Deezer H1 2025 slides: Music streamer turns profitable as cost-cutting measures take effect

Deezer reported its H1 2025 results, achieving positive adjusted EBITDA of €2.1 million, a significant turnaround from a €5.0 million loss in H1 2024, on €267.1 million revenue and positive free cash flow of €1 million. This improved financial performance, despite a decline in total subscribers to 9.2 million due to partnership churn, was driven by €6 million in cost reductions and a strategic focus on higher-value direct subscribers, particularly in its core French market. While the stock trades near its 52-week low, the company confirmed its full-year 2025 targets for continued positive adjusted EBITDA and free cash flow, underscoring its shift towards sustainable profitability over growth.

Analysis

Deezer's H1 2025 results demonstrate a significant strategic pivot towards sustainable profitability, even as top-line growth stagnates. The company achieved a second consecutive half of positive adjusted EBITDA, reporting €2.1 million, a notable turnaround from a €5.0 million loss in H1 2024. This €7 million year-on-year improvement was primarily driven by disciplined cost management, evidenced by a €6 million reduction in operating expenses. While revenue grew a modest 1.3% at constant exchange rates to €267.1 million, the underlying subscriber dynamics reveal a deliberate focus on higher-value segments. The 5.5% like-for-like growth in direct subscribers, particularly the 8.2% increase in the core French market, was offset by a 21.1% decline in partnership subscribers, leading to a net decrease in total subscribers to 9.2 million. The company's confirmed full-year 2025 guidance for flat-to-slightly declining revenue alongside sustained positive adjusted EBITDA and free cash flow reinforces this profitability-over-growth strategy. Despite these operational improvements and a solid €60 million cash position, the stock is trading near its 52-week low, suggesting a market disconnect or skepticism about the long-term growth outlook in a competitive streaming landscape.

Key Decisions for Investors

• Investors should view Deezer as a turnaround story, where the key thesis rests on management's ability to maintain cost discipline and generate positive free cash flow, which could lead to a re-rating if the stock's performance catches up to its fundamental improvements.
• It is crucial to monitor the subscriber mix; a continued decline in overall subscribers could pressure future revenue, making sustained growth in the high-value direct subscriber base a critical metric for the strategy's success.
• Given the guidance for flat-to-declining revenue, investors should be cautious about near-term growth prospects and weigh the demonstrated progress in profitability against the significant top-line headwinds and intense industry competition.