French online music streaming platform Deezer has pledged to turn a profit by 2025, with losses shrinking by 8.8 million euros ($8.5 million) in the first half.
That’s according to the company’s half-year results, for the six-month period ending June 30, 2022, released Thursday, September 22.
In the first half of the year, the company lost 300,000 subscribers as it failed to retain and attract users outside of its home market. The loss was also driven by the company’s exit from the Russian market at the end of the first quarter.
Spotify, by comparison, added 6 million net Premium subscribers in the second quarter, ending the first half of 2022 with 188 million subscribers, compared to 9.4 million for Deezer.
Despite the loss in user numbers, Deezer managed to collect €219.4 million in revenue in the first half, up 12.1% from a year ago. He attributed the growth to price increases he had rolled out, as well as a change in the company’s geographic mix.
Although the company’s losses continued to rise, its net loss in the first half decreased by 8.8 million euros to 51.9 million euros from 60.7 million euros a year ago. .
Spotify’s rival, in its first-half results released on September 22, said its operating losses were €52.6 million, compared to €61.1 million in the first half of the year. last year. In the most recent period, it recorded one-time expenses related to its IPO.
Deezer debuted on Euronext in July, receiving a lukewarm response from investors.
However, Deezer remains optimistic about its potential to generate profits over the next three years, as it doubles down on its new B2C/B2B strategy of deepening its focus on large, attractive markets via a so-called “first-go partnership”. -to- market model”.
“Deezer’s new strategy delivers better profitability and double-digit growth. This was possible thanks to strong subscriber growth in France, increased ARPU in international markets thanks to our new orientation and cost discipline. »
Jeronimo Folgueira, Deezer
The company recently unveiled plans to expand into Germany by partnering with local broadcaster RTL, which was the same route it took when it launched in Brazil in 2013 via partnerships with TIM, Globo and Mercado Libre.
“Deezer’s new strategy delivers better profitability and double-digit growth. This has been possible thanks to strong subscriber growth in France, increased ARPU in international markets thanks to our new orientation and cost discipline,” said Deezer CEO Jeronimo. Folgueira.
Folgueira says that by focusing on large, attractive markets and entering new markets with a partnership-driven model, “we are confident that we can capture a fair share of the booming streaming market and continue to improve our profitability. to reach equilibrium by 2025”.
Deezer seeks to focus on product innovation and brand differentiation in its aim to attract more users globally.
France remains the stronghold of Deezer. The company’s revenue in this market increased 11.1% year-on-year to €132.4 million, driven by a 10.7% increase in its number of B2C subscribers. In the rest of the world, Deezer’s revenue climbed 13.6% in the first half to 87 million euros, which the company attributes to buoyant B2B sales, thanks to its existing partnerships and transactions. B2B latest in Brazil and Europe.
“We are confident that we can capture a fair share of the booming streaming market and continue to improve our profitability to break even by 2025.”
Jeronimo Folgueira, Deezer
Deezer ended the first half of 2022 with 9.4 million subscribers worldwide, down 2.9% from the previous year.
It comes as the jump in its French subscribers offsets the drop in its subscriber base in the rest of the world.
“In the rest of the world, Deezer’s new strategy has led to a significant reduction in unprofitable spend in non-core long markets, which therefore has an impact on new B2C subscriber acquisition,” the company said. .
Looking ahead, Deezer expects to record a 14% increase in revenue for 2022 to €455 million, as it anticipates a sharp increase in revenue in the second half due to the gradual ramp-up of the partnership RTL and the incremental impact of price increases implemented throughout the year. .
The company did not provide guidance on net profit or loss for the full year.The music industry around the world