believe
Page: 3
LONDON — French music company Believe’s recent investments in Europe, Asia Pacific and Africa helped boost digital sales across its key markets and drive overall revenues up 22% from January through March, despite a slowdown in ad-funded streaming revenue.
The company reported Thursday (April 27) that revenues grew 22.2% to 198.6 million euros ($218.9 million) compared to the prior year’s quarter. The Paris-headquartered company’s premium solutions business — which includes label services, marketing, distribution, promotions and sync — rose 23% year-on-year to 186 million euros ($205 million), while its automated solutions, which includes the TuneCore distribution platform, increased 11.2% to 12.7 million euros ($14 million).
Digital revenue also grew by 22.2% during the quarter, with non-digital sales up 21.8%. Believe didn’t provide financial figures for either market segment, nor an indication of overall net profit or loss for the quarter. The company’s shares, traded on France’s Euronext, fell 2.41% on Thursday to close at 9.70 euros ($10.70).
The company said ad-funded streaming revenue slowed to single digit growth at the start of the year — in line with the challenging global advertising market — but didn’t report financial values or the percentage increase.
Non-digital revenue benefitted from merchandising, branding and live activities in France and India, as well as a film project in Turkey, which Believe said collectively offset the fall in physical sales, most notably in Germany.
Growth of Believe’s core digital business, which focuses on markets and music genres where artist promotion and marketing are predominantly online, was driven by the global rise in paid music steaming and the company’s expanding international portfolio of artists and labels, CEO and founder Denis Ladegaillerie said during Thursday’s earnings call.
Recent investments include partnerships with Filipino label Viva Music and Artists Group (VMAG), India-based imprints Think Music and Panorama Music, French pop label Structure and Germany-based Madizin Music. Last month, Believe acquired U.K.-based publisher Sentric from Switzerland-based Utopia Music in a €47 million ($51 million) deal that marks the French company’s first major entry into the publishing industry. (Sentric is expected to add about 3% to annual revenue growth, the company said Thursday.)
Notable Believe artist signings cited include Thai acts TimeThai and Reinizra, Belgian rapper Hamza and a new multi-album deal with French hip-hop star Jul.
Globally, revenue from Asia Pacific and Africa, which Believe groups together in its earnings report, grew 40% year-on-year to 56.1 million euros ($61.8 million), representing 28.2% of the company’s earnings, compared to 24.7% in the first quarter of 2022.
Within the Asia Pacific and Africa region, Believe said it recorded strong growth in India, Greater China and Southeast Asia, driven by its growing roster of local artists and labels, sustained investment in on-the-ground teams and the rollout of its full label and artist solutions offer in most markets.
Europe, excluding France and Germany, recorded a revenue increase of 21.1% to 54.4 million euros ($60 million), representing around 27% of total revenue.
Believe’s operations in the Americas rose 25.2% to 29.4 million euros ($32.4 million), representing 14.8% of all income, with the company saying that it had a particularly strong sales quarter in Latin America, most notably in Brazil.
The company’s two strongest individual markets, France and Germany, also grew by 13.2% to 32.1 million euros ($35.4 million) and 3.7% to 26.6 million euros ($29.3 million), respectively. France generates 16.2% of the company’s total revenue, while Believe said its performance in Germany was impacted by a “strong decline in physical sales linked to the lowered exposure to physical sales-heavy contracts.”
Over the past 12 months, Believe has made significant moves into the dance music sector with the launch of global label solutions brand b:electronic, which has signed deals with electronic music imprints Hospital Records and Rinse in the U.K.; Big Top Amsterdam, Blackout Music and Mixmash in the Netherlands; and Cercle and Roche Musique in France.
On Wednesday, the company announced that its TuneCore distribution platform had teamed up with Beatport, enabling TuneCore artists to distribute their songs on the world’s largest electronic music platform for working DJs.
“This great start to the year, marked by strong operational milestones and solid organic performance, shows that we are well on track to deliver another year of profitable growth,” Ladegaillerie says in a statement. Believe’s increasing global reach combined with a “successful investment strategy” was enabling “artists and labels to thrive in the digital ecosystem,” he says.
Ladegaillerie says the company is looking to make further acquisitions in the year ahead. Believe, which operates in more than 50 countries and has over 1,600 employees worldwide, says it expects to generate positive free cash flow for the full year and expects to record organic revenue growth of around 18% in 2023. The company says it will “monitor its investment pace and focus on improving efficiency” to reach an adjusted EBITDA (earnings before interest and taxes, depreciation and amortization) margin of 5% for fiscal year 2023.
Annual revenues for French music company Believe grew 31.8% to 760.8 million euros ($723.5 million) in 2022 as the company capitalized on investments and expansion in Europe, India and China. Digital sales accounted for 92% of Believe’s revenue while non-digital sources represented just 8%.
The company’s premium solutions segment grew 31.6% to 712.6 million euros ($677.7 million). Automated solutions, which includes the TuneCore distribution platform, improved 34.5% to 48.2 million euros ($45.8 million). TuneCore’s launch of an “unlimited pricing” plan in 2022, which allows artists to distribute an unlimited amount of music for a fixed annual fee, was “extremely successful and translated into an acceleration of growth,” CEO Denis Ladegaillerie said during Wednesday’s earnings call.
“We ended 2022 strongly delivering above our IPO commitments both operationally and financially for the second year in a row,” Ladegaillerie said in a statement. “In 2022, as we have done each year since 2005, we did what we said we would do … or better. We grew our market share; we improved profitability; we generated significant cash flow from our operations.” Free cash flow was 52 million euros ($49.5 million), an improvement from negative 30.7 million euros in 2021.
Believe also revealed that it invested in French pop label Structure, which it called “a new French pop label partnering with two successful producers, behind the recent success of several multi-platinum French pop artists.” It additionally noted an investment in Madizin Music, “a German well-known brand managed by two renowned producers, composers, and entrepreneurs,” as well as an exclusive partnership with Panorama Music, a new Indian label founded by a Bollywood film producer.
Digital revenues improved 34.7% organically as Believe served an additional 200,000 artists, to 1.3 million, either directly or through record labels. In France, Believe was the second-largest music company in digital local repertoire in 2022. Believe was the third-largest recorded music company in Germany “on local repertoire in the streaming market,” and the market’s second-largest company in hip-hop. The company pointed to the chart success of TuneCore artist Theo Junior and Milky Chance, who amassed 1.2 billion streams in 2022 on the strength of the track “Stolen Dance.”
In Asia, Believe has invested in India and Southeast Asia and now has about 80 people spread throughout five offices in China. “The level of activity remained sustained throughout the year as the digital monetization increased in Greater China, which led to the signings in Premium Solutions of more than 300 labels and above 250 artists directly,” the company said.
Looking forward to 2023, Believe expects to post organic revenue growth of 18%, improve its adjusted EBITDA margin to between 5% and 7% and again be cash flow positive. “In 2023, we will continue our profitable growth strategy: invest in our teams to grow market share, innovate in audience development products for our artists and labels, and further drive operational efficiencies through technology and scale to increase profitability,” said Ladegaillerie.