Universal Music Group's third-quarter revenue rose 11.7% at constant currency to 3.394 billion euros ($3.90 billion), the world's largest record company said Oct. 29, and two Asian acts sat near the top of its sales chart: Japanese band Mrs. Green Apple and K-pop group Stray Kids.

For investors in Asia, the quarter was a reminder that the region's fans still buy music in formats Western markets largely abandoned. UMG's physical revenue, mostly CDs and vinyl, rose 17.4% at constant currency, and the company named Japan alongside North America and Europe as a source of that growth. Stray Kids is managed in Seoul by JYP Entertainment, a label whose shares have been volatile this autumn after an unverified takeover claim.

UMG listed its top sellers for the three months to September as Mrs. Green Apple, Olivia Rodrigo, Stray Kids, Ariana Grande and The Beatles. The company did not break out revenue by artist or by country.

Universal Music Group's Q3 numbers

Much of the headline growth came from Downtown Music Holdings, which UMG's Virgin Music Group bought in February. Excluding Downtown, revenue grew 5.3% at constant currency, the company said. Downtown contributed 195 million euros in the quarter, according to Music Business Worldwide, slightly less than the 202 million euros it added in the second quarter.

Recorded music, the core business, brought in 2.559 billion euros, up 14.7%, or 7.4% without Downtown. Subscription streaming revenue rose 19.2% to 1.422 billion euros. Stripping out Downtown, subscription growth was 9.5%, which UMG credited to wholesale price increases and steady subscriber gains.

Physical sales reached 392 million euros. The 17.4% increase was the same with or without Downtown, so it reflected UMG's own catalog and new releases rather than the acquisition. Ad-supported streaming revenue rose 4.7% excluding Downtown, while downloads kept shrinking.

Adjusted EBITDA, a measure of operating profit, rose 9% at constant currency to 729 million euros. The margin slipped to 21.5% from 22% a year earlier, because Downtown runs at much thinner margins. Without it, the margin widened 0.4 percentage point to 22.4%. In recorded music alone, the margin excluding Downtown rose 1.2 points to 26.2%, which UMG attributed to lower spending on artists and repertoire relative to revenue, and tighter control of marketing and overhead.

Chief Financial Officer Matt Ellis said in the release that "subscription revenue growth accelerated" in the quarter.

The weaker spots were publishing and merchandise. Music publishing revenue rose 7.5%, or 1.5% excluding Downtown. Merchandising and other revenue fell 4.6%, which UMG blamed on lower touring income compared with a year earlier, when more big tours were on the road. License and other revenue in recorded music fell 2.8% excluding Downtown.

Shares rebound after a 30% slide

Investors welcomed the report. UMG shares closed up 7.9% at 17.09 euros on Euronext Amsterdam on Oct. 30, the biggest gain on the AEX index that day, Music Business Worldwide reported. They had risen as much as 14.9% during the session. Volume of 6.04 million shares was more than triple the prior day's.

The bounce came from a low base. As of the Oct. 29 close, the stock was down about 30% this year, including a fall of about 25% on July 31 after second-quarter results showed subscription growth slowing. That growth had eased to 6.7% in the second quarter from 7.9% in the first. The third-quarter figure of 9.5% beat the 8.2% analysts had expected, according to an ING note cited by Reuters and reported by Music Business Worldwide.

Even after Friday's rise, the shares trade well below the 30.40 euros a share that Pershing Square offered in an unsolicited proposal in May. UMG's board rejected that approach, which valued the company at about 55.8 billion euros, saying it materially undervalued the business.

Why Japan and K-pop matter to the major labels

The top-seller list shows how much the global majors now lean on Asian repertoire. Mrs. Green Apple is a Japanese act, and UMG named it first on a list that also included Olivia Rodrigo and The Beatles. UMG named Japan as one of three regions, with North America and Europe, behind its physical growth, which came across both new releases and catalog.

That matters for listed Asian music companies too. A K-pop group managed by a Seoul agency ranking among the top sellers of a Dutch-listed major shows how far Korean repertoire now travels through global distribution. The flip side is concentration: UMG's own results show touring income can drop sharply when fewer big acts are on the road, the same exposure Asian agencies face when a headline group pauses.

For the nine months to September, UMG's revenue rose 11.1% at constant currency, or 5.5% excluding Downtown. Adjusted EBITDA grew 4.8%, or 3.5% excluding Downtown.

Chairman and Chief Executive Lucian Grainge said UMG is "making UMG faster and more focused" so it can "operate more efficiently and drive sustained growth and long-term value."