Deezer Sa · EURONEXT:DEEZR
Deezer Sa — H1 2023 Earnings Presentation
31 slides from Deezer Sa's earnings presentation, Aug 3, 2023
Slide 1: H1 2023 Results
1 H1 2023 Results August 3, 2023
Slide 2: Disclaimer
2 Disclaimer 2 References herein to this presentation (the “Presentation”) shall mean and include this document, any oral presentation accompanying this document provided by Deezer SA (the “Company”), any question and answer session following that oral presentation and any further information that m
Slide 3: Speakers
3 Speakers 3 Jeronimo Folgueira Stephane Rougeot CEO Deputy CEO & CFO
Slide 4: Deezer at a glance
4 Deezer at a glance 4 #2 independent music platform globally LARGE AND GROWING MUSIC STREAMING MARKET 9.3M €451M Subscribers FY22 revenue STRATEGIC VALUE FOR THE INDUSTRY +45 +600 Partnerships Employees UNIQUE BUSINESS MIX TO ACHIEVE PROFITABILITY STRONG ESG involvement Social Impact Environmental
Slide 5: Agenda
Agenda 5 Path to profitability Financial Review Outlook
Slide 6: Large and growing music streaming market
6 Large and growing music streaming market 6 A sizeable and growing market Beyond subscribers volume, price leverage Worldwide Music Streaming From €9.99 to €10.99 Revenue - $bn + $24bn 55.2 +$23bn 30.9 Jan-22 Oct-22 Jan-23 Jul-23 → Deezer, as a first mover, revealed the pricing power in the 8.0 ind
Slide 7: Strategic value for the industry
7 Strategic value for the industry 7 Labels & artists Go-to partner for friendly large players First mover on pricing We bring added value Q1 2022 to the music ecosystem Explore new artist & fan-focused streaming model Q1 2023 Source of loyalty, AI and fraud detection differentiation and to protect
Slide 8: Unique business mix…
Unique business mix… 8 Direct Partnerships New Verticals Focus on countries Tech & Label with strong ROI services % of total revenue (ex. other revenue) 70% 27% <1% Contribution to Deezer’s growth ++ +++ + Adjusted Gross margin ~24% ~21% ~85% Marketing % of Rev. <5% <5% (Subscribers acquisition ~10%
Slide 9: …Paving our way to breakeven
…Paving our way to breakeven 9 FY21A FY22A H1-23A 2025E Revenue €400m €451m €233m Continued revenue growth Marketing efficiency €11m €42m €35m Adj. Gross Profit after 2.7% 9.2% 15.0% Sound Partnerships profitability Marketing Business mix Direct / Partnerships Ramp-up New Verticals Staff/ G&A (core1
Slide 10: Agenda
Agenda 10 Path to profitability Financial Review Outlook
Slide 11: H1 2023 - Execution of Deezer strategy
11 H1 2023 - Execution of Deezer strategy 11 Continued revenue growth… +6.3% YoY In line with our plan Direct +5.7% YoY Continued subscriber growth in France …among our 2 main segments Partnerships +8.5% YoY Gradual build-up of Partnerships Significant increase in adjusted €51.8m (+14.2% YoY) Higher
Slide 12: Revenue growth of +6.3% in H1 2023, at €233m
Revenue growth of +6.3% in H1 2023, at €233m 12 YoY YoY In €m +6.3% In €m +6.3% 233.2 233.2 219.4 219.4 +0.9% 6.9 6.8 +8.5% 62.4 57.6 +4.8% 91.3 87.0 Other ROW Partnerships France Direct +5.7% 163.9 155.0 +7.2% 142.0 132.4 H1 2022 H1 2023 H1 2022 H1 2023 → Direct: Continued subscriber growth in Fran
Slide 13: Further improvement in ARPU in H1 2023
Further improvement in ARPU in H1 2023 13 YoY YoY Subs (1.8)% ARPU +8.3% In m In € 9.4 9.3 9.3 4.2 3.9 3.8 3.6 3.7 Partnerships Direct ROW 2.3 2.1 2.0 Direct FR 3.3 3.5 3.6 30-Jun-22 31-Mar-23 30-Jun-23 H1 2022 H1 2023 → Direct: Stable subscriber base with an improved geo mix (France vs. ROW) → Incr
Slide 14: Adjusted gross profit up +14.2% in H1 2023
Adjusted gross profit up +14.2% in H1 2023 14 In €m +1.5 pts +14.2% 51.8 22.2% Direct 45.4 → Adj. Gross Profit +5.0% YoY % margin 20.7% → Higher level of activity (+5.7%) partly offset by increased publishing rates Partnerships → Adj. Gross Profit +10.2% YoY 23.9% 37.1 +5.0% 38.9 23.8% Direct → High
Slide 15: Strong increase in adj. gross profit after marketing
Strong increase in adj. gross profit after marketing 15 In €m +€15.4m 35.0 15.0% Direct Increase in Adj. Gross Profit in all of our segments Partnerships Other 2 1 8.9 Significant improvement of our marketing performance 6.4 % margin 1.9 → Marketing spent increased in France year on year, with 9.0%
Slide 16: Significantly improved adjusted EBITDA loss
Significantly improved adjusted EBITDA loss 16 Driven by margin improvement, marketing efficiencies and strict cost control In €m +€11.5m % revenue (11.2)% (24.6) 2.8 2.9 (5.6)% Sequentially decreased 8.4 vs H2 2022 (13.1) 0.2 (2.9) 1 Adj. EBITDA Revenue impact Impact from Marketing Staff & Scope Ad
Slide 17: Robust cash position at end-June 2023
Robust cash position at end-June 2023 17 In line with resources required for 2025 plan Free cash flow of €(10)m in H1 2023 without one-off In €m 113.6 (13.1) (1.2) (3.1) 7.7 (11.8) 90.9 (1.1) 1 2 Cash Position Adj. EBITDA Δ Working Capex Leases Others Financing Cash Position 31-Dec-22 Capital 30-Jun
Slide 18: Agenda
Agenda 18 Path to profitability Financial Review Outlook
Slide 19: 2023 Priorities and outlook
2023 Priorities and outlook 19 Outlook for H2 2023 Continue to Revenue growth to accelerate vs. H1 2023, to achieve a target of 7 to 10% in FY 2023 prioritize profitability while → Gradual build-up of Partnerships and new sources of revenues targeting revenue growth from Partnerships and Direct in s
Slide 20: Long-term outlook
Long-term outlook 20 Positive cash flow1 in 2024 Positive adjusted EBITDA in 2025 Double-digit average yearly revenue growth over the 2023-2025 period (1) Cash flow pre-funding.
