Music Earnings Q4 2021: Taking Stock of Spotify, WMG, SiriusXM & More Companies

Most public music companies continued hot streaks by turning in good or excellent numbers for the quarter ended Dec. 31, 2021. For the majority of them, however, it would have been difficult not to impress in 2021 compared to 2020. COVID-19 shut down the touring business for three quarters of 2020, hampered brick-and-mortar retail for much of the year and hammered advertising spending, which affected radio broadcasters as well as streaming services. By the end of 2021, businesses’s main problems were rising costs and labor shortages, not unemployment and unpredictable consumer spending.

Each component of the music ecosystem had encouraging results. The three majors — Universal Music Group, Sony’s music division and Warner Music Group — had combined revenues of about $25.4 billion, up 19.8% from 2020. Live Nation revenues more than tripled. SiriusXM revenues and self-pay subscribers both grew about 4% despite a sluggish auto sales market that drives consumer adoption. Radio broadcaster iHeartMedia came within 3% of 2019 revenue and improved 20.7% on 2020 revenue. Spotify, a vital cog for record labels’ and publishers’ growth, grew nearly 23%.

Looking forward, some companies’ growth and margins have raised some analysts’ concerns. Investors, too, are less than impressed if share price performances are any indication. But the signs are pointed in the right direction. These public companies have little exposure to the political crisis in Ukraine that is shutting off Russia to Western markets and disrupting energy prices throughout North America and Europe. And all companies are enjoying the tailwinds of falling COVID-19 infection rates, lifted mask mandates and a return to public life.

This list of financial results for the fourth quarter and 2021 will be updated as companies release earnings.

SPOTIFY

(NYSE: SPOT)

Billboard coverage

Summary: Spotify’s revenue grew nearly 23% in 2021 and slightly surpassed the high end of guidance. The company expects first quarter of 2022 revenue to be 2.6 billion euros ($2.94 billion), slightly lower than the recent quarter’s tally. Its forecast of 183 million subscribers for the first quarter would represent a three million-subscriber gain, on par with the prior-year period.

2021 overall results

• Revenue: $10.9 billion (9.67 billion euros), +22.7% y/y
• Operating income: $104 million (94 million euros)
• Net loss: $38 million (34 million euros)

Q4 overall results

• Revenue: $3 billion (2.69 billion euros), +24% y/y
• Operating loss: $7.8 million (7 million euros)
• Net loss: $43.5 million (39 million euros)

Q4 listener metrics

• Total listeners: 381 million million, +25 million q/q
• Subscribers: 180 million, 25 million y/y, +8 million q/q
• Ad-supported listeners: 236 million, +37 million y/y, +16 million q/q

Q4 ARPU

• $4.84 (4.34 euros), +3.6% y/y, +1.2% q/q

Analyst reactions

• Mark Zgutowicz of Rosenblatt Securities lowered the price target from $350 to $220: “While we view the lack of annual guidance and associated gross margin uncertainty negatively, we are encouraged by management’s confidence to add incremental investments (beyond core which is already seeing strong leverage) to better position SAN (Spotify Audience Network) for future growth.”
• Steven Cahall of Wells Fargo Securities lowed the price target from $200 to $153. “For 2022, we think margin progress is slowing (or moving backwards) on more content and advertising R&D, which pushes out the long-term margin targets. We think patience is thinning for a profitability inflection.”
• Lightshed Partners initiated coverage at a $260 price target. “With the podcast investment phase for Spotify starting to bear fruit in advertising and the overall ad-supported music business starting to scale meaningfully, margin improvement is set to drive rapid EBITDA growth; we have EBITDA growth still over 40% in 2024…By any metric, Spotify no longer looks expensive relative to the growth potential we see over the next few years, creating a compelling buying opportunity at these levels.”

From the earnings call

• CEO Daniel Ek on Joe Rogan controversy: “I think the important part here is we don’t change our policies based on one creator, nor do we change it based on any media cycles, or calls from anyone else. Our policies have been carefully written with the input from numbers of internal and external experts in this space.”
• CFO Paul Vogel on the Spotify Audience Network: “Across the platform, particularly in podcasting, we’re seeing consumption increasing. So all that is leading to more inventory. We’re seeing more publishers up double digits, quarter over quarter. So that’s allowing us to see more inventory…And because we’re monetizing, giving people good returns, they’re opting more inventory into the platform for us.”

