BELIEVE: H1 2021 Results
Very dynamic H1 supported by its
attractive business model and favourable structural trends in the
digital music industryRevenue growth: +39% in Q2
and +33% in H1 2021FY 2021 guidance uplifted on
the back of solid growth prospects
Paris, September 15, 2021 –
Believe (Ticker: BLV, ISIN: FR0014003FE9), one of the world’s
leading global digital music companies, published today its interim
results for the period ended June 30 (H1 2021) today.
Denis Ladegaillerie, Founder and
CEO, said: “Believe has experienced strong revenue growth
in H1 2021. While we benefit from structural market growth
trends, this growth is also the reflect of our unparalleled appeal
to a new generation of independent digital artists looking for
go-to-market solutions and a wide range of expertise. Throughout
the period, we kept investing on our cutting-edge platform to
capture further growth and drive geographic expansion. As
highlighted by our FY2021 guidance upward revision, we are on the
right track to reinforce our development and continue to pursue our
objective of profitable growth while achieving our mission to help
build a better, more diverse, more respectful, more transparent and
fairer future for all artists.”
in € million |
H1 2020 |
H1 2021 |
Change YoY |
Organic change1 |
Group Revenues |
196 |
260 |
+33% |
+30% |
Premium Solutions |
181 |
243 |
+34% |
+30% |
Automated Solutions |
15 |
17 |
+17% |
+26% |
Adjusted EBITDA pre central
platform |
19 |
35 |
+86% |
|
In % of revenues |
9.5% |
13.3% |
+380bps |
|
Premium Solutions |
16 |
32 |
+100% |
|
Automated Solutions |
3 |
3 |
-2% |
|
Central Platform |
-25 |
-28 |
+14% |
|
Group's Adjusted
EBITDA |
-6 |
7 |
|
|
In
% of revenues |
-2.8% |
2.7% |
+550bps |
|
Operating income /
loss (EBIT) |
-17 |
-14 |
|
|
Net cash from operating activities |
-4 |
-22 |
|
|
Free cash flow |
-20 |
-35 |
|
|
NB: the Group uses alternative performance
indicators - not defined by IFRS - described in appendix 1 (page
4)
In H1 2021, Believe has further deployed its
unique and long-term proprietary technology solutions enabling
independent artists and labels to benefit from the latest
innovations and accelerate their careers. More recently this
included an innovative partnership with Spotify on the
Discovery Mode platform, the launch of the
Signed By programme for the TuneCore platform2
(which is presented as Automated Solutions in financial reporting)
and a partnership with YouTube for the launch of
Shorts, positioning us as one of the first
partners of the leading video streaming service for this mobile
phone feature enabling artists to further engage their communities.
Believe also continued to grow its roster over the period
confirming its unparalleled appeal to a new generation of artists
looking for digital solutions and expertise and the continuous rise
of independent and local artists and labels in the industry.
RevenuesH1 2021
revenues grew by 33% to reach €260 million (versus €196
million in H1 2020), mainly reflecting strong organic growth (+30%)
and a positive perimeter effect (+3%). Overall, the Group
benefitted from the favourable structural trends in the digital
music industry and from its positioning on the fastest growing
markets leveraging its increased investment in sales and marketing
over the past 24 months.
After a solid performance in Q1 2021
(+26%), revenue growth accelerated in Q2 2021 with
revenues reaching €136 million, representing a 39% year-over-year
increase compared to Q2 2020. This increase reflected a 36% organic
growth at constant rate and a perimeter effect of 4%, driven by the
acquisition of DMC label in Turkey in July 2020. The growth
acceleration witnessed in Q2 2021 in comparison with Q1 2021 (€124
million, up 26% compared to Q1 2020) was driven by the recovery of
digital sales activities linked to add-funded streaming services
that were particularly affected by the Covid-19 pandemic in 2020
and by the growth and performance of Believe’s roster.
