Spotify: High growth with losses
Spotify has been traded on Wall Street since 2018. (Photo: Christopher Penler / Shutterstock.com)
The streaming service remains number 1 among its peers: 365 million people use it worldwide, 165 million pay for it. The advertising revenue doubled. But there is a catch.
New quarterly results show a juicy growth curve for the music streaming market leader. Overall, the number of monthly active users (MAU) increased by 22 percent compared to the previous year. The stock exchange reacted with a huff, because the forecast was 366 to 373 million users. Spotify explained the difference by pausing some marketing campaigns due to the Covid pandemic. MAU growth was particularly weak in Brazil, India and parts of south-east Asia. the Stock fell after the numbers were announced by four percent, reported CNBC.
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Advertising revenues are exploding at a low level
On the other hand, the number of premium customers increased by 20 percent year-on-year; that of the other customers who use an advertising-financed “free” account by 24 percent. Sales in Q2 / 2021 rose by 28 percent to 2.3 billion euros compared to Q2 / 2020. The majority of this was generated by premium accounts, namely 2.06 billion euros. Virtually the rest came in through advertising income, which more than doubled with an increase of 110 percent. The company attributes the massive increase on the one hand to the corona-related advertising downturn in the last year, but also to the “new” income from podcasts.
The podcast section can also announce a new record. Twice as many MAU dealt with podcasts in the second quarter than in the previous year. The length of stay and the proportion of the total usage time reached all-time highs. 100 new original and exclusive series (O&E) have been published internationally. Spotify signaled that they would continue to move from a music subscription service to the audio platform – in other words: continue to invest heavily in podcasts. Spotify had 2.9 million podcasts in the second quarter of this year. Advertising revenue through them grew 627 percent year over year. At the same time, the platform is working on a clubhouse clone from which podcasts can then be generated.
Loss of 20 million euros
With all the nice increases, one number fell out of line: the profit. While the company posted a small profit of 23 million euros in the last quarter, it now had to post a loss of 20 million euros. However, the total does not matter in relation to the second quarter of 2020. At that time it was 356 million euros lousy. Spotify only raised prices in April.
