The largest music biz story of right this moment (August 3) will most likely ceaselessly be regarded upon because the shock information from SoundCloud that it’s slashing a fifth of its world workforce in response to the “monetary market headwinds” and “difficult financial local weather” of 2022.
SoundCloud, after all, isn’t alone as a music firm in getting nervous concerning the influence that macro-economic components could have on its enterprise within the second half of this yr.
But there’s one other aspect to this story, and it comes from Paris.
Imagine, the France-born distribution and providers firm (and proprietor of labels reminiscent of Nuclear Blast), has right this moment launched its H1 2022 outcomes (for the six months to finish of June).
These outcomes make for good-looking studying:
- Imagine’s group income progress in H1 was up +35.4% YoY to €352.2 million, and up 35.6% YoY on an natural foundation (i.e. discounting acquisitions made this yr);
- The agency’s digital income progress was up 37.8% YoY within the interval, reflecting what Imagine calls “strong market share positive factors”;
- Throughout H1 2022, Imagine’s revenues in Asia Pacific (APAC) and Africa grew by a whopping 61.0% YoY and represented 25.8% of the agency’s complete revenues. (Along with natural progress within the APAC area, Imagine benefitted from transactions accomplished in This fall 2021 in India and the Philippines);
- Imagine’s Adjusted EBITDA within the six-month interval of H1 2022 was up 60.5% YoY, reaching €11.7 million;
- And Imagine instructed the markets right this moment that after a “very dynamic” Q1 2022 interval, it truly noticed “accelerated income progress” in Q2 2022.
But maybe crucial announcement from Imagine right this moment issues not what’s already been achieved – however what’s coming subsequent.
Imagine, which is publicly traded in France, clearly has the wind in its sails.
And though the corporate is cognizant – and even conservative – within the face of sure macro-economic threats going through all industries in H2 2022… right this moment it truly upped its income steerage for the full-year of 2022.
To place it merely: Imagine thinks that the worldwide music business nonetheless has a really constructive story to inform in 2022, regardless of the broader financial gloom surrounding it.
Imagine introduced right this moment that it now expects its FY 2022 natural income progress to achieve circa +29% YoY.
That’s considerably above the agency’s prior forecast revealed in Might (+20%) – and in addition above the vary of YoY progress Imagine mentioned it anticipated for the 2021-2025 interval when it went public final yr (+22% to +25%).
Excluding Russia and Ukraine, Imagine now expects the natural annual income progress of its firm in FY 2022 to do even higher, hitting +31% YoY.
What’s driving this confidence?
This: Imagine is forecasting that world paid music streaming progress – notably in markets like APAC, the place the corporate has been investing closely – will show “resilient” in 2022, regardless of world financial challenges.
Imagine subsequently predicts that paid streaming (its largest income) will “pursue its strong progress trajectory, notably in key [emerging] markets”.
Primarily based on that assumption, Imagine thinks that its firm will proceed to develop organically in H2 ’22 – however, it says, at a slower tempo than it did in H1 ’22.
Don’t let or not it’s mentioned that Imagine is ignorant to wider financial hazards forward for itself and the leisure business, nevertheless.
For one factor, Imagine admitted right this moment that it noticed a “slowdown after which stabilization of the expansion of ad-funded streaming revenues in June”. As such, the corporate says it now expects world ad-funded streaming progress to stay on the slower price (it noticed in June) through the second half of 2022.
(Chatting with MBW, Imagine boss Denis Ladegaillerie just lately predicted a possible progress slowdown within the common world on-line advert market within the second half of 2022 as a consequence of financial market pressures.)
Then there’s the invasion of Ukraine by Russia.
Imagine, like many music rights firms, has beforehand forecast this ongoing occasion may have a detrimental impact on its world enterprise in FY 2022.
Nonetheless, in an replace right this moment, the corporate shared some shock information: “Imagine’s Russian and Ukrainian enterprise models recorded a income progress slowdown in Q2’22 extra restricted than initially anticipated, with revenues up +9.2% in H1’22 in contrast with final yr (Q2’22 income progress was +2.9%).”
