Strong Q3 driven by Believe’s appeal to artists and labels at all stages of their career and in all geographies
Revenue growth: +36.9% in Q3’22 and +35.9% year-to-date
Organic revenue growth: +37.6% in Q3’22 and + 36.3% year-to-date
FY 2022 guidance: Believe now anticipates organic growth in excess of +30%, Adjusted EBITDA margin at c. 4.5% and solid positive free cash flow
in € million | Q3 2021 | Q3 2022 | Change YoY | Organic change1 |
Group Revenues | 143.9 | 197.0 | 36.9% | 37.6% |
Premium Solutions | 135.3 | 184.4 | 36.2% | 37.7% |
Automated Solutions | 8.6 | 12.6 | 46.8% | 36.1% |
in € million | 9M 2021 | 9M 2022 | Change YoY | Organic change |
Group Revenues | 404.1 | 549.2 | 35.9% | 36.3% |
Premium Solutions | 378.4 | 513.6 | 35.7% | 36.7% |
Automated Solutions | 25.7 | 35.6 | 38.9% | 30.8% |
Key highlights
Believe’s strong growth in Q3’22 once again demonstrated the strength of Believe’s model in the artist and label markets. The Group continued to gain market share across all segments (from music creators to independent labels and top local artists) in all markets around the world.
Believe’s products and solutions allowed to grow artists and labels at a much faster rate on all key digital music services through continued investments. Believe’s priority is to build capacity in its key markets and provide local teams with best-in-class products and solutions, developed by the Group’s Central Platform teams and leveraged across all local entities. The quality of service enabled by the model resulted in a strong performance from the existing portfolio of artists and labels during the quarter.
Believe continues its expansion in
The Group established new teams and partnerships during the quarter to address opportunities in music genres that are developing rapidly in digital or currently accelerating their digitalization. Believe launched b.electronic in October, a global initiative to specifically address the growing number of electronic and dance music labels and artists looking for the right partner to maximize their audience reach at a global scale and optimize the revenue sources. This new solution echoes the fast growth of the global electronic and dance music market, that grew +32% in FY’21 versus +18% for the market according to IMS (International Music Summit, the premier thought leadership platform for electronic music). It responds to specific needs of labels and artists from this genre, inherently targeting audiences beyond their local border. Believe will rely on highly experienced Central and Local teams of experts in key markets who have a global view on the genre to develop the portfolio of labels and artists. The signing of Big Top Amsterdam label, one of the major players in the global dance industry reflects such initiative. Big Top Amsterdam can count on all-stars like Bakermat and Gamper & Dadoni on its roster, each with over a billion streams, as well as creators Supermassive (who have built 1.8 million followers on
Believe continued to nurture its relationships with major streaming providers and social platforms during the quarter by renewing partnerships with greater benefits for its artists and labels, as well as by early moving on their new initiatives. Believe was for example among the first players to participate in YouTube’s “Creator Music” initiative, a new digital storefront that allows creators to easily license popular music for use in their videos, generating revenue both for them and music rights holders.
In alignment with its corporate project Shape Music for Good, Believe continued to promote gender parity in the music industry during the quarter. Believe hosted for the second year in a row the Gender Equality Hub at the Reeperbahn festival in
Revenues
Q3’22 revenues grew by +36.9% to reach €197.0 million (versus €143.9 million in Q3’21), mainly reflecting strong organic growth (+37.6%). In Q3’22, core digital activities represented 93.7% of Group’s revenues and increased by +39.6% year-over-year driven by continued growth in paid streaming, notably in emerging markets, and better monetization of ad-funded streaming services, even if the growth rate of ad-funded revenues has been weaker compared to the previous quarters as expected. The growth was amplified by additional market share gains at largest digital streaming providers both in mature and emerging countries thanks to the built-up of local capabilities and Believe’s expertise in developing digital audience and monetizing the artists and labels served by the Group. Non-digital sales grew by 6.1% in Q3’22 mostly thanks to merchandising, live and synchronization notably in
Q3’22 performance reflected strong momentum in both segments. Premium Solutions revenues amounted to €184.4 million in Q3’22, a year-over-year organic increase of +37.7% compared with Q3’21. The success of Premium Solutions stemmed from the Group’s investment over the past 24 to 36 months to strengthen local capabilities and roll out more services in key countries. This allowed the Group to serve a greater number of artists and labels with best-in-class services and to address a wider variety of music genres. Automated Solutions revenues reached €12.6 million and grew by +46.8% in Q3’22 compared to last year, mostly reflecting solid organic growth of +36.1% and a positive forex impact related to the dollar appreciation versus the euro. Q3’22 performance reflected the appeal of TuneCore’s “Unlimited Pricing” program, which is driving subscription up, with revenue per subscriber on a positive trend as music creators are switching from the discovery offer to the highest pricing plan. Believe recorded solid performances in most markets except in the Russian and Ukrainian business units which grew +8.8% in Q3’22, resulting in an organic growth of +9.0% year-to-date. The Group excluding the two business units grew organically by +40.5% in Q3’22.