From the 10-K filing

• We learned the price of two key acquisitions in 2021. Spotify acquired live streaming company Betty Labs for 57 million euros ($65 million) and Podz, a podcast discovery platform, for 45 million euros ($51 million).
• In 2021, value in Spotify’s stake in Chinese music streamer Tencent Music Entertainment fell from 2.3 billion euros ($2.6 billion) to 852 million euros ($974 million).

Guidance for Q1 2022

• 418 million monthly active users
• 183 subscribers
• Total revenue of 2.6 billion euros
• Gross margin of 25.0%

Recent developments

UNIVERSAL MUSIC GROUP

(AMS: UMG)

Billboard coverage

Summary: Big streaming gains and a rebound in merchandise sales. UMG became the first label/publisher to reach $10 billion revenue in a year (depending on which exchange rate is used since the company reports in euros, not U.S. dollars).

Q4 financial results

• Total revenue:  $2.98 billion, up 19% y/y (or 16% in constant currency)
• Recorded music revenue: $2.3 billion, up 15.2% y/y
  • Streaming + Subscriptions: $1.4 billion, up 18.7% y/y
  • Physical: $448 million, up 11.1% y/y
  • Licensing: $340 million, up 11.6% y/y
• Music publishing revenue: $482 million, up 31.6% y/y
• Merchandising revenue: $167 million, up 45.4% y/y
• EBITDA: $512 million, down 4.2% y/y
• Operating income: $1.58 billion, up 14.6% y/y

2021 financial results

• Total revenue:  $10.12 billion, up 14.4% y/y (or 17.0% in constant currency)
• Recorded music revenue: $8.12 billion, up 14.3% y/y
  • Streaming + Subscriptions: $5.33 billion, up 16.9% y/y
  • Physical: $1.33 billion, up 18.6% y/y
  • Licensing: $1.07 billion, up 15.5% y/y
• Music publishing revenue: $1.59 billion, up 12.6% y/y
• Merchandising revenue: $432.2 million, up 24.3% y/y
• EBITDA: $2.01 billion, up 13.4% y/y
• Operating income: $1.58 billion, up 14.6% y/y

Analyst comment

• Julian Roche of Barclays lowered price target from 21.25 euros to 21.00 euros: “We leave our forecasts more or less unchanged. Our Underweight thesis is not a short-term call. We see some risks to the investment story (more money flowing to artists, new competitors) that a universally bullish investor base might not fully appreciate and valuation is rich, in our view, at 2.3% eFCF yield in 2022E (looks better on EV/EBITDA but cash flow matters more).”

Recent developments

SONY MUSIC

(NYSE, Nasdaq for corporate parent: SONY)

Billboard coverage

Summary: Revenues for Sony Music Entertainment, Sony Music Publishing and Sony Music Entertainment (Japan) grew 11.7% in the third fiscal quarter ended Dec. 31. Excluding the visual media and platform segment, revenue grew 26% to about $2 billion.

Fiscal Q3 overall results

• Revenue: $2.6 billion, +11.7% y/y
• Operating income: $502 million, -8.1% y/y

Fiscal Q3 recorded music

• Revenue: $1.62 billion, +29.3% y/y
• Streaming revenue: $1.05 billion, +35.7% y/y
• Physical: $209 million, -5.9% y/y
• Downloads: $61 million, +4.3% y/y
• Other (including synchronization): $214 million, +97.4% y/y

Fiscal Q3 publishing

• Revenue: $456 million, +15.3 y/y
• Streaming revenue: $229 million, +26.9%

Fiscal Q1-Q3 

• Revenue: $7.5 billion, +22.3% y/y
• Operating income: $1.5 billion, up 8.1% y/y

Recent developments

WARNER MUSIC GROUP

(Nasdaq: WMG)

Billboard coverage

Summary: Streaming gains lived up to expectations while artist services and expanded rights nearly doubled after artists returned to touring. New segments such as social, gaming and fitness is worth $325 million on an annualized basis for WMG’s labels and publisher, up from $310 million in the previous quarter.

