French music company Believe used a mix of investments, new digital products, stronger artist services teams and global streaming growth to improve revenue 35.4% to 352.2 million euros ($369 million) in the first half of 2022, the company announced in its first half earnings report Wednesday (Aug. 3). Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) rose 60.5% to 11.7 million euros ($12.3 million) while operating loss improved to 11.3 million euros ($11.8 million) from 14.4 million euros ($15.1 million) in the first half of 2021.
Digital revenues accounted for 92.4% of total revenues, increasing 37.8% year over year, due to more paid music subscriptions, improved monetization of ad-supported streaming and market gains of major streaming services in both mature and emerging markets. Non-digital sales improved by 11.4% due mostly to concert production subsidiary Live Affair, which organized a stadium performance of French rapper Jul in Marseille, France, in June.
Believe's premium solutions division – which includes financial solutions, marketing services and record labels – grew 35.4% to 329.2 million euros ($344.9 million). Believe attributed the improvement to “new, dedicated teams in all geographies” that helped “the business unit increased both its roster and profitability.” Believe had artists services teams in 14 markets at the end of June and claimed at least one artist charting in the top 100 in each of those countries in the first half of the year – in some cases multiple artists in the top 10.
In each of its 14 markets, Believe's employs its supply chain, rights management and marketing tools to build its artists presence, which attract more successful artists and encourages Believe to expand to additional genres. “Every single year since the creation of the company, we have gained market share because of the power of the model," said CEO Denis Ladegaillerie during Wednesday's earnings call.
Automated solutions – namely digital distributor TuneCure – improved 34.9% to 23 million euros ($24.1 million). Believe’s digital distributor, TuneCore, benefitted from the launch of a new program in June that gives artists the ability to distribute an unlimited amount of music for a fixed cost. The four-tier program also includes a free tier that charges no upfront fee in return for a 20% fee taken by TuneCore. The other tiers, which range from $14.99 to $49.99 per month, pay the customer 100% of the royalties earned from digital platforms.
By region, six-month revenues in France grew 36.8% to 59.4 million euros ($62.2 million) and continued to be Believe’s single largest country. Germany rose 13.0% to 53.9 million euros ($56.5 million). Europe (excluding France and Germany) grew 30.5% to 98.4 million euros ($103.1 million). Believe reaped the benefits of recent investments in Asia-Pacific and Africa, where revenue grew 61.0% to 90.8 million euros ($95.1 million). Believe purchased a majority stake in Indian label Think Music in November as well as a minority stake in Philippines-based Viva Music and Artists Group in December.
In the Americas, where revenue climbed 33.5% to 49.8 million euros ($52.2 million), Believe was helped by recent investments in local teams in Latin America and the new offers at TuneCore.
Russia and Ukraine revenue growth slowdown was more limited than expected due to the strength of the rouble and better monetization from local digital services which improved their market position as foreign services ceased operations.
Looking forward, Believe expects organic growth of 29% in fiscal 2022 (31% excluding Russia and Ukraine), up from the guidance of 20% given on May 3. That includes an expected positive impact of 2% related to the extension of service agreements with French indies Play Two and Jo&Co (Believe owns a minority stake and majority stake, respectively), Think Music and VMAG. Believe anticipates a slowdown in organic growth in the second half of the year due to economic uncertainty and inflation’s impact on ad-funded streaming. Russia and Ukraine will have a lighter impact that previously believed and should be “roughly stable” in fiscal 2022.
Believe shares rose 2.95% to 9.60 euros on Wednesday prior the company's financial release. Its share price has recovered from an all-time low of 7.49 euros on June 30 but is down 43.2% in 2022.
This story is developing.