Update 1 - Universal Music stock surges as subscription user growth exceeds expectations

Added a chart showing the stock's performance over time; supplemented with background information, performance details, and comments from the CFO and analysts.

Jerome Terroy

Reuters, October 30 - On Friday, Universal Music Group (UMG.AS) shares surged after the world's largest music company reported stronger-than-expected third-quarter subscription revenue growth and said that pressures on its market share had eased compared to the first half of the year.

Previously, after Universal Music Group (whose labels include artists such as Taylor Swift and BTS) reported a slowdown in second-quarter growth, investors had been watching for signs that its growth momentum could rebound.

The stock jumped as much as 15%, leading the European benchmark STOXX 600 Index .STOXX, but following a plunge of a quarter previously (link), was still trading below July levels.

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At constant exchange rates, recorded music subscription revenue rose 9.5% (excluding the impact from the recent Downtown acquisition), beating analysts' expectations for an 8.2% increase as per ING's pre-earnings report.

Universal Music Group (UMG) said that higher wholesale prices and continued steady growth in subscriber numbers drove the performance, while CFO Matt Ellis noted that subscription revenue growth accelerated during the quarter.

Before UMG's results, Spotify SPOT.N reported (link) ongoing growth in its premium subscription business and forecast new subscriber additions would exceed expectations; Alphabet GOOGL.O said that YouTube's subscription revenue was now growing faster than its advertising business.

Analysts at JPMorgan said in a report: "Universal Music Group may need to deliver a few more quarters of results to convince investors, but the third quarter performance represents a marked improvement."

(To facilitate non-native speakers, Reuters has automatically translated its report into several other languages. As automated translations may contain errors or lack necessary context, Reuters does not guarantee the accuracy of the automated translation, which is provided for readers' convenience only. Reuters accepts no liability for any damage or loss caused by the use of automated translation functions.)