Fiscal Q1 overall results

• Revenue: $1.6 billion, +20.9% y/y
• Adjusted EBITDA: $389 million, +31% y/y
• Net income: $188 million, +90% y/y

Fiscal Q1 recorded music

• Revenue: $1.39 billion, +30.9% y/y
• Streaming: $836 million, +20.8% y/y
• Downloads: $34 million, unchanged
• Physical: $195 million, +65% y/y
• Licensing: $89 million, +32.8% y/y
• Artist services & expanded rights: $232 million, +96.6% y/y

Fiscal Q1 publishing

• Revenue: $456 million, +15.3 y/y
• Performance: $38 million, +27% y/y
• Mechanical: $14 million, +27% y/y
• Sync: $42 million, +27% y/y

Earnings call highlights

• CEO Stephen Cooper: streaming services “will continue to enjoy very nice growth for the foreseeable future.”
• Cooper on Web3: “We think there are going to be more opportunities than we can even imagine.”

Recent developments

LIVE NATION

(NYSE: LYV)

Billboard coverage

Summary: Annual results improved mightily from a nearly moribund 2020 touring season. The concert pipeline appears strong well into 2023 and management insisted no-show rates are at or near pre-pandemic levels.

Q4 financial results

• Total revenue: $2.7 billion, +$2.47 billion y/y
• Adjusted operating income: $160.3 million, +$405 million y/y
• Concerts revenue: $2.04 billion, +$1.87 billion y/y
• Ticketing revenue: $487.7 million, +477 million y/y
• Sponsorship & advertising revenue: $170.3 million, +262% y/y

2021 financial results

• Total revenue: $6.27 billion, +237% y/y
• Adjusted operating income: $323.9 million, +$1.34 billion y/y
• Concerts revenue: $4.72 billion, +3.3 billion y/y
• Ticketing revenue: $1.13 billion, +946 million y/y
• Sponsorship & advertising revenue: $411.9 million, +102% y/y

Concert and ticketing metrics

• Estimated events: 17,234, +112% y/y
• Estimated fans: 35.1 million, +215% y/y
• Estimated fee-bearing tickets: 131.7 million, +323% y/y

Misc. metrics

• Total cash and cash equivalents: $4.9 billion (includes $1.3 billion in ticketing client cash and $1.5 billion in free cash).
• Liquidity: $2.1 billion (includes $570 million of available debt capacity)
• Event-related deferred revenue: $2.3 billion, up 53% y/y
• Q4 transacted ticket gross transaction value: $6.6 billion, up 20% from Q4 2019.
• Year-to-date through mid-February ticket sales: 45 million, up 45% from the same period in 2019.

From the earnings call

• President and CFO Joe Berchtold: “I have in front of me a list of 40-some tours for 2023 that are either confirmed or in our pipeline. Normally, at this point…we’d have a list of five to ten.”
• Berchtold on inflation: “We don’t think it’s material to the business.”

SIRIUSXM

(Nasdaq: SIRI)

Summary

10-K filing

Q4 financial results

• Total revenue: $2.28 billion, +4.2% y/y
• SiriusXM revenue: $1.7 billion, +4.4% y/y
• Pandora revenue: $575 million, +3.6% y/y
• Operating income: $476 million, +$979 million y/y
• Adjusted EBITDA: $672 million, +1.8 y/y
• Net income: $318 million, +$995 million y/y

2021 financial results

• Total revenue: $8.7 billion, +8.2% y/y
• SiriusXM revenue: $6.62 billion, +4.3% y/y
• Pandora revenue: $2.07 billion, +22% y/y
• Operating income: $2.02 billion, +134.8% y/y
• Adjusted EBITDA: $2.78 billion, +7.6 y/y
• Net income: $1.31 billion, +10x y/y

Q4 listener metrics

• SiriusXM self-pay subscribers: 32 million, +3.7% y/y
• Pandora self-pay subscribers: 6.3 million, +0.7% y/y
• Pandora monthly active users: 52.3 million, -11.2% y/y

Q4 ARPU

• SiriusXM: $15.34, +7% y/y
• Pandora subscription: $6.70, +0.5% y/y

2022 Guidance

• SiriusXM self-pay net additions of about 500,000
• Total revenue of about $9.0 billion
• Adjusted EBITDA of about $2.8
• Free cash flow of approximately $1.55 billion

From the earnings call

• Jennifer Witz, CEO, on Pandora: “[A]dvertising growth will clearly become more challenged. We’ve been able to offset the declines in listener hours with significant improvements in monetization.”
• Witz: “On conversion rates, things have been pretty consistent. We’re in about the mid-30s on the new car side and kind of the low to mid-20s on the used car side…[W]e are focused on using 360L as a mechanism in the new car side to improve conversion because when we see people using these features, we do see improvements in conversion rates.”