Slide 21: Appendix
Appendix 21
Slide 22: Continued Direct subscriber growth in France
Continued Direct subscriber growth in France 22 YoY YoY Subs - ARPU +4.9% In m In € 5.6 5.6 5.6 4.8 4.6 2.3 2.1 2.0 ROW France 3.3 3.5 3.6 30-Jun-22 31-Mar-23 30-Jun-23 H1 2022 H1 2023 → Stable subscriber base reflecting continued growth in France (+8.8%) that → Further ARPU growth reflecting price
Slide 23: Sustained improvement in Partnerships ARPU
Sustained improvement in Partnerships ARPU 23 YoY YoY Subs (4.4)% ARPU +14.9% In m In € QoQ 3.8 +0.6% 3.7 2.8 3.6 2.5 30-Jun-22 31-Mar-23 30-Jun-23 H1 2022 H1 2023 → Lower subscribers YoY due to a change in customer offer mix in the ROW → Strong ARPU growth driven by price increases and improved cus
Slide 24: Key performance indicators for Q2 2023
Key performance indicators for Q2 2023 24 In € million Q2 2023 Q2 2022 Change (%) Chg. at constant FX (%) Total revenue 118.0 111.2 +6.1% +6.9% Direct 82.2 78.8 +4.3% +5.0% Partnerships 31.6 29.5 +7.1% +8.0% Other 4.3 3.0 +44.4% +46.1% Total revenue 118.0 111.2 +6.1% +6.9% France 71.8 67.7 +5.9% +5.
Slide 25: Key performance indicators for H1 2023
Key performance indicators for H1 2023 25 In € million H1 2023 H1 2022 Change (%) Chg. at constant FX (%) Total revenue 233.2 219.4 +6.3% +6.5% Direct 163.9 155.0 +5.7% +6.1% Partnerships 62.4 57.6 +8.5% +8.2% Other 6.9 6.8 +0.9% +0.7% Total revenue 233.2 219.4 +6.3% +6.5% France 142.0 132.4 +7.2% +
Slide 26: Reconciliation of non-IFRS financial indicators
Reconciliation of non-IFRS financial indicators 26 In € million H1 2023 H1 2022 Gross Profit 27.9 29.1 Onerous contract depreciation - - License agreements non-recurring expenses 23.9 16.3 Adjusted Gross Profit 51.8 45.4 In € million H1 2023 H1 2022 Operating loss (42.5) (52.6) Gross profit adjustme
Slide 27: Consolidated income statement
Consolidated income statement 27 In K€ H1 2023 H1 2022 Total revenue 233,214 219,416 Cost of revenue (205,271) (190,331) Gross Profit 27,943 29,085 Product and development (18,337) (15,225) Sales and marketing (27,030) (35,603) General and administrative (25,035) (30,892) Operating loss (42,459) (52
Slide 28: Consolidated balance sheet (1/2)
Consolidated balance sheet (1/2) 28 In K€ 30 June 2023 31 December 2022 ASSETS Goodwill 15,176 15,070 Intangible assets 311 524 Property and equipment 5,521 5,881 Right-of-use assets 19,285 21,061 Investments in equity affiliates - - Non-current financial assets 5,369 5,440 Other non-current assets
Slide 29: Consolidated balance sheet (2/2)
Consolidated balance sheet (2/2) 29 In K€ 30 June 2023 31 December 2022 EQUITY AND LIABILITIES Equity attributable to owners of the parent (213,510) (184,687) Non-controlling interest reserves 2,636 2,866 Total equity (210,874) (181,821) Provisions for employee benefits 788 692 Lease liabilities 17,
Slide 30: Consolidated cash flow (1/2)
Consolidated cash flow (1/2) 30 In K€ H1 2023 H1 2022 OPERATING ACTIVITIES Net loss (38,437) (51,944) Adjustments for: - Depreciation and amortization (excluding those related to current assets) 4,701 4,299 - Provisions (934) 1,257 - Share-based compensation expense 11,822 15,264 - Gains and losses
Slide 31: Consolidated cash flow (2/2)
Consolidated cash flow (2/2) 31 In K€ H1 2023 H1 2022 FINANCING ACTIVITIES Increase in share capital and share premium (net of costs) 37 1,756 Repayments on short-term debt (2,005) (229) Repurchases of ordinary shares 93 - Proceeds from issuance of long-term debt 747 422 Repayment of lease liabiliti