French music streamer Deezer expects that its partnerships with telecom and media companies will help drive growth in 2023 but slightly reduced its expectations for full-year revenue growth, the company announced Wednesday (Aug. 2) in its mid-year earnings report. Citing a more cautious approach to the build-up of its business-to-business partnerships and new verticals, Deezer pared its forecast for annual revenue growth for 2023 to a range of 7% to 10% from its previous expectation of more than 10%.
Despite the revisions, the company still expects revenue growth to accelerate in the second half of the year, mainly from direct subscriptions and partnerships with Latin American e-commerce platform Mercado Libre, digital audio company Sonos and German media company RTL. “Each of them will bring an incremental contribution” in the second half of 2023 and 2024, said deputy CEO/CFO Stéphane Rougeot during Wednesday’s earnings call.
The changed guidance likely sent shares of Deezer down 8.4% to 2.30 euros ($2.46) on Thursday, giving the company a market capitalization of 278 million euros ($298 million). The CAC 40, a composite of French stocks, declined just 0.7%. Year-to-date, Deezer’s share price has fallen 21.2%.
Revenue in the first half of 2023 increased 6.3% to 233.2 million euros ($250 million). The company lost 100,000 subscribers in the first half of 2023 but used an 8.3% improvement in average revenue per user (ARPU) to improve its top line and reduce its net loss to 38.4 million euros ($41 million) from 51.9 million euros ($56 million). ARPU was helped by Deezer’s decision in February 2022 to raise the price of its individual direct subscription by 10%, from 9.99 euros to 10.99 euros. No additional price increases are built into Deezer’s revenue growth expectations for 2023, said CEO Jeronimo Folgueira.
Deezer finished June with 9.3 million subscribers, down from 9.4 million at June 30, 2022. It gained 300,000 direct subscribers in France, which accounted for 39% of its 5.6 million subscribers, and lost 300,000 direct subscribers elsewhere in the world. The company also lost 100,000 subscribers through its partnerships. The loss of subscribers was more than offset by gains in ARPU, however. ARPU for direct subscribers rose 5% to 4.80 euros ($5.14) while ARPU for partnership subscribers jumped 15% to 2.80 euros ($3).
Deezer’s financial and other metrics for the first half of 2023:
- Revenue increased 6.3% to 233.2 million euros ($250 million)
- Adjusted EBITDA loss improved to 13.1 million euros ($14 million) from 24.6 million euros ($26 million)
- Net loss improved to 38.4 million euros ($41 million) from 51.9 million euros ($56 million)
- Net cash (cash and cash equivalents less financial debt) dropped 22% to 66.4 million euros ($71 million)
- Subscribers declined to 9.3 million from 9.4 million
- Average revenue per user improved 8.3% to 4.20 euros ($4.50)
