Investing.com -- Shares in Universal Music Group jumped around 12% on Friday, a day after the world's biggest music label reported faster growth in paid-subscription revenue and said its cost-cutting drive was working, easing worries about slowing streaming growth.
The world's largest music label reported third-quarter revenue of €3.39 billion, up 12.3% year over year, or 11.7% in constant currency. Excluding Downtown, which UMG acquired in February, revenue increased 5.3% in constant currency.
Recorded Music revenue rose 14.7% in constant currency, or 7.4% excluding Downtown. Subscription revenue increased 19.2%, or 9.5% excluding the acquisition, supported by wholesale price increases and subscriber growth. Market share headwinds moderated compared with the first half of 2026.
Ad-supported streaming revenue grew 4.7% excluding Downtown, while physical sales increased 17.4% in constant currency.
Downloads and other digital revenue fell 15.4%, reflecting the continuing industry-wide shift away from the format.
Adjusted EBITDA rose 9% in constant currency to €729 million. Excluding Downtown, it increased 7%, while the adjusted EBITDA margin expanded 0.4 percentage points to 22.4%.
Recorded Music margin expansion and lower relative artist and repertoire expenses supported profitability, alongside tighter marketing and overhead costs.
Music Publishing revenue grew 7.5% in constant currency but only 1.5% excluding Downtown.
Adjusted EBITDA declined 3.5% in constant currency, or 4.3% excluding the acquisition, while its margin excluding Downtown fell 1.5 percentage points to 24.2%, reflecting a timing benefit to expenses in the year-earlier quarter.
Merchandising and Other revenue declined 4.6% in constant currency as touring income fell against a stronger year-earlier comparison that included more high-profile tours. Adjusted EBITDA fell 15.4% to €11 million.
Goldman Sachs maintained its "neutral" rating, raising its 12-month price target to €16 from €15.
The broker modestly increased its 2026 and subsequent revenue and adjusted EBITDA estimates by around 0% to 1%, citing stronger Recorded Music and Merchandising results and cost savings, partly offset by weaker Music Publishing growth and tougher comparisons in the fourth quarter.
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