Believe has been growing strongly since January with revenues up +35.9% year-to-date mostly reflecting a +36.3% organic growth for the period closing at the end of September (organic growth reached +39.2% outside
Revenues by geography: growth in all geographies
in € million | Q3 2021 | Q3 2022 | Change YoY |
APAC / | 32.5 | 52.3 | 61.1% |
24.2 | 34.1 | 41.2% | |
21.2 | 28.6 | 35.1% | |
40.9 | 53.1 | 29.8% | |
25.2 | 28.8 | 14.4% | |
Total | 143.9 | 197.0 | 36.9% |
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FY 2022 outlook and organic growth guidance update
In Q3’22, Believe remained on H1’22 solid organic growth trajectory. Paid streaming demonstrated its resilience and grew strongly in most of the Group's key markets. Growth in ad-supported streaming revenue decelerated compared to H1’22, stabilizing around June’s level as expected. The switch from ad-supported to paid streaming in emerging markets is progressing steadily. The Group expects the music industry to continue to show resilience and that paid streaming will continue its global deployment.
Believe now expects FY22 organic growth to exceed +30% for the Group, above prior expectations provided on
Based on higher organic growth than initially anticipated, Believe now expects an adjusted EBITDA margin of c. 4.5% above prior expectations of a stable margin year-over-year (FY'21: 4%), as Central Platform costs will be better amortized. As the focus remains on accelerating investments, the annual margin improvement remains gradual. Believe intends to continue to invest significantly in Central Platform and local teams in the coming years to fuel future profitable growth, while actively managing the investment cycle with the objective of further improving efficiency.
The Group also confirms that it will generate positive and solid free cash flow for the full year. This will result from a positive change in working capital and lower capital expenditure as a % of revenues. In addition, free cash flow will benefit from an annual installment of approximately €20 million from one of its digital partners, which was renewed in Q3’22.
Overall, the Group is on track with its strategic roadmap to build the best digital music company and confirms its medium-term trajectory communicated at the IPO, including a 2021-2025 CAGR of between +22% and +25% and a Group Adjusted EBITDA of 5%-7% by 2025, implying a segment Adjusted EBITDA margin of 15%-16%, which is a "high growth period" margin, with revenue growth largely reinvested. Believe remains confident in its ability to achieve its long-term target of a 15% Group Adjusted EBITDA margin.
Webcast:
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Conference ID: 555964
2023 financial agenda:
Believe Contacts:
Investor Relations Emilie MEGEL investors@believe.com Tel: +33 1 53093391 Cell: + 33 6 07099860 | Press Relations Manon JESSUA manon.jessua@believe.com Yousr ABASSI yousr.abassi@agenceproches.com Cell: +33 6 99454864 |
Appendix
- Revenue breakdown between digital and non-digital sales
Q1’21 | Q2’21 | Q3’21 | Q1’22 | Q2’22 | Q3’22 | 9M’21 | 9M’22 | |
Digital sales | 90% | 92% | 92% | 93% | 92% | 94% | 91% | 93% |
Non-digital sales | 10% | 8% | 8% | 7% | 8% | 6% | 9% | 7% |
- Digital and non-digital sales growth
Q1’22 | Q2’22 | H1’22 | Q3’22 | 9M’22 | |
Digital sales | +35.3% | +40.1% | +37.8% | +39.6% | +38.5% |
Non-digital sales | -6.5% | +32.1% | +11.4% | +6.1% | +9.7% |
About Believe
Believe is one of the world’s leading digital music companies. Believe’s mission is to develop independent artists and labels in the digital world by providing them the solutions they need to grow their audience at each stage of their career and development. Believe’s passionate team of digital music experts around the world leverages the Group’s global technology platform to advise artists and labels, distribute and promote their music. Its 1,610 employees in more than 50 countries aim to support independent artists and labels with a unique digital expertise, respect, fairness and transparency. Believe offers its various solutions through a portfolio of brands including TuneCore, Nuclear Blast, Naïve, Groove Attack and AllPoints. Believe is listed on compartment A of the regulated market of Euronext Paris (Ticker: BLV, ISIN: FR0014003FE9).
www.believe.com
Forward Looking statement
This press release contains forward-looking statements regarding the prospects and growth strategies of Believe and its subsidiaries (the “Group”). These statements include statements relating to the Group’s intentions, strategies, growth prospects, and trends in its results of operations, financial situation and liquidity. Although such statements are based on data, assumptions and estimates that the Group considers reasonable, they are subject to numerous risks and uncertainties and actual results could differ from those anticipated in such statements due to a variety of factors, including those discussed in the Group’s filings with the French Autorité des Marchés Financiers (AMF) which are available on the website of Believe (www.believe.com). Prospective information contained in this press release is given only as of the date hereof. Other than as required by law, the Group expressly disclaims any obligation to update its forward-looking statements in light of new information or future developments. Some of the financial information contained in this press release is not IFRS (International Financial Reporting Standards) accounting measur
1 Organic change accounts for revenue growth at a like-for-like perimeter and at constant exchange rate.
Attachment
- 2021-11-03-Believe Q3 2022-ENG
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