Revenue at French music streaming company Deezer rose 11.0% (13.0% in constant currency) to 134.0 million euros ($147.3 million) in the third quarter, the company said on Wednesday.
This was slightly slower than the 15% growth rate in the second quarter and first trimester but in view of the 7.4% revenue growth the company posted in calendar 2023.
Partnerships accounted for most of the quarter's improvement with a 21% increase to 41.5 million euros ($45.6 million). Deezer provides music streaming services for companies such as Germany's RTL and Argentinian e-commerce company Mercado Libre. Through partnerships, Deezer offers its branded service to the likes of DAZN, a sports streaming platform, and Mexican mobile operator WIM, whose customers get a 20% discount on Deezer Premium.
Subscriber growth was helped by the conversion of “the first cohort of MeLi+ subscribers from trial accounts to premium accounts with higher margins,” the CEO said Alexis Lanternier during Thursday's earnings call. Also, Lanternier added, the Mercado Libre partnership, which provides 12-month trials, has produced results “higher than our initial expectations.”
Revenue from France was 78.5 million ($86.3 million) and 58.6% of total revenue, up from 59.4% in the prior period. Rest of the World grossed €55.5 million ($61 million). The “other” category was 6.7 million euros ($7.4 million), up 63.8%, partly due to new verticals such as its wellness app, Zen.
Growth in France and contraction in the rest of the world is part of the plan, the CFO said Carl de Place. “The strategy has been to improve profitability and move towards positive profitability for Deezer, which has made us more selective in how we invest, in terms of marketing and making sure we're investing in markets where we can see that the performance of The investment is positive for this. So that's why we're growing in France and the rest of the world is declining.”
Direct subscribers account for the majority of Deezer's business, but grew at a slower pace of 4% to 85.8 million euros ($94.3 million). The number of direct subscribers increased by 4.1% to 9.9 million. 5.2 million of these came from Deezer's home market of France, while the rest of the world produced 1.8 million subscribers, up from 2.0 million in the previous period. Deezer's subscriber base took a hit as the company removed 400,000 “inactive family accounts”, but the company explained that the move had no impact on revenue and benefited its gross margin.
Despite the quarter's positive momentum, the company chose to maintain its guidance from the previous quarter. Deezer projects revenue growth of 10% in 2024 and expects adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) to improve to a loss of 10 million euros ($10.9 million) and plans to have positive free cash flow.
Deezer was among the first music streaming platforms to raise prices in 2022 and did so again in 2023. There will be “potential for price increases” as Deezer continues to “upgrade the experience to add value to the user,” said de Place.
Following the release of third-quarter earnings after the market closed on Wednesday, Deezer's share price was essentially flat, down just 0.4% to 1.345 euros ($1.46) on Thursday. Year to date, Deezer's share price is down 36% from 2,095 euros ($2.27) per share.
Deezer Q3 Financials:
- Revenue: up 11% to 134 million euros ($147.3 million)
- Total subscribers: up 4.1% to 9.9 million
- Direct subscribers: down 1.4% to 5.2 million
- Partnership subscribers: up 11% to 4.7 million
- Average direct subscriber revenue per user (ARPU): up 5.8% to €5.40 ($5.90)
- Partner ARPU: down 4.7% to €2.80 ($3.10)
from our partners at https://www.billboard.com/pro/deezer-earnings-revenue-q3-2024/