Revenues by geography: growth in all
geographies
in € million |
H1 2020 |
H1 2021 |
Change YoY |
Asia-Pacific /
Africa |
33 |
56 |
+69% |
Rest of Europe |
52 |
75 |
+44% |
Americas |
27 |
37 |
+37% |
France |
36 |
43 |
+21% |
Germany |
47 |
48 |
+1% |
Total revenues |
196 |
260 |
+33% |
Revenues in Asia Pacific and
Africa grew strongly at 69% compared to last year and
represented 22% of group revenues. This steep increase was driven
by the market growth and the roll-out and strengthening of premium
services in several countries in the region in 2020 and early
2021.
Rest of Europe (excluding
France and Germany) reported revenue growth of 44% and represented
29% of total revenues. The level of activity was dynamic across the
region and particularly strong in Russia where the Group is ramping
up its activities. Revenues were also heightened by the
integration of DMC label in Turkey following its acquisition in
July 2020.
Americas grew by 37% and
represented 14% of total revenues, reflecting solid take up of
activity in Latin America.
In France, revenues increased
by 21%, driven by the strong performance of artist services
activities and further growth in artist and label solutions. In
Germany, revenues were impacted by ongoing
reorganization of the activities to optimize digital solutions and
reduce exposure to physical sales. France and Germany respectively
represented 17% and 18% of group revenues.
Revenues by segment
In terms of segment, Premium
Solutions revenues amounted to €243 million in H1 2021, a
year-over-year organic increase of 30% versus H1 2020. Premium
Solutions benefitted from the market growth and additional market
share gains driven by reinforced investment in sales and marketing
since 2019. The market growth was particularly strong in Q2 thanks
to the recovery of digital sales activities linked to add-funded
streaming services.Automated Solutions amounted to
€17 million and grew by 17% in H1 2021 compared to last year,
including a negative forex impact related to the US dollar, the
reporting currency of TuneCore. Organic growth was 26% at constant
rate. The increase was driven by the addition of new subscribers,
the TuneCore expansion in new geographies (Brazil, Russia, Africa
and Southeast Asia) and the recovery in advertising spending from
advertisers, a key driver of the revenue pool of the automated
platform.
Adjusted EBITDA
In line with the strong organic growth,
Adjusted EBITDA pre central platform costs3 almost
doubled in H1 2021 to reach €35 million (versus €19 million in H1
2020). The increase was primarily driven by the strong growth
witnessed in Premium Solutions, while Automated Solutions remained
stable year-over year due to the sharp increase in technology and
the development of new services directly recorded in the segment.
Overall, the Adjusted EBITDA margin pre central platform costs
amounted to 13%, strongly recovering from H1 2020 level (9%) and
almost bridging the gap with historical annual level (16% in full
year 2018 and 2019). The Group controlled its costs during the
period but continued to strongly invest in sales and marketing in
both segments.
The Group’s Adjusted EBITDA
returned to positive territory to reach €7 million in H1 2021
compared to a loss of €(6) million in H1 2020,
notwithstanding a slight increase in central platform investment
during the first half of 2021. However, central platform costs were
lower as a % of total revenues at 11% in H1 2021 versus 12% in H1
2020. Believe maintained its investment in central platform, which
grew mainly due to full-year effects after significant build-up in
2019 and 2020. As a result, Adjusted EBITDA margin reached 2.7% in
H1 2021 compared to -2.8% in H1 2020 and 1.7% in full year
2020.
Operating loss (EBIT) EBIT
amounted to €(14) million in H1 2021. Excluding the €5 million of
costs related to the initial public offering completed in June
2021, EBIT improved by €8 million year-over-year, almost halving
the loss compared to H1 2020.
Free cash flow
Free cash flow was negative €35 million in H1
2021, reflecting a higher level of renewals with large label
customers through new longer-term deals and the increase in artists
services and solutions activities. This drove a negative variation
of the working capital, resulting in a decrease in net cash from
operating activities. The rate of renewals with large labels
through longer-term deals was particularly high in H1 2021 and is
anticipated to stabilize in H2 2021. Capex which mostly consist in
capitalized R&D amounted to €13 million, slightly below last
year level.