Recent developments

IHEARTMEDIA

(Nasdaq: IHRT)

Earnings release, investor presentation

Q4 financial results

• Total revenue: $1.06 billion, +13.5% y/y (+17.1% excluding political revenue)
• Multiplatform group revenue: $762.3 million, +9.2% y/y
• Digital revenue ex. podcast: $176.6 million, +35.7%
• Podcast revenue: $96.6 million, +130.2%
• Adjusted EBITDA: $294.2 million, +10.8% y/y

2021 financial results

• Total revenue: $3.56 billion, +20.7% y/y (+25.1% excluding political revenue)
• Multiplatform group revenue: $2.5 billion, +12.8% y/y
• Digital revenue ex. podcast: $581.9 million, +56.1%
• Podcast revenue: $252.6 million, +148.4%
• Adjusted EBITDA: $811.1 million, +50.6% y/y

Misc. metrics

• Monthly podcast audience: 30.3 million
• Net debt: $5.39 billion, +1.7% y/y

2022 guidance

• January consolidated revenue: +18.3% y/y
• Q1 consolidated revenue: +17-19% y/y

CUMULUS MEDIA

(Nasdaq: CMLS)

Earnings release

Q4 financial results

• Total revenue: $252.3 million, +2.6% y/y
• Broadcast radio revenue: $193.1 million, -3.8% y/y
• Digital revenue: $35.0 million, +47.3%
• Other revenue: $24.1 million, +12.8%
• Adjusted EBITDA: $43.2 million, +9.3% y/y

2021 financial results

• Total revenue: $916.5 million, +12.3% y/y
• roadcast radio revenue: $790.2 million, +6.9% y/y
• Digital revenue: $126.9 million, +47.6%
• Other revenue: $79.4 million, +20%
• Adjusted EBITDA: $134.9 million, +66% y/y

RESERVOIR MEDIA

(Nasdaq: RSVR)

Billboard coverage

Fiscal Q3 overall results

• Revenue: $27.1 million, +26% y/y
• Operating income: $4 milllion, -18.7% y/y
• Net income: $2.4 million, no change
• Adjusted EBITDA: $10.2 million, +26% y/y

Fiscal Q3 segment results

• Recorded music: $8.1 million, +147% y/y
• Music publishing: $18.4 milllion, +4% y/y

Fiscal 2022 guidance

• Revenue: $103-105 million
• Adjusted EBITDA: $40-41 million

Recent developments

RYMAN HOSPITALITY

(NYSE: RHP)

8-K filing, 10-K filing

Q4 financial results

• Revenue: $377.4 million, +198.3% y/y
• Adjusted EBITDAre: $85.6 million, +1,391% y/y
• Entertainment segment: $54.2 million, +275.7% y/y
• Entertainment adjusted EBITDAre: $11.9 million, +378.3% y/y

2021 financial results

• Revenue: $939.4 million, +79.1% y/y
• Adjusted EBITDAre: $177.3 million, +$217.6 million y/y
• Entertainment segment: $152.8 million, +161.5% y/y
• Entertainment adjusted EBITDAre: $28.9 million, +218.4% y/y

From the annual report

• The purchase of Block 21, a mix-used entertainment property in Austin, TX, is expected to close in Q1 2022.
• An Ole Red location is planned to open in Las Vegas in 2023.

CLOUD VILLAGE

(HKSE: 9899)

Summary: The freshly minted public company — China’s second-largest music streamer behind Tencent Music Entertainment — spun off from NetEase and debuted on the Hong Kong stock exchange on Dec. 1, 2021. But the encouraging Q4 revenue growth has been overshadowed by a stunning 44% fall in the share price from a 205 HDK IPO price to 115 HKD on Feb. 24, the day of the quarter’s earnings release.

Earnings release

Q4 financial results

• Revenue: $296.5 million, +23.9% y/y
• Gross profit: $12.1 million
• Gross profit margin: 4.1%

2021 financial results

• Revenue: $1.1 billion, +42.9% y/y
• Gross profit: $22.4 million
• Gross profit margin: 2.0%

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