Spotify reports fewer users than expected, but podcasting ad sales soar
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Spotify’s gamble on buzzy podcasts like “The Joe Rogan Experience” and “The Michelle Obama Podcast” is paying off.
The Swedish music streaming on Wednesday reported fewer total users in the second quarter than expected, but said ad sales jumped 110 percent over last year, thanks to its growing podcasting business.
During the quarter that ended on June 30, Spotify logged 365 million total monthly users, below expectations for between 366 to 373 million total users.
But advertising revenues, which usually account for about 10 percent of the total, ticked up to 12 percent due to its expanding podcasting business, which also includes the popular “Bill Simmons Podcast.”
Subscribers who pay for Spotify’s ad-free service hit 165 million, in line with forecasts of between 162 million and 165 million.
The Swedish streamer reported a net loss of $23.6 million or 19 cents, narrowing from a year-ago loss of $418 million or $2.25 a share. Revenue rose 23 percent to $2.75 billion.
In a conference call with investors, Spotify CEO Dan Ek said the company “didn’t spend much time” on advertising in the past. “But it is becoming impossible to ignore” and is fast becoming “a second big revenue driver” for the company.
“It’s clear to me that the days of our ad business accounting for less than 10 percent of our total revenue are behind us. I expect ads to grow to be a substantial part of our revenue mix,” Ek said.
Spotify has benefited from the pandemic, which has helped it add listeners. But the company faces uncertainty as the emerging markets it depends on for new user growth gets hit by COVID spikes. Meanwhile, bigger, more established markets, like the US, are coming out of lockdowns and getting back to daily life and streaming less.
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