Deezer Revenue Dropped 1% to $154 Million in the Third Quarter

Gains from self-paying subscribers almost equally offset losses from partnerships as French music streaming company Deezer’s revenue fell 0.9% to 131.4 million euros ($154 million) in the third quarter, the company announced Thursday (Oct. 23). 

“Subscriber growth in France has accelerated for a third consecutive quarter, confirming the positive impact of our differentiation initiatives in our home market,” CEO Alexis Lanternier said in a statement. “In the rest of the world, subscription numbers in the Direct segment are also picking up pace, reflecting the quality of our service and the appeal of our brand as we champion transparency and fairness in music streaming.

Revenue from partnerships fell 12.6% to 35.6 million euros ($42 million) and subscribers from these partnerships dropped 24.5% from the prior-year quarter. Deezer powers music streaming platforms for numerous companies globally and counts these partnership subscribers separately from subscribers who pay directly. The company attributed the loss in its partnerships business to “the residual impact” of a business model shift by Mercado Libre, a Latin America e-commerce company that partnered with Deezer in 2023. A focus on higher average revenue per user (ARPU) also contributed to the decline in partnership subscribers, the company said.

Direct subscribers grew in number to 5.5 million, up nearly 10%, and direct subscription revenue increased 1.6% to 87.9 million euros ($103 million). France accounted for 3.7 million of those direct subscribers, an 11.7% increase from the prior-year period, which the company attributed to “good performance” of family plans. Direct subscribers from the rest of the world rose 6.1% to 1.8 million. 

ARPU from direct subscribers fell nearly 5% to 5.4 euros ($6.31) per month. Partnership ARPU rose 6% to 3.1 euros ($3.62) per month.

Other revenue, which consists of advertising and ancillary revenue, rose 17.4% to 7.9 million euros ($9.2 million). Deezer said the improvement “mainly reflected the performance of the white labelling solutions for hardware / media partners.”

While relatively small compared to the likes of Spotify and Apple Music, Deezer has attempted to separate itself from its competitors by making combating AI music a business priority. In September, the company revealed that it detected the delivery of over 30,000 fully AI-generated tracks each day. That accounts for 28% of all daily track uploads, up from 18% in April and 10% in January. These fully AI-generated tracks are eliminated from Deezer’s algorithmic recommendations and excluded from editorial playlists. 

Looking ahead, Deezer confirmed its full-year guidance in which it expects positive adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) and positive free cash flow for the second consecutive year.