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France's Deezer pledges to turn a profit by 2025

·2-min read
Deezer starts trading on the Euronext stock exchange

By Mathieu Rosemain

PARIS (Reuters) - French music streaming platform Deezer's first-half adjusted gross profit rose 9.1% from a year earlier, led by a surge in sales in its home country that firmed up its goal to turn a profit by 2025, the company said on Wednesday.

The group, once championed in France as being one of the first and most promising so-called unicorns, companies valued at 1 billion euros or more, is striving to convince investors of its capacity to turn a profit by 2025 by focusing on key markets such as France, Brazil and the Netherlands, and new services.

Gross profit increased to 45 million euros ($44.4 million) from 42 million a year earlier, while total sales rose by 12% over the period to 219 million euros, Deezer said in a statement.

This was mainly due to a gain in the average revenue per user (ARPU), which jumped by 12.4% to 3.9 euros. Deezer's number of direct subscribers in France, where it generates about 60% of its consolidated revenue, rose to 3.3 million from 3 million a year earlier.

Yet the total number of subscribers fell by close to 3% to 9.4 million.

"By focusing our business on large attractive markets and entering new markets with a partnership-led model, we are convinced we can capture a fair share of the booming streaming market and continue improving our profitability to reach breakeven by 2025," Chief Executive Officer Jeronimo Folgueira said.

Suffering from comparison to bigger rivals such as Spotify and Apple Music, Deezer hasn't yet recovered from its painful debut on Euronext's Paris stock exchange in July, which saw its shares plummet by 35% in the first few hours after its listing.

The stock has lost 65% of its value since its first trading day, valuing the company at 472 million euros ($466.38 million), compared to Spotify's market capitalisation of $18.7 billion.

($1 = 1.0120 euros)

(Reporting by Mathieu Rosemain; Editing by Elaine Hardcastle and Emelia Sithole-Matarise)