “Calm Down” • Created a new global superstar, supported by Virgin E
Slide 110: Financial Outlook
Financial Outlook Boyd Muir EVP, President of Operations & Chief Financial Officer
Slide 111: UMG Has Achieved Strong Revenue Growth
UMG Has Achieved Strong Revenue Growth Revenue (€M, ’21-’23) Drivers of Revenue ~14% CAGR 11,108 10,340 • Industry-leading frontline business and the 8,504 world’s largest music catalog • Acceleration of superfan businesses • Expanded growth of our ecosystem partners • Continued growth of our publis
Slide 112: Industry-Leading Frontline Business Fuels the Best Catalog
Industry-Leading Frontline Business Fuels the Industry’s Best and Most Iconic Catalog UMG recorded music digital and physical revenue (2023) Recorded Music Frontline 38% 62% >3.2 Million Catalog Recordings ~15% UMG global catalog revenue CAGR (’21-’23) Note: Historical financials and growth CAGRs ar
Slide 113: Strong Streaming Growth Anchors Revenue and Earnings Growth
Strong Streaming Growth Anchors Revenue and Earnings Growth UMG revenue (2023) Downloads & Other Ad-Supported License & Paid Subscription Streaming Physical Merch Publishing Streaming Other Growth balanced Ad-supported revenues ~€4.3B ~€1.4B across both fortified by social & subscriber volume video
Slide 114: Increasingly Diverse Set of Growing Revenue Streams
Increasingly Diverse Set of Growing Revenue Streams UMG revenue (2023) Superfan business Downloads & Other Paid Subscription Streaming Ad-supported Physical Merch License & Publishing Streaming Other Source: UMG ~€1.4B ~€0.7B ~€1.2B ~€2.0B
Slide 115: Superfans Driving a Physical Music Collectibles Business
Superfans Driving a Physical Music Collectibles Business… Growth primarily driven by premium vinyl Growth drivers UMG physical revenue (€M, ’21-’23) • Development of innovative physical products and ~11% CAGR premium vinyl catered to 1,380 collectors and superfans 1,207 1,121 • Resurgence in vinyl p
Slide 116: Fueling a Premium Merchandise Business
… and Fueling a Premium Merchandise Business Growth driven by touring and D2C Growth drivers UMG merchandise revenue (€M, ’21-’23) ~39% CAGR • Innovative new products 706 driving demand for premium, 618 customized merchandise 363 ~10-25% • Increased opportunity for brand collaborations Merchandise g
Slide 117: Building a Scaled D2C Capability
Building a Scaled D2C Capability Sustained strong growth in D2C sales Growth drivers Growth from loyal customers and UMG D2C revenue (€M, ’21-’23) high-spend owned audiences ~33% CAGR • Growing global footprint of 548 ~54% D2C customers are repeat purchasers* D2C stores • Scaling supply chain 360 in
Slide 118: Growing License & Other Revenues
Growing “License & Other” Revenues License & other covers a broad range of innovative products Growth drivers Global reach UMG license & other revenue (€M, ’21-’23) • Music continues to drive Pokémon 25th engagement across a broad ~14% CAGR Anniversary ecosystem of partners 6.5B impressions 1,174 1,
Slide 119: UMG Has Achieved Strong Adjusted EBITDA Growth
UMG Has Achieved Strong Adjusted EBITDA Growth Adjusted EBITDA (€M, ’21-’23) Drivers of Adjusted EBITDA ~15% CAGR 2,369 2,135 • Operating leverage from increasing scale: 1,788 – Corporate overhead – Business unit operations – Sales and marketing • Organizational redesign efficiencies 2021 2022 2023
Slide 120: Generating Significant Free Cash Flow
Generating Significant Free Cash Flow Free cash flow before investment activities (€M, ’21-’23) 1,704 1,606 1,029 2021 2022 2023 Adj. EBITDA conversion 57.6% 75.2% 71.9% Note: Historical financials are as reported Source: UMG
Slide 121: Driving Long-Term Returns for Investors
Driving Long-Term Returns for Investors Organic investment Strategic M&A Return capital to shareholders in the business Artist and songwriter signings & development Continued investment in high-quality roster High-potential markets M&A of local labels and catalogs €2.6B Dividends paid to shareholder
Slide 122: Continued High Growth in Revenue and Adjusted EBITDA
Continued High Growth in Revenue and Adjusted EBITDA Mid-term CAGR through 2028 • Scaling superfan business Total revenue growth 7%+ • Penetrating high-potential markets • Reinvestment in the business • Continued subscriber growth Subscription revenue growth 8-10% • Improved monetization from price
Slide 123: Summary of Investment Highlights
Summary of Investment Highlights Driving innovation and expanding TAM with long runway for high growth Powering the next Unlocking superfan Fueling an Attractive era of recurring monetization expanding opportunities for streaming growth through innovative ecosystem of music expansion – high- (Stream
Slide 124: Closing
Closing Sir Lucian Grainge CBE Chairman & Chief Executive Officer
Slide 125: Streaming is a quantum leap forward in music access and monetization
Fact #1 Streaming is a quantum leap forward in music access and monetization Fact #2 Superfandom will accelerate music industry economics Fact #3 Music is Universal
Slide 126: Universal Music Group
4 a UNIVERSAL NES UNIVERSAL MUSIC GROUP
Universal Music Group — Investor Day (September 2024) on 6ix