Deezer: Financial recovery in progress, but an uncertain stock market outlook

Administrateur
6 days ago
3 min read

Steady revenue growth

Since its IPO in July 2022, Deezer has experienced consistent revenue growth. Turnover rose from €451 million in 2022 to €485 million in 2023 (+7.4%), then to €541.7 million in 2024 (+11.8%). This increase reflects the strong momentum of strategic partnerships (+24% in 2024) and the positive impact of price hikes on direct subscriptions.

The adjusted gross margin also improved, reaching €133.7 million in 2024 (+21.2%), with a margin rate of 24.7%, up from 22.7% in 2023. This progress was driven by a favorable product mix (more direct subscribers) and renegotiated agreements with music labels.

Reduced losses and improving profitability

Deezer implemented strict cost control measures. Operating expenses were lowered through geographic refocusing. Adjusted EBITDA significantly improved, from –€56 million in 2022 to –€29 million in 2023, and –€4 million in 2024, nearly reaching breakeven.

Operating losses narrowed sharply: –€27.5 million in 2024 versus –€64.4 million in 2023. Net loss declined from –€59.6 million to –€26 million. For the first time in years, free cash flow turned positive: +€6.6 million in 2024, compared to –€44.3 million in 2023.

Subscribers and ARPU: Rationalization and monetization

The number of paying subscribers fluctuated. After peaking at 10.5 million at the end of 2023, the base dropped to 9.7 million at the end of 2024 following a cleanup of inactive accounts. ARPU (Average Revenue Per User) fell to €46 in 2023 but rebounded to €56 in 2024 due to pricing adjustments.

Challenging stock market journey since the IPO

On its first trading day, Deezer dropped from €8.50 to €6.58 (–22.6%). Since then, its share price has continued to decline amid a tough tech market, perceived overvaluation, and fierce competition. As of early 2025, the stock trades around €1.30, implying a market cap of approximately €155 million—five times lower than at IPO.

Despite financial progress, valuation remains depressed. Analysts set a target price around €2.20 (+65% potential), conditional on Deezer achieving sustainable profitability.

A unique strategic positioning

Unlike its diversified competitors (podcasts, audiobooks), Deezer focuses solely on music. It leverages AI to personalize user experiences and deepen artist-fan interactions.

However, its global footprint is limited—only about 2% market share versus 31% for Spotify. Deezer remains the French market leader (~30%), leveraging its image as a “cultural sovereignty” platform.

Global growth through partnerships

Deezer’s growth strategy relies heavily on B2B partnerships. The company collaborates with major telcos and media firms to expand internationally—e.g., Orange (France), TIM (Brazil), RTL (Germany), and Sonos (USA). In 2024, partnerships accounted for 31% of total revenue.

This strategy enables cost-effective user acquisition and ARPU improvement. Geographic expansion, although modest, reduces market dependency. Targeted marketing investments remained under control (+€1 million in 2024).

Cost discipline and path to profitability

Since 2022, Deezer has stabilized R&D, marketing, and general expenses. The goal is clear: to be profitable by 2025, both in terms of EBITDA and free cash flow. With breakeven nearly achieved in 2024, the company shows encouraging signs. Its cumulative positive free cash flow (~€7 million) supports future investments.

The 2024 financial report emphasizes a disciplined cost structure coupled with strategic investments. The shift from a €59.6 million loss in 2023 to €26 million in 2024 shows steady progress. The roadmap to profitability appears credible.

Investment opportunities

Upside potential:

Low market capitalization reflects embedded risks.
Clear improvements in operational and financial performance.
Unique positioning centered on music and AI.
Strong, scalable partnerships with global firms.
Positive image among artists through “artist-centric” revenue sharing.

But risks remain

Downside factors:

Intense competition from tech giants.
Risk of subscriber stagnation or decline.
Monetization strategy may trigger user churn if poorly executed.
Regulatory and technological risks, including AI-generated content concerns.
No dividends and limited stock liquidity, deterring institutional investors.

Conclusion

Deezer has strengthened its fundamentals: rising revenue, reduced losses, and positive cash flow. If it maintains momentum and achieves profitability in 2025, the stock could rebound significantly.

However, due to stiff global competition and its minor market share, Deezer remains a speculative bet. It offers upside for long-term investors—provided the growth strategy is executed effectively and cost control remains tight.