Deezer ended Q3 2022 with 9.4 million subscribers, unchanged from the start of the period, while revenue growth in the third quarter gained momentum partly due to price hikes that the company implemented.
The France-based online music streaming platform had 5.6 million B2C subscribers as of the end of September and 3.8 million B2B subs, both unchanged from the end of June, according to the company’s Q3 revenue results released Thursday (October 27).
On a year-over-year basis in Q3, Deezer’s total subs fell 2.5% YoY from 9.7 million to 9.4 million (see below), weighed down by a 15.8% drop in B2C subscribers outside of France.
It follows the company’s new strategy of focusing on select key markets.
Deezer, which debuted on the Euronext Paris in July, has reduced its investments in non-core markets and refocused its efforts towards large attractive markets via a partnership-first go-to-market model.
It also exited the Russian market in the first quarter at the height of the Russia-Ukraine conflict, leading to the loss of 104,000 subscribers in that market alone.
Still, Deezer’s operations in its home country of France continue to buoy its business. B2C subs in France rose 9.5% YoY to 3.4 million subs as of the end of September.
“While the overall macroeconomic environment remains uncertain, marked by an acceleration of inflation, we have seen a strong resilience of our business in the first nine months of 2022.”
Said Deezer: “This sustained performance mainly reflected a higher family mix, continued acquisition funnel optimization, as well as improved churn rate, despite price increases.”
“In the rest of the world, the implementation of Deezer’s new strategy led to a significant reduction of unprofitable spend in non-core long tail markets, which therefore impacted the acquisition of new B2C subscribers in these markets.”
“In the rest of the world, the implementation of Deezer’s new strategy led to a significant reduction of unprofitable spend in non-core long tail markets, which therefore impacted the acquisition of new B2C subscribers in these markets,” the company said.
The strength of Deezer’s operations in its home market helped boost the company’s overall revenue by 14% YoY to €115.2 million ($116m) in Q3.
Consolidated revenue in the first nine months of the year jumped 13% YoY to €334.6 million ($336.94m), accelerating from the 12.1% expansion in the first half of the year when it lost 300,000 subs.
Deezer attributed the strength to double-digit growth across all segments and geographies. The company currently operates in France, Germany, the UK, Brazil and the US.
Deezer’s B2C revenue climbed 11.6%% YoY in Q3 to €79.8 million ($80.35m) on the back of increased level of activity that mainly resulted from a 14.8% jump in ARPU. ARPU climbed as a result of price increases and the company’s refocusing on select key markets, it said.
B2B revenue, meanwhile, rose 13.2% from a year earlier to €30.5 million ($30.7m), which the company attributed to a robust performance of recent partnerships with France’s SFR, Brazil’s Globo and Europe’s A1, and a 16.2% jump in ARPU.
Looking ahead, Deezer reaffirmed its target to achieve about €455 million in revenue in 2022, representing a 14% jump from the year-ago period.
“While the overall macroeconomic environment remains uncertain, marked by an acceleration of inflation, we have seen a strong resilience of our business in the first nine months of 2022, and we do not expect any significant negative effect on our activity or financials,” Deezer said.
The company has yet to disclose whether it generated a profit or incurred a loss in the third quarter of the year.
Last month, Deezer pledged to turn in a profit by 2025 after its losses narrowed by €8.8 million in the first half.
Deezer is “convinced we can capture a fair share of the booming streaming market and continue improving our profitability to reach breakeven by 2025,” Deezer CEO Jeronimo Folgueira said at the time.
The company also revealed during its investor day in London on October 4 that it expects revenue to reach €1 billion by 2025.
Deezer increased the price of its Premium plan from £9.99 to £11.99 in the UK in October 2021.
In the US, the price of a Premium Deezer subscription increased to $10.99 in February.
Price increases have also been seen from the likes of Apple Music and YouTube in recent weeks.
Apple Music now charges $10.99 for an individual Premium plan, while YouTube hiked the price of its Premium Family Plan by 28% to $22.99.
Rival Spotify still charges the classic $9.99 subscription fee for its Premium plan, but CEO Daniel Ek told investors last week that the company was considering raising prices following similar moves from its competitors.
All EUR-USD conversions in this report for Q3 2022 have been made as the average prevailing quarterly rate as identified by the European Central Bank.Music Business WorldwideMusic Business Worldwide