Ticker UMG NA Currency Trading

Name Universal Music Group NV Data Adjusted (If available) Summary Analysis Input Calculation Output Analysis

Summary Analysis
In Millions of EUR Dec 19 A Dec 20 A Dec 21 A Dec 22 A Dec 23 A Dec 24 A Dec 25 E Dec 26 E Dec 27 E Dec 28 E Dec 29 E Dec 30 E Trend
Revenue (Estimate Comparable) 7,159 7,432 8,504 10,340 11,108 11,834 12,346 13,293 14,194 15,195 16,211 17,555
% YoY Growth 0% 14% 22% 7% 7% 4% 8% 7% 7% 7% 8%
EBITDA 1,267 1,486 1,686 2,028 1,808 2,332 2,798 3,075 3,392 3,711 4,062 4,464
% Margin 18% 20% 20% 20% 16% 20% 23% 23% 24% 24% 25% 25%
Free Cash Flow 1,801 2,506 703 2,507 1,576 2,267 2,942 2,782 3,371 3,590 3,983 4,259
% Margin 25% 34% 8% 24% 14% 19% 24% 21% 24% 24% 25% 24%

Perpetuity Growth Method EBITDA Multiple Method

Current Price (EUR) 21.48 Current Price (EUR) 21.48
Consensus Price Target 29.25 Consensus Price Target 29.25
DCF Estimated Value per Share (EUR) 28.10 DCF Estimated Value per Share (EUR) 39.17
DCF Estimated Upside 31% DCF Estimated Upside 82%

Perpetuity Growth Terminal EBITDA Multiple

2.6% 3.1% 3.6% 4.1% 4.6% 19.4x 20.9x 22.4x 23.9x 25.4x
9.2% 29.10 31.11 33.48 36.31 39.76 9.2% 36.23 38.56 40.90 43.24 45.58
Discount 9.7% 26.90 28.59 30.57 32.90 35.68 Discount 9.7% 35.45 37.74 40.02 42.31 44.60
Rate 10.2% 24.99 26.44 28.10 30.04 32.33 Rate 10.2% 34.70 36.94 39.17 41.40 43.64
(WACC) 10.7% 23.32 24.57 25.99 27.63 29.53 (WACC) 10.7% 33.97 36.15 38.34 40.52 42.71
11.2% 21.84 22.93 24.15 25.55 27.16 11.2% 33.26 35.39 37.53 39.66 41.80
2.6% 3.1% 3.6% 4.1% 4.6% 19.4x 20.9x 22.4x 23.9x 25.4x
9.2% 35% 45% 56% 69% 85% 9.2% 69% 80% 90% 101% 112%
9.7% 25% 33% 42% 53% 66% 9.7% 65% 76% 86% 97% 108%
10.2% 16% 23% 31% 40% 51% 10.2% 62% 72% 82% 93% 103%
10.7% 9% 14% 21% 29% 37% 10.7% 58% 68% 78% 89% 99%
11.2% 2% 7% 12% 19% 26% 11.2% 55% 65% 75% 85% 95%

Input Calculation
Current Auto Input Selection
Input Peers Px Implied Tgt Implied Default
Choice On
Weighted Average Cost of Capital 8.5% 10.2% 10.2%
Perpetuity Growth Rate 1.0% 3.9% 3.6% 3.6% (Perpetuity Growth Method only)
Exit Enterprise Value / EBITDA 16.3x 10.5x 15.7x 22.4x 22.4x (EBITDA Multiple Method only)

In Millions of EUR Dec 19 A Dec 20 A Dec 21 A Dec 22 A Dec 23 A Dec 24 A Dec 25 E Dec 26 E Dec 27 E Dec 28 E Dec 29 E Dec 30 E Year 5
Revenue (Estimate Comparable) 7,159 7,432 8,504 10,340 11,108 11,834 12,346 13,293 14,194 15,195 16,211 17,555
Revenue (Adjusted) 7,159 7,432 8,504 10,340 11,108 11,834
% YoY Growth Close 14% 22% 7% 7% 4% 8% 7% 7% 7% 8%

