Photo Credit: UMG
Universal Music Group (UMG) has posted so-so financials for Q2 2026, including modest publishing growth and a double-digit merch-revenue slide. Meanwhile, the major has reupped with Pandora, sold over $460 million worth of Spotify stock, and disclosed plans to put new releases behind a paywall in India.
As was also the case in Q1, with the Downtown buyout now in the books, those financials cover several angles – among them straight year-over-year (YoY) shifts, changes in constant currency (CC), and changes in CC without contributions from Downtown.
And with CEO Lucian Grainge having committed to providing “greater insight into the ways we have evaluated investments in our business,” the Q2 earnings call is heavier on details about UMG’s catalog plays and other acquisitions.
In general, then, the second-quarter results appear solid enough when factoring for Downtown’s contributions but less positive when accounting solely for core UMG operations.
“(T)here are aspects of our quarterly results that we’re pleased with, and other areas that we’re not satisfied with and already at work to improve,” CFO Matt Ellis summed up.
All told, UMG identified revenue of €3.29 billion (currently $3.79 billion) for April, May, and June 2026 – up 10.5% YoY and 6.4% YoY in CC excluding Downtown.
As usual, recorded music made up the lion’s share of the sum, $2.91 billion/€2.52 billion (up 13.1% YoY and 8.7% YoY in CC excluding Downtown).
Also as usual, paid streaming accounted for the majority of this revenue at $1.58 billion/€1.37 billion (up 14.3% YoY and 6.7% YoY in CC excluding Downtown), against $449 million/€389 million from ad-supported listening (up 8.7% YoY and just 1.7% YoY in CC excluding Downtown).
Of course, the 1.7% uptick leaves something to be desired, especially since Spotify loosened its free tier restrictions in the U.S. nearly one year ago. Enter the initially mentioned decision to place all new streaming releases behind a paywall in India for 72 hours – a decision that higher-ups framed as a key stop on the road to enabling monetization resembling that in China.
Does the move double as a step towards making new projects available solely to paid subscribers across all markets? Time will tell, though Grainge during the earnings call noted that he’d “not been happy with some of the monetization” and emphasized related discussions “with several of the major partners.”
Rounding out the recorded side, physical including vinyl generated $394 million/€342 million for UMG on the quarter, up 10.3% YoY and 15.6% YoY in CC excluding Downtown, with $437 million/€379 million for licensing and other (up 30.7% YoY and 32.7% YoY in CC excluding Downtown).
Publishing results were rockier: $710 million/€616 million in revenue, up 8.1% YoY and 2.7% YoY in CC excluding Downtown. Dips in sync ($67 million/€58 million total) and to a lesser extent other ($16 million/€14 million) were offset by gains in digital ($452 million/€392 million) and performance ($142 million/€123 million).
“And within music publishing digital revenue, ad-supported streaming faces the same pressures we are seeing in the recorded music business,” Ellis added. “As a result, we expect music publishing to be a mid-single-digit growth business rather than high-single-digit for the immediate future.”
Next, merch revenue fell 13% YoY to $193 million/€167 million, and execs attributed the decrease to the timing of tours and product releases. For 2026’s opening half, operating profit slipped by almost 1% YoY (in CC and CC excluding Downtown) to $1.04 billion/€901 million.
Closing on other noteworthy takeaways, UMG confirmed inking a new licensing agreement with Pandora, which Grainge described as “a top-10 partner.”
The major also acknowledged $437 million/€379 million in proceeds from H1 2026 Spotify stock sales totaling closer to $464 million/€403 million; Ellis reiterated that Universal Music’s “share buybacks will ultimately be primarily funded by the sale of a portion of our Spotify shares.”
Finally, we’ve heard plenty about Spotify’s upcoming gen AI offerings, on which all the majors, Believe, and Merlin are partnering. But we’ve heard far less about the status of opt-in discussions with actual artists.
According to Grainge, nine months and change after Spotify announced the partnerships, these talks are still very much unfolding.
“We have weekly meetings with 20, 25 people focusing on exciting and bringing in as many artists into this opt-in – we’ll respect what they want to do, but it’s our job as well as the platform’s job to show what the products are and to delight them and to get them excited so that we can have as big an offering as possible,” Grainge said.
Leave a Reply