It’s been almost two years since the Paris-based music company Trust floating on Paris Euronext.
On March 15, 2023, the company announced its second full-year financial results since becoming a publicly traded entity.
Key highlights for Trustalso own DIY distributor TuneCoreincluding annual sales of €760.8 million in fiscal year 2022. That only converts to above 800 million USD (at the average annual exchange rate according to the IRS).
That €760.8 million annual sales figure for 2022 has grown €183.6 million YoY, or 31.8%, marked the outstanding growth compared to the previous year of Believe.
The firm increase annual revenue increased €135.8 million YoY (+30.7%), to €577.2 million (USD682 million) in 2021.
Perhaps the most important change from Believe’s 2021 versus its 2022?
In the company’s earnings report for fiscal year 2022, Believe reported that it achieved a positive free cash flow of €52.0 million. In the previous year, it posted every year (-30.7 million euros) free cash flow.
According to Believe, this new free cash flow has increased the “firepower of M&A activities” over the next 12 months.
The company said in a note to investors that it “hopes to use leverage.” [our] cash to continue the acquisition strategy in FY ’23 due to opportunities created by current market conditions”.
So where can we expect Believe to steer its acquisition strategy in 2023?
Its activity in the last few months of 2022 gives us a good sign.
Speaking on March 15, during a company call with analysts following the release of Q4 2022 results, Believe Founder and CEO Denis Ladegaillerie explained that his firm “felt that the market conditions in 2022 were not entirely suitable for a full-blown M&A.”
He added: “However, at the end of the fourth quarter of 2022, and [in] In recent months, we have re-entered several strategic partnerships.”
“We hope to take advantage of [our] cash to continue [our] acquisition strategy in fiscal year ’23 was driven by opportunities created by current market conditions.”
Trust investor note, March 2023
Ladegaillerie pointed to three new partnerships (see slide below) as examples of this “re-engagement”: (I) Structure; (ii) Panorama Music; And (iii) madness.
Believe explains that these deals – two strategic investments in Europe and one in India – will “brand themselves with talented partners who offer complementary sourcing capabilities based on their expertise”.
In France, Believe invests in Structure, described as “the new French pop label”, through which it “collaborates with two successful producers behind the recent success of several multi-platinum French pop artists”.
Believe says the partnership will further expand its “sourcing capacity and ability to penetrate the French pop market,” where it recently invested in music companies based in France. Play two and Jo&Co.
According to Faith financial resultson December 19, 2022, it “registered to increase capital PY SAS Structure and is currently holding” 24% share capital of the company”.
Faith of 2022 also see it invest in Music Madizina German-based brand managed by what the company says are “two well-known producers, composers and entrepreneurs”.
With this partnership, Tin note that it expands its presence IThe German-language music market includes traditional Pop and Schlager music, which the company says is “just beginning the process of digitization”.
It’s fun, Trust your opponent BMG did one big buyback in Schlager music last year, buying Germany’s biggest independent label – Telamo – the genre specialist.
According to Faith financial reportnow it owns a 51% shares in Madizin (see below).
In India, Believe it says sign an “exclusive agreement” with music panoramais said to have been founded recently by “a prominent Indian producer, distributor and studio operator in the Indian music and entertainment industry, who is behind a number of blockbuster films from India. Bollywood”.
Believe says the deal will accelerate the expansion of the Bollywood Original Soundtrack market.
“We estimate that we have some of these opportunities coming our way in 2023, as changes in the market currently present quite exciting opportunities to continue. [a] a much more aggressive acquisition strategy in 2023.”
Denis Ladegaillerie
Ladegaillerie added to the earnings call: “We have signed three agreements with leading local talent management agencies in Germany, France and India for the development of local artists in all three categories. in some of the largest market segments.
“These are teams that have previously worked with traditional studios, have demonstrated a great track record of success, are looking for new partners for their next phase of growth in the digital world.
“We estimate that we have some of these opportunities coming our way in 2023, as changes in the market currently present quite exciting opportunities to continue. [a] a much more aggressive acquisition strategy in 2023.”
Elsewhere, in Believe’s financials, the company revealed that on November 16, 2022, it purchased a majority stake in the company. 53% at a record label based in France Morning Glory Music SAS (“MGM”) for €3,942 million (4.14 million USD)
According to the report, “one put on the other” 47% exists with two waves in two separate implementation periods, in 2026 and 2029.”
An official announcement video appeared online a few months ago confirming the marriage between Believe and Morning Glory, which we’ve included below.
It announced that Morning Glory’s hip-hop leaning list includes artists including Zkr (people with 1.4m Spotify monthly listeners today), Landy (2.3m) and favourite (2.1m).
https://www.youtube.com/watch?v=_DNCebUd82s
During an earnings call last week, HSBC’s Nicolas Cote-Colisson asked Believe’s Ladegaillerie to formulate the company’s acquisition strategy.
Commenting on the types of properties Believe is looking to buy in 2023, Ladegaillerie said: “Great companies with great management teams, aligned with potentially marketable or musical strategies that don’t go unnoticed. we want to strengthen and where we think we can grow.”
After the call, Ladegaillerie further commented on the company’s M&A strategy, explaining that Believe will “focus on high-growth geographies where we can accelerate our growth.” target”.
He added: “The focus will be on the same thing as before, which is increasing capabilities in the regions or geographies where we already have a presence and where we feel that we can. accelerate the growth of the companies we acquire.”
- All EUR-USD conversions in this story have been performed at the annual averages provided by the US Internal Revenue Service (IRS).
Global Music Business