Environmental, Social & Governance
The Board also approved the corporate social
responsibility strategy proposed by the CSR committee. It also
defined key quantitative and qualitative indicators which will be
monitored closely and annually reported. Based on an analysis of
Believe’s challenges, four strategic priorities have been
identified and form the foundation of the Group’s social
responsibility initiatives throughout the world:
- Developing diverse & local talent in local markets
first
- Cultivating talent for the digital era
- Building trusting relationships through respect,
fairness and transparency
- Empowering our community to have a long term positive
impact
FY 2021 outlook and organic growth guidance
update
Based on Believe H1 and Q2 revenue growth, the
Group expects to exceed its annual organic growth expectations
(initially set in IPO documentation at c. 20% in comparison with
2020) and now anticipates an organic growth of at least 23% for
2021. Revenues in the next two quarters are expected to grow at a
lower rate than in Q2 2021, as the recovery in digital services
activities related to the add-funded streaming started improving in
Q3 2020 and returned to previous trends towards the end of the
year. Besides Believe anticipates a decrease in physical sales in
H2 2021. As stated in the IPO documentation, Believe still does not
expect a significant impact on 2021 revenues of the potential
external growth transactions that it is working on.
As a result of higher organic growth
expectations, the Group also anticipates reporting an adjusted
EBITDA margin for 2021 slightly above 2020 level (versus initial
expectation to be in line with 2020 level: 1.7%). As Believe will
continue to substantially invest in its commercial and marketing
development and central platform to support the strong growth of
its businesses, the margin expansion in full year 2021 in
comparison with 2020 is anticipated to remain moderate.
Webcast:
We will host a webcast
https://edge.media-server.com/mmc/p/ynw5jaca and conference call
including a live question and answer session starting at 6:30 p.m.
CET today. Denis Ladegaillerie, our Founder and CEO, and Xavier
Dumont, our Chief Operating Officer and Chief Financial Officer,
will present interim results and answer questions addressed in the
call or submitted through the webcast. All information related to
the interim results are available on our investor website: Believe
- Investors Website - Financials
Conference call details:France, Paris:+33
(0)176700794 - United Kingdom, London: +44 (0) 2071 928000 -
United States, New York: +16315107495
Conference ID: 8179503
Next financial event:3 November 2021: Third
quarter 2021 revenues - Press release to be issued after market
close
Investor RelationsEmilie
MEGEL
investors@believe.comTel: +33 1 53093391
- Cell: + 33 6
07099860
Press Relations Brunswick
believe@brunswickgroup.com
Corporate Communication
equipe.believe@agenceproches.com
Appendix
1. Use of Alternative Performance
Indicators
To supplement our financial information presented in accordance
with IFRS, we use the following non GAAP financial measures:
- Adjusted EBITDA is calculated based on operating income (loss)
before depreciation, amortization and impairment, share-based
payments (IFRS 2), other operating income and expense; and included
the share of net income (loss) of equity-accounted companies –
Reconciliation table available in interim financial report
- Free cash flow corresponds to net cash from operating
activities after net capex
2. Quarterly revenues by division
in € million |
Q1 2020 |
Q1 2021 |
Change |
Organic at constant rate |
Premium Solutions |
91 |
116 |
27% |
24% |
Automated Solutions |
7 |
9 |
14% |
24% |
Total revenues |
98 |
124 |
26% |
24% |
in € million |
Q2 2020 |
Q2 2021 |
Change |
Organic at constant rate |
Premium Solutions |
91 |
127 |
41% |
37% |
Automated Solutions |
7 |
9 |
21% |
29% |
Total revenues |
98 |
136 |
39% |
36% |
3. Revenue breakdown between digital and non-digital
sales
|
Q1 2020 |
Q2 2020 |
H1 2020 |
Q1 2021 |
Q2 2021 |
H1 2021 |
Digital sales |
90% |
90% |
90% |
90% |
92% |
91% |
Non-digital sales |
10% |
10% |
10% |
10% |
8% |
9% |
About BelieveBelieve 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 1,370 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
measures.
1 Organic change accounts for revenue growth at a like-for-like
perimeter and at constant exchange rate. The change in perimeter
only concerned Premium Solutions in H1 2021, no perimeter impact in
Automated Solutions. Organic growth at current rate amounted to
29%.
2 TuneCore platform is an independent distributor of digital
music and market leader in the DIY segment fully owned by Believe
and constitutes the Automated Solutions segment.
3 Central platform costs account for the costs that cannot be
allocated by division
- 2021-09-15-Believe H1 2021-ENG
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