Imagine credited that better-than-expected efficiency to “the power of [Russian currency] the Ruble and elevated monetization by native DSPs”.
Imagine added: “The state of affairs in Russia and Ukraine is topic to the evolution of native and worldwide rules in addition to the Ruble foreign money price. The power of the Ruble is nevertheless anticipated to mitigate the exercise slowdown in H2’22 and [Believe’s] revenues [in the region]… are anticipated to be roughly steady in contrast with FY’21.”
It added: “Imagine operates with full compliance with worldwide sanctions and suggestions and is carefully monitoring their evolution to take any new required actions.”
“Regardless of right this moment’s difficult economical and geopolitical context, our H1 natural progress was stronger than final yr’s, and… we anticipate to stay on a strong and constructive worthwhile trajectory in H2.”
Denis Ladegaillerie, Imagine
Additionally serving to with Imagine’s rosy world outlook for FY 2022: a constructive influence of round 2% associated to the extension of service agreements regarding Play Two, Jo&Co, Suppose Music and VMAG, which have been concluded as a part of Imagine’s strategic partnerships signed with these firms in This fall 2021.
Discussing his firm’s H1 2022 outcomes right this moment, Denis Ladegaillerie, Imagine’s founder and CEO mentioned: “Our mannequin and technique result in elevated monetary efficiency each quarter, driving success for the artists and labels who put their belief in us.
“Regardless of right this moment’s difficult economical and geopolitical context, our H1 natural progress was stronger than final yr’s, and we generated constructive free money circulate. We anticipate to stay on a strong and constructive worthwhile trajectory in H2 and can proceed to put money into our Central Platform and native groups to proceed to innovate for our artists and labels and drive future progress.”
(Imagine’s ‘Central Platform’ is the proprietary know-how platform upon which its world operation is reliant, and into which it regularly invests.)
Elsewhere in Imagine’s H1 2022 outcomes right this moment, the corporate broke down the efficiency of DIY distributor TuneCore (known as ‘Automated Options’ in its outcomes) in addition to the efficiency of its core premium label and artist providers operation (known as ‘Premium Options’)
‘Automated Options’ noticed an increase in web revenues of 34.9% YoY in H1 2022, to €23.0 million. Throughout Q2 2022 (June), TuneCore switched its pricing model to a single annual subscription for artists wishing to distribute music (and/or purchase further providers) by way of the platform.
The overwhelming majority of Imagine’s web revenues in H1 2022, although, got here from its ‘Premium Options’ enterprise. This section contributed €329.2 million, up 35.4% YoY.
Along with acquisitions (Play Two and Jo&Co (France), Suppose Music (India) and VMAG (Philippines), Imagine mentioned this ‘Premium Options’ rise was “fueled by market segments which have now change into digital”.
It added: “Imagine is benefiting from its well-mastered blueprint of deploying new devoted groups in all geographies to handle new alternatives by leveraging the Central Platform provide chain, rights administration, and advertising instruments. In consequence, [Premium Solutions] elevated each its roster and profitability.”
Imagine claims that ‘Premium Options’ enterprise – which works with “established to prime artists” – has “additionally demonstrated a big market share construct up”.
In the meantime, in H1 2022 (see above), Imagine’s free money circulate improved to €10.8 million (versus a €35.3 million deficit in H1 2021), whereas its working loss narrowed to €11.3 million (from €14.4 million in H1 2021).
In an announcement right this moment concerning profitability, Imagine mentioned: “Imagine intends to proceed considerably investing within the Central Platform and in native groups within the H2’22 to gas future worthwhile progress. The funding cycle can be actively managed as the extent of financial uncertainties stay excessive.
“The Group will pursue its concentrate on additional reinforcing its market place because the digitalization of music market grows in all nations. In consequence, Imagine anticipates its Adjusted EBITDA margin to be round final yr’s stage (4%).”
It added: “Imagine stays assured in its capability to attain its long-term goal to achieve Group Adjusted EBITDA margin of 15%.”
Music Enterprise Worldwide