Row # of choice 1 1 1 1 1 1
Click on a cell below to select assumption (selected cells are highlighted in blue)
BEst Consensus Revenue 4% 8% 7% 7% 7% 8%
5 Year Moving Trend 12% 11% 8% 6% 6% 6%
BEst Consensus EPS Long Term Growth 6% 6% 6% 6% 6% 6%

Input (%) 0% 0% 0% 0% 0% %
>> Input (EUR) - - - - - -

(-) Cost of Revenue 7,018 7,541 8,131 8,704 9,233 10,097

(-) Cost of Revenue (GAAP)
% of Revenue 0% 0% 0% 0% 0% 57% 57% 57% 57% 57% 58%
(=) Gross Profit 5,327 5,753 6,063 6,490 6,978 7,458
% Margin Close 0% 0% 0% 0% 0% 43% 43% 43% 43% 43% 42%

1 1 1 1 1 1
Click on a cell below to select assumption (selected cells are highlighted in blue)
BEst Consensus Gross Margin 43% 43% 43% 43% 43% 42%
Last Year's Gross Margin 0% 43% 43% 43% 43% 43%

<< Input (%) 0% 0% 0% 0% 0% 17%

Highlight estimates if… Less than Greater than

Gross Margin YoY Change -5% 5% 43% 0% -1% 0% 0% -1%
Number of analysts estimating Gross Margin 3 7 7 6 6 4 3

(-) Operating Expenses/Income 6,182 7,095 8,689 9,682 9,911 3,297 3,280 3,319 3,530 3,721 3,779
% of Revenue Close 83% 83% 84% 87% 84% 27% 25% 23% 23% 23% 22%

1 1 1 1 1 1
Click on a cell below to select assumption (selected cells are highlighted in blue)
BEst Consensus Implied Operating Expense as a % of Revenue 27% 25% 23% 23% 23% 22%
Last Year's Operating Expense as a % of Revenue 84% 27% 25% 23% 23% 23%

>> Input (%) 0% 0% 0% 0% 0% 0%

% YoY Growth 15% 22% 11% 2% -67% -1% 1% 6% 5% 2%

(=) Operating Income 1,065 1,250 1,409 1,651 1,426 1,923 2,030 2,473 2,743 2,961 3,257 3,678
% Margin 15% 17% 17% 16% 13% 16% 16% 19% 19% 19% 20% 21%
(-) Tax on Operating Income 203 418 281 128 460 816 464 562 618 721 778 856
% Tax Rate Close 17% 23% 24% 13% 27% 27% 23% 23% 23% 24% 24% 23%
 1 1 1 1 1 1
Click on a cell below to select assumption (selected cells are highlighted in blue)
5 Year Rolling Average Effective Tax Rate 23% 23% 23% 24% 24% 23%
Last Year's Effective Tax Rate 27% 23% 23% 23% 24% 24%

>> Input (%) Input Input Input Input Input Input

(=) NOPAT 862 832 1,128 1,523 966 1,107 1,567 1,910 2,125 2,240 2,478 2,822
% Margin 12% 11% 13% 15% 9% 9% 13% 14% 15% 15% 15% 16%
(+) Depreciation & Amortization 202 236 277 377 382 409 767 602 649 750 805 786
% of Revenue Close 3% 3% 3% 4% 3% 3% 6% 5% 5% 5% 5% 4%

1 1 1 1 1 1
Click on a cell below to select assumption (selected cells are highlighted in blue)
BEst Consensus Implied Depreciation & Amortization as a % of Revenue 6% 5% 5% 5% 5% 4%
Last Year's Depreciation & Amortization as a % of Revenue 3% 6% 5% 5% 5% 5%

>> Input (%) 0% 0% 0% 0% 0% 0%

% YoY Growth 17% 17% 36% 1% 7% 88% -22% 8% 16% 7% -2%

(-) Capital Expenditure 75 29 13 33 47 91 69 80 81 84 95 132
% of Revenue Close 1% 0% 0% 0% 0% 1% 1% 1% 1% 1% 1% 1%

