Believe : Transcript (en anglais)

Full Year 2021

Earnings Presentation

Thursday, 17th March 2022

Believe Full Year 2021 Results Presentation

Thursday, 17th March 2022

FY21 Overachievement in Line with Believe's Profitable Growth

Strategy as Presented at the IPO

Denis Ladegaillerie

Founder and Chief Executive Officer, Believe

Good day everyone, I am Denis Ladegaillerie. I am very excited to present to you Believe's performance for 2021, and I would say I am even more excited about where we are today as a business and our favourable competitive positioning and our future growth prospects.

Key Achievements in Line with Believe's Profitable Growth Strategy Presented at the IPO

So, to start, what did we achieve in 2021? If you can go to the next slide, please. We focused on, essentially, overdelivering on the profitable growth strategy presented at the IPO in terms of growth, but also in terms of operating leverage.

Once again, in 2021, we proved our ability to drive profitable organic growth faster than the market.

Three elements contributed to faster growth:

• Strong attractivity for artists and labels. We have never signed so many artists and labels in our entire history than we did in 2021. The dynamics have been very strong all year long across all market segments, from entry level all of the way to top artists, and this in all geographies.
• Second main contributor to growth is improvability through digital innovation, technology, team training to deliver higher digital audience development and monetisation for our artists.
• Finally, the positioning, Believe's unique positioning, in the faster growing markets and the largest future digital markets that are now accelerating in Asia and in Europe has contributed to accelerated growth for us.

So very strong organic growth resulting from a very strong sales organisation and performance, and attractivity of the services.

Delivered high-quality M&A

To build on faster growth, second element at the core of the strategy we presented to investors at the time of IPO, high-quality M&A. We delivered four high-quality deals in 2021 in our two core geographies, Jo&Co and Play Two in France and Viva and Think Music in Asia, that have contributed and will be contributing to growth in 2022 and beyond.

Invested in future growth while demonstrating operating leverage

Second characteristic besides growth is we have, once again, demonstrated the operating leverage in our model while continuing to invest in future growth. I want to insist on the fact that these two elements have run in parallel. We have continued investing in future growth. We have invested in sales and marketing teams across all geographies and market segments to build future growth 2023/2024 and beyond. And we have continued to deliver digital and technological innovations through investment in our central platforms to create and, I would

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Believe Full Year 2021 Results Presentation

Thursday, 17th March 2022

say even accentuate competitive advantage in a number of areas. While continuing these investments, we have, nonetheless, increased operating leverage at EBITDA level by 230 basis points in the course of 2021.

Formalised and deploying Shaping Music for Good, Believe's CSR plan

Finally, the last core pillar of our 2021 strategy, as presented, was formalized and deployed Shaping Music for Good, which is our CSR plan, articulated, as you remember, around developing talent, cultivating talent, and we are building with respect, fairness and transparency and building for the long term.

Next slide, please.

Growth: Proved Ability to Drive Organic Growth Faster than the Market

Strong organic growth each quarter in 2021

On growth, as you can see, growth has been very strong throughout the year, including an acceleration in the last quarter of the year, in Q4, with over 32% organic growth in the last quarter of the year, driven by a strong performance geographically as well as by digital music services. Across the board, a very strong release schedule that has driven these results.

Driven by digital revenues

If you look at digital performance, digital revenue growth, which accounts for almost 91% of Believe's revenues, the growth was even stronger, almost at 36% in the last quarter. And we have seen these growth trends in Q4 hold on; similar growth trends holding on in January and February of this year.

Next slide, please.

Growth: Strong Attractivity for Artists and Labels with New Record of Local Signings

Signing/renewing top artists in all regions

That growth has been driven by a record number of new signings across all market segments. As you can see there, Believe has added, with TuneCore, over 150,000 new artists to its roster of music creators leveraging the service during the year, and we have signed and renewed top artists in almost all territories. Some of the examples that you see there in the slide are some very top artists across the territories; from Micro TDH in Brazil to Placebo in Germany. Most of these artists on this picture are artists that were previously signed to one of the traditional labels, which confirms the acceleration, I would say, of our ability to take share not only at entry level but also at mid-level, and more and more at the top level, all of them contributing to growth.

Case Study: Strengthened Our Leadership in the French New Releases Market

If you move on to the next slide, case study for France that is very illustrative of why there is no limit to the level of leadership that Believe that can attain in any country. At the very top in 2021, Believe overperformed two of the three traditional players in the Top 200 albums in the market, with a market share of 41 of the Top 200 albums, including three of the four most-streamed singles in France, the biggest video on YouTube and the biggest artist. That is the result of our growth strategy. Some of the artists, several of the artists, in the top 41 were artists that were signed on TuneCore two or three years ago. Many artists were artists

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Believe Full Year 2021 Results Presentation

Thursday, 17th March 2022

that were signed in the middle segment and that we have now grown to become Top 200 artists, and some of these artists are artists that were signed away from competitors.

