France-based music streaming service Deezer has published its financial results for the third quarter of 2023 (three months ending September 30).
The company’s consolidated revenues, which includes revenues from its ‘Direct’ and ‘Partnerships’ segments, totaled €120.7 million (USD $131.36m) in Q3 2023, up 5.5% year over year at constant currency (see below).
Deezer’s total number of subscribers during the quarter reached 9.9 million as of the end of September, compared with 9.4 million in September 2022, representing a 4.9% YoY growth, or 500,000 versus Q3 last year (see below).
On a quarter-over-quarter basis, Deezer added 600,000 subscribers in Q3 (up from 9.3 million subscribers at the end of Q2).
Deezer largely attributed the rise in its revenue to “the execution of the strategy of the group, with the ramp-up of the new Partnerships (including RTL+, Sonos and Mercado Libre), and continued Direct subscriber growth in France.”
“I’m very proud of what we have achieved in Q3 2023. 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 Deezer CEO Jeronimo Folgueira.
Breaking down its revenue streams, Deezer reports that its ‘Direct’ or B2C revenues amounted to €82.5 million in Q3 2023, up 4.1% at constant currency. The company attributed this to the continued expansion of the Group’s subscriber base in France.
Within the French market, Deezer’s total direct subscribers rose 7.3% YoY to 3.6 million. The figure, however, was unchanged from the previous quarter. Outside France, Deezer’s subscriber number was also flat on a quarter-over-quarter basis at 2 million, and down 10.6% from a year earlier.
The company’s revenue through Partnerships or B2B (via customers who have subscribed through a bundle deal with a third-party partner) grew 12% YoY at constant currency to €34.2 million.
“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.”
Jeronimo Folgueira, Deezer
This was driven by an 11.8% annual jump in subscribers via Partnerships to 4.3 million in Q3 from 3.8 million. On a quarter-over-quarter basis, the number also climbed from 3.7 million in Q2.
“This performance reflects the success of the first few weeks of the Meli+ offering, exceeding our initial expectations, as well as the gradual build-up of the RTL partnership, with the launch of the Multimedia App (including Video and Music) at the end of Q3 2023,” Deezer said.
The company also attributed the growth to the initial contribution of the Sonos partnership launched in Q2 2023.
Deezer’s average revenue per user (ARPU) climbed for both its Direct and Partnerships segments ahead of a new wave of price increases recently implemented with impact starting in Q4 2023.
The company’s ARPU from its Direct segment edged up 3.4% YoY to €4.9, which Deezer says was “driven by an improved geo mix and reflects the end of the impact of the first wave of price increases.”
ARPU from Partnerships jumped 10.6% YoY to €2.9 in Q3.
Deezer started adjusting prices in several markets including France, the UK, Spain, Italy and the Netherlands from September 21. The company said the adjustment aims to “better recognize the value of music streaming and to ensure the continuous improvement of product and fan experiences.”
Since the announcement, Deezer said it has seen “minimal churn impact” on its subscriber base.
Elsewhere, other revenue, which consists of advertising and “ancillary” revenue, amounted to €4.1 million in Q3 2023, down 5.3% compared to Q3 2022 at constant currency. The segment was affected by an “unfavorable comparison basis” and the weak performance of Driift, Deezer said.
“We once again lead an important change in music streaming with the introduction of the new Artist Centric model which will help create a healthier ecosystem and better reward artists and music, while enhancing fan experience.”
Jeronimo Folgueira, Deezer
Breaking down its revenue by geography, Deezer reveals that in France, its Direct and Partnerships revenue combined totaled €71.7 million in Q3 2023, up 3% from Q3 2022.
In the Rest of World, Deezer generated revenues of €49 million in Q3 2023 up 9.2% YoY at constant currency.
In its Q3 results, Deezer also highlighted the company’s new “artist-centric model,” which it recently introduced with Universal Music Group.
“We once again lead an important change in music streaming with the introduction of the new Artist Centric model which will help create a healthier ecosystem and better reward artists and music, while enhancing fan experience. And finally, we have successfully renewed the majority of our contracts with key content providers, with improved terms ahead of time,” Folgueira said.
The company further revealed that “around half of Deezer streams are already running on the new model.”
Other companies that recently jumped on board the new model include France-headquartered indie music company Wagram Music and French collecting agency SACEM.
All references to YoY percentages in this story, whether stated as such or not, are in constant currency. All EUR-USD conversions made at the average rate of the relevant period according to the European Central Bank
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