1 1 1 1 1 1
Click on a cell below to select assumption (selected cells are highlighted in blue)
BEst Consensus Capital Expenditure 69 80 81 84 95 132
5 Year Rolling Average 43 51 64 74 81 82
Last Year's Capital Expenditure 91 69 80 81 84 95

>> Input (EUR) Input Input Input Input Input Input

% YoY Growth -61% -55% 154% 42% 94% -24% 16% 2% 3% 13% 39%
(-) Changes in Net Working Capital (798) (1,277) 653 (854) (310) (494) (611) (332) (644) (576) (647) (694)
% of Revenue Close -11% -17% 8% -8% -3% -4% -5% -2% -5% -4% -4% -4%

1 1 1 1 1 1
Click on a cell below to select assumption (selected cells are highlighted in blue)
5 Year Rolling Average -5% -2% -5% -4% -4% -4%

<< Input (%) Input Input Input Input Input Input

Highlight estimates if… Less than Greater than

Change in NWC as a % of Revenue YoY change -5% 5% -1% 2% -2% 1% 0% 0%
(+) Changes in Net Long Term Deferred Tax Liabilities 14 190 (36) (214) (35) 348 66 18 35 108 148 89
% of Revenue Close 0% 3% 0% -2% 0% 3% 1% 0% 0% 1% 1% 1%

1 1 1 1 1 1
Click on a cell below to select assumption (selected cells are highlighted in blue)
5 Year Rolling Average 1% 0% 0% 1% 1% 1%

>> Input (%) 0% 0% 0% 0% 0% 0%

(+) Other User Estimated Non-Cash Adjustments - - - - - -

% of Revenue Close 0% 0% 0% 0% 0% 0%

Input (EUR) - - - - - -

(=) Free Cash Flow 1,801 2,506 703 2,507 1,576 2,267 2,942 2,782 3,371 3,590 3,983 4,259 4,238
% Margin Close 25% 34% 8% 24% 14% 19% 24% 21% 24% 24% 25% 24%

Highlight estimates if… Less than Greater than

Free Cash Flow Margin YoY Change -5% 5% 5% -3% 3% 0% 1% 0%

% YoY Growth 39% -72% 256% -37% 44% 30% -5% 21% 6% 11% 7%

% of the Free Cash Flow to be discounted 7% 100% 100% 100% 100% 93%
Period for Discount Factor (Mid-Year Convention) 0.04 0.57 1.57 2.57 3.57 4.54
Discount Factor @ 10.2% WACC 1.00 0.95 0.86 0.78 0.71 0.64
Present Value of Free Cash Flow (5 Years) 217 2,632 2,894 2,797 2,818 2,541
EBITDA 1,267 1,486 1,686 2,028 1,808 2,332 2,798 3,075 3,392 3,711 4,062 4,464 4,434
% Margin Close 18% 20% 20% 20% 16% 20% 23% 23% 24% 24% 25% 25%

Highlight estimates if… Less than Greater than

EBITDA Margin YoY Change -5% 5% 3% 0% 1% 1% 1% 0%

% YoY Growth 17% 13% 20% -11% 29% 20% 10% 10% 9% 9% 10%

Output Analysis
Perpetuity Growth Method - Value per Share EBITDA Multiple Method - Value per Share
Free Cash Flow at Year 5 4,238 Terminal EBITDA at Year 5 4,434
WACC 10.2% WACC 10.2%
Perpetuity Growth Rate 3.6% Exit Enterprise Value / EBITDA 22.4x
Perpetuity Value at End of Year 5 66,374 Terminal Value at End of Year 5 99,320
 Present Value of Perpetuity (@ 10.2% WACC) 40,890 Present Value of Terminal Value (@ 10.2% WACC) 61,187
(+) Present Value of Free Cash Flows (@ 10.2% WACC) 13,899 (+) Present Value of Free Cash Flows (@ 10.2% WACC) 13,899
(=) Current Enterprise Value 54,789 (=) Current Enterprise Value 75,085.7

