Paris-headquartered music company Believe generated EUR €197.0 million in Q3 – a 36.9% YoY increase in revenues.
On an organic basis (at a like-for-like perimeter and constant exchange rate), that figure was up 37.6% YoY.
These impressive percentage rises have been fairly typical for Believe this year, despite macro-economic headwinds looming for the wider music and entertainment business (especially around ad-supported streaming services).
Case in point: in the first nine months of this year, Believe’s revenues were up 35.9% YoY – and 36.3% YoY on an organic basis – to €549.2 million.
Today (November 3), while announcing its latest figures, Believe also upped its full-year forecast… for the second quarter in a row.
The company says that it now expects its revenues in the 12 months to end of December this year to grow by at least 30% (it previously forecast 29%+).
If Believe achieves that forecast, its revenues this year will surpass €750 million for the first time in its history.
(In FY 2021, Believe posted €577.2m in annual revenue, up 30.7% YoY).
Believe is now also forecasting a slightly improved full-year EBITDA margin of approximately 4.5% – higher than prior expectations of repeating its 4% margin from 2021.
The slight rise in that margin prediction, says Believe, is down to the costs around its ‘Central Platform’ being better amortized.
However, the company says its focus remains on “accelerating investments” in technology and local markets, rather than fattening up its bottom line in the short-term. (Believe says it remains confident in ability to achieve its long-term target of a 15% adjusted EBITDA margin).
Believe also says that it now expects annual “positive and solid free cash flow” for FY 2022, a prediction that has been helped by an “annual installment” of approximately €20 million from one of its digital partners, via a deal renewed in Q3 this year.
Discussing Believe’s Q3 results today, Denis Ladegaillerie, the company’s founder and CEO, said: “Our Q3 performance has been again very strong, with market share gains across all our main countries on all key digital music services.
“Our unique model, built to serve artists and labels at all stages of their careers, is performing extremely well. With the increased penetration of streaming music in all markets, more and more music genres accelerate their digitalization.”
“Our unique model, built to serve artists and labels at all stages of their careers, is performing extremely well.”
Denis Ladegaillerie, Believe
He added: “As a digital-first music company, we are well positioned to pursue our profitable growth trajectory.
“Our expertise in maximizing audiences and monetization of labels and artists in the digital ecosystem unlocks new opportunities every day.”
Focus on Asia
Believe’s heavy investment in Asian markets continued to pay dividends in Q3 2022.
The French company saw 61.1% YoY revenue growth in Asia-Pacific (APAC) plus Africa in the quarter.
These two territories combined generated €52.3 million for the company in Q3 – almost as much as Believe generated in Europe, excluding France and Germany (see below).
Believe, which is on record as predicting that Asia will be the world’s biggest recorded music market over the next decade, continued its expansion in the territory in Q3.
During the quarter Believe launched Byond in Thailand, an artist services brand to develop and support hip-hop artists and music locally.
Byond has already successfully signed significant local acts including Saran – who has surpassed 1 billion streams across various platforms in 2022.
It also signed other local artists such as Zentyarb, K.Aglet, SD Thaitay, Z9, BlackHeart, DIEOUT, Mona V, Cyanide, T-BIGGEST, Pondering and Rap is Now.
Believe’s Q3 – in which ad-funded streaming kept growing
Believe has been one of the more vocal companies in the music business this year about the impact macro-economic factors (inflation, rising interest rates) will have on the digital ad market in the second half of 2022.
Despite this, in Q3, Believe reported growth in ad-funded streaming revenues. However, the company noted that growth in this area was “weaker compared to the previous quarters as expected”.
It added that its Q3 growth was “driven by continued growth in paid streaming, notably in emerging markets, and better monetization of ad-funded streaming services”.
For corporate reporting purposes, Believe breaks down its global operations into two divisions:
- (i) DIY distributor TuneCore (referred to as ‘Automated Solutions’ in its results), as well as
- (ii) the performance of its core premium label and artist services operation (referred to as ‘Premium Solutions’)
‘Premium Solutions’ revenues amounted to €184.4 million in Q3 2022, an increase of +37.7% YoY.
Believe said the success of ‘Premium Solutions’ stemmed from “our investment over the past 24 to 36 months to strengthen local capabilities and roll out more services in key countries”.
‘Automated Solutions’ (i.e. TuneCore) revenues reached €12.6 million and grew by+46.8% YoY. (These revenues are net revenues – from fees paid by artists/labels to use TuneCore. They do not include royalties collected, 100% of which are paid out to rightsholders.)
Believe said that TuneCore’s growth in Q3 mostly reflected “solid organic growth of +36.1% and a positive forex impact related to the dollar appreciation versus the euro”.
The company remains positive about the future of the digital music business, adding in its media release today: “The switch from ad-supported to paid streaming in emerging markets is progressing steadily.
The Group expects the music industry to continue to show resilience and that paid streaming will continue its global deployment.”Music Business Worldwide