So very strong organic contribution that is also further driven by our M&A strategy in France. As you will remember, we started to make an investment a few years ago, and now with Jo&Co, with Play Two, with two more acquisitions now driving additional market share. And that is allowing us to come into a leadership position in this market. We took France as an example as France is a top five global market. We could have taken many more markets where the very same dynamics are playing.

Delivered High-Quality M&A with Four M&A Transactions in Core Geographies

Building on to the next slide, on to the contribution to the M&A strategy. I have just mentioned for France, Jo&Co, Play Two. For Asia, what is our strategy? Our M&A strategy essentially today allows us to expand into new market segments as our markets are expanding.

To take the case of France, why did we invest in Jo&Co and Play Two? Play Two, largest independent music label in France, previously under partnership with one traditional label. Jo&Co, one of the largest independent French labels. French pop music, for both of them is the core focus, previously distributed by traditional labels.

Both of these labels essentially came to us for two reasons. One, their market segments are now becoming digital. They used to be very physical and now they are digital, and they are seeking a partner that can help them accelerate their growth in these market segments.

A very similar opportunity in Asia, where Think Music is a soundtrack label, which is a segment that was much more traditional, that is becoming much more digital. And the label is seeking exactly the same thing, a partner that will help them accelerate growth into their markets.

As we have always said, there is plenty of these opportunities across the markets around the world. Our focus has remained around core geographies for us, Europe, Asia, to help us accelerate to leadership positions in these markets.

Invested in Future Growth while Demonstrating Operating Leverage

If you want to move to the next slide, please. We have invested in growth, organically and through M&A, while demonstrating operating leverage. So, as you can see there, EBITDA level segment is at 14.4%, with an investment, in that case, of almost 2% of revenues invested into new resources, sales and marketing hires in the territories that we made in 2020 and 2021 and that will start generating in 2023 and beyond. So first high segment level of EBITDA, even though at segment level we keep investing very heavily to keep funding future growth for the business.

We have continued investing in the central platform to build digital innovative technological solutions but as you see and exactly as we had communicated, at the time of IPO, investment in the central platform is being made at a rate that is much lower than revenue growth. And that will continue to translate year-after-year into Central Platform costs, representing a lower and lower percentage of revenues over time; two points of gain in 2020/2021.

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Believe Full Year 2021 Results Presentation

Thursday, 17th March 2022

Invested in Digital and Technological Innovations to Deliver Increased Audience Development and Monetisation for all Artists

Next slide, slide 11. Where did we make these investments? In terms of technology and innovation, in areas of investment in technology, core focus has been how do we help artists and labels at very large scale increase their audiences and increase their monetisation on the video side, which is a very important revenue driver; through tools such as video monetisation optimisers which helps, at very large scale, all of our artists and labels around the world generate more views, more revenues on YouTube in an automated way. Spotify Discovery, which helps artists and labels gain market share through more exposure of their music to new audiences. Or TikTok virality tool. Obviously, continuing to build up teams that are supporting our artists in terms of marketing and promotion opportunities with all of the key digital music stores is a key element.

Next slide, please, slide 12.

Invested in TuneCore through Geographic Expansion and Innovative Services to Increase Market Share of Music Creators

The continued investment in TuneCore to drive growth in two dimensions: geographic dimensions, service was expanded into five new languages to cover new areas and contribute to accelerated market share gain; and into innovative services to increase our market share of music creators with social platforms, which is a service targeting at the tens of millions of new creators that want to make their music available on TikTok, on YouTube, on Facebook, Instagram for discovery and then move on to full distribution once they have generated success.

Many examples of this, most recent example being Lauren Spencer Hill, a TuneCore artist signed on to the social platforms that jumped straight into number five of the Billboard charts in the UK a few weeks ago after distributing through social platforms. So continued investment there.

Formalised and Deploying Shaping Music for Good, Believe's CSR Strategy

Finally, the last element in the next slide about our key drivers of 2021 since the IPO has been the deployment and execution around our CSR strategy that is centred around developing diverse and local talent; training this talent; building trust relationships with respect, fairness and transparency; and empowering our community to have a long-term impact. We have put a few of the elements that we are very focused on: parity, gender equality (where we have made great progress towards our objective), ambassador rate; training rate, with the objective of having local people that are the best trained in the industry to deliver services to our artists and labels in the most respectful, transparent and fair way.

So, as a summary, I would say this was 2021. I am more excited, I think, than I have ever been at Believe about the opportunity that is ahead of us for 2022 because I do think that where we are as a business and the core trends that have played in 2021 are exactly the ones that are going to continue play in 2022. In 2022, our focus is going to remain profitable growth. We have a very large opportunity ahead of us with very strong tailwinds in the digital music market with YouTube, Spotify, all digital music services continuing to drive very strong growth.

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