Short Term Debt 1,128 Short Term Debt 1,128

(+) Long Term Debt 2,607 (+) Long Term Debt 2,607
(-) Cash and Marketable Securities 525 (-) Cash and Marketable Securities 525
(-) Current Net Debt 3,210 (-) Current Net Debt 3,210
(-) Current Preferred and Minority Interest 30 (-) Current Preferred and Minority Interest 30
(=) Equity Value 51,549 (=) Equity Value 71,846

Shares outstanding 1,834 Shares outstanding 1,834

Estimated Value per Share (EUR) 28.10 Estimated Value per Share (EUR) 39.17
Current Price (EUR) 21.48 Current Price (EUR) 21.48
Estimated Upside 31% Estimated Upside 82%

Perpetuity Growth Method - Sensitivity Analysis EBITDA Multiple Method - Sensitivity Analysis

Enterprise Value in Millions of EUR Enterprise Value in Millions of EUR

Incremental change Perpetuity Growth Incremental change Terminal EBITDA Multiple
0.5% 1.5x 0.5%
2.6% 3.1% 3.6% 4.1% 4.6% 19.4x 20.9x 22.4x 23.9x 25.4x
9.2% 56,606 60,296 64,644 69,842 76,166 9.2% 69,685 73,974 78,263 82,552 86,841
Discount 9.7% 52,574 55,687 59,311 63,580 68,683 Discount 9.7% 68,269 72,461 76,653 80,845 85,037
Rate 10.2% 49,075 51,731 54,789 58,347 62,539 Rate 10.2% 66,890 70,988 75,086 79,184 83,281
(WACC) 10.7% 46,011 48,298 50,907 53,910 57,404 (WACC) 10.7% 65,547 69,553 73,559 77,565 81,571
11.2% 43,307 45,292 47,539 50,100 53,050 11.2% 64,239 68,156 72,072 75,989 79,906

Value in EUR Value in EUR

2.6% 3.1% 3.6% 4.1% 4.6% 19.4x 20.9x 22.4x 23.9x 25.4x
9.2% 29.10 31.11 33.48 36.31 39.76 9.2% 36.23 38.56 40.90 43.24 45.58
9.7% 26.90 28.59 30.57 32.90 35.68 9.7% 35.45 37.74 40.02 42.31 44.60
10.2% 24.99 26.44 28.10 30.04 32.33 10.2% 34.70 36.94 39.17 41.40 43.64
10.7% 23.32 24.57 25.99 27.63 29.53 10.7% 33.97 36.15 38.34 40.52 42.71
11.2% 21.84 22.93 24.15 25.55 27.16 11.2% 33.26 35.39 37.53 39.66 41.80

Upside Potential Upside Potential

2.6% 3.1% 3.6% 4.1% 4.6% 19.4x 20.9x 22.4x 23.9x 25.4x
9.2% 35% 45% 56% 69% 85% 9.2% 69% 80% 90% 101% 112%
9.7% 25% 33% 42% 53% 66% 9.7% 65% 76% 86% 97% 108%
10.2% 16% 23% 31% 40% 51% 10.2% 62% 72% 82% 93% 103%
10.7% 9% 14% 21% 29% 37% 10.7% 58% 68% 78% 89% 99%
11.2% 2% 7% 12% 19% 26% 11.2% 55% 65% 75% 85% 95%

Implied Exit EV / EBITDA Multiple Implied Perpetuity Growth

2.6% 3.1% 3.6% 4.1% 4.6% 19.4x 20.9x 22.4x 23.9x 25.4x
9.2% 14.82 16.11 17.63 19.45 21.66 9.2% 4.0% 4.4% 4.7% 5.0% 5.2%
9.7% 13.78 14.90 16.19 17.72 19.55 9.7% 4.5% 4.9% 5.2% 5.5% 5.7%
10.2% 12.88 13.85 14.97 16.27 17.80 10.2% 5.0% 5.4% 5.7% 5.9% 6.2%
10.7% 12.08 12.94 13.92 15.04 16.35 10.7% 5.5% 5.8% 6.1% 6.4% 6.7%
11.2% 11.38 12.14 13.00 13.98 15.11 11.2% 6.0% 6.3% 6.6% 6.9% 7.1%