French music streaming company Deezer added 500,000 subscribers in the third quarter, helping its revenues improve by 4.8% (5.5% at constant currency) to 120.7 million euros ($131.4 million), the company announced Thursday (Oct. 26).
“We are back to meaningful subscriber growth and secured top line acceleration starting in Q4 thanks to the implementation of a new wave of price increases, as well as the ongoing growth of new partnerships,” said CEO Jeronimo Folgueira in a statement.
A relatively small music subscription service, Deezer has recently taken an outsized position of influence with its partnership with Universal Music Group to revamp how it calculates artist royalties and addresses fraud. The “artist-centric” system was announced in September and will be implemented in France in the current quarter, to be followed by additional markets. Around half of Deezer’s streams are already running on the new model, the company said Thursday.
While direct subscriptions remained flat at 5.6 million, subscribers from partnerships grew from 3.8 million to 4.3 million. Deezer said it had “very strong initial subscriber growth” in Brazil and Mexico stemming from its partnership with Uruguay-based e-commerce giant Mercado Libre. The third quarter was also the first full quarter for which Deezer managed the Sonos Radio service. Deezer also powers the music streaming in RTL+, a multimedia platform launched by RTL Germany that has 4.5 million subscribers, according to RTL’s website.
Revenue from direct subscribers grew 3.3% to 71.7 million euros ($78 million). Revenue from partnerships increased 11.9% to 34.2 million euros ($37.2 million). Other revenue (advertising and ancillary revenue) decreased 16% to 4.1 million euros ($4.5 million).
France accounted for 59% of Deezer’s revenue in the quarter compared to 60% in the prior-year period. Direct subscribers in France increased by 200,000 while subscribers elsewhere decreased by an equal amount.
Direct subscribers are more lucrative than partnerships on a per-subscriber basis. Direct subscriber ARPU (average revenue per user) rose 3.4% to 4.9 euros ($5.33) while partnerships ARPU improved 10.6% to 2.9 euros ($3.16). Direct subscriber ARPU will get a further boost from a price increase instituted on Sept. 21 for all new subscribers in France, the United Kingdom, Spain and the Netherlands. For all current direct subscribers, the increase will progressively roll out starting on Oct. 24.
Deezer reiterated its previous guidance of 7% to 10% revenue growth for the full year and a “significant reduction” in adjusted earnings before interest, taxes, depreciation and amortization in the second half of the year.
Q3 2023 financial metrics:
Revenue grew 4.8% (5.5% at constant currency) to 120.7 million euros ($131.4 million).
Total subscribers grew 4.9% to 9.9 million.
Direct subscribers were flat at 5.6 million. Subscribers from partnerships grew by 500,000 to 4.3 million.
ARPU from direct subscribers grew 3.4% to 4.9 euros ($5.33).
ARPU from partnerships grew 10.6% to 2.9 euros ($3.16).