Investing.com — Shares in sank as much as 23% on Friday after the world’s largest music company reported second-quarter subscription revenue growth that fell sharply short of analyst expectations.
The shares fell to a record low of €14.88, their lowest level since the company listed in Amsterdam in September 2021, extending their year-to-date decline to about 33%.
Underlying subscription revenue, excluding the consolidation of Downtown Music Holdings, grew 6.7% in constant currency in the second quarter, missing a company-compiled consensus average of 9.3% by 260 basis points.
Including Downtown, subscription revenue rose to €1.37 billion, against a consensus average of €1.38 billion, a 1.2% miss, with constant-currency growth of 16.6% versus a consensus average of 18.4%, a 180-basis-point shortfall.
Total revenue of €3.29 billion was roughly in line with a consensus average of €3.30 billion, a 0.1% miss, while constant-currency revenue growth of 13.3% beat the consensus average of 13.0% by 30 basis points.
Revenue excluding Downtown was €3.09 billion, above a consensus average of €3.06 billion, a 1.0% beat, with constant-currency growth of 6.4% versus a consensus average of 5.9%, a 50-basis-point beat.
Adjusted EBITDA of €674 million missed a consensus average of €710 million by 5.1%, with margin of 20.5% against a consensus average of 21.5%, a 107-basis-point miss.
Excluding Downtown, adjusted EBITDA of €664 million missed a consensus average of €703 million by 5.5%, with margin of 21.5% versus a consensus average of 22.9%, a 143-basis-point miss.
Music Publishing revenue of €616 million missed a consensus average of €624 million by 1.3%, with constant-currency growth of 9.8% against a consensus average of 12.4%, a 260-basis-point miss.
Merchandising and Other revenue came in at €167 million, 16.9% below the €201 million consensus, as constant-currency sales fell 10.7% against expectations for 8.1% growth.
Morgan Stanley, which rates the stock “overweight” with a €31 price target and lists it as a “Top Pick,” tagged the results a “Meaningful shortfall” versus consensus and said the print “raised more questions than answers.”
The analysts said pricing was “the key area of focus” and noted management indicated market share improved as the quarter progressed, with a new Pandora agreement and Apple price increases expected to provide additional pricing benefit in the second half.
Adjusted EBITDA margin fell 2.2 percentage points to 20.5%, which the company attributed to the Downtown consolidation, pressure from revenue and repertoire mix in Recorded Music, and a loss in Merchandising.
Chairman and Chief Executive Sir Lucian Grainge said the company’s “unique combination of global reach, local expertise, artist development, vast audio and visual IP and entrepreneurial culture positions UMG to deliver long-term growth, sustained value creation, and creative and commercial success for our artists and songwriters.”
Net debt stood at €4.13 billion as of June 30, 2026, up from €2.39 billion at the end of 2025.
Jaiveer Shekhawat contributed to this report