Spotify surpassed Wall Street estimates for third-quarter revenue on Wednesday as the music streaming company reported a 19 percent increase in paying subscribers for its premium service due to demand in Europe and North America. Premium subscribers, who make up most of the company’s revenue, hit 172 million, beating analysts’ expectations of 171.7 million.
Total monthly active users rose by 19 percent to 381 million.
Spotify earns from subscriptions and by showing ads to non-paying members. Revenue from ads, which declined at the height of the pandemic, rose 75 percent to 323 million euros (about Rs.2810 billion), and the company plans to hire hundreds of employees to further grow advertising revenue.
Total sales rose 27 percent to 2.50 billion euros (approximately 21,760 billion rupees), surpassing analysts’ expectations of 2.45 billion, according to IBES data from Refinitiv.
About 40 percent of Spotify’s premium subscribers are based in Europe and 29 percent in the US.
The company has also invested heavily in its podcast business to compete with Apple’s and launched a paid subscription platform for podcasters in the US in April.
Spotify currently has 3.2 million podcasts on its platform, up from 2.9 million at the end of the second quarter.
“Although we work tirelessly to be the largest audio platform in the world, we are just getting started,” CEO Daniel Ek said in a statement.
The upper end of the company’s current quarterly forecast for revenue and premium subscribers also beat estimates.
Spotify predicts fourth quarter revenues of EUR 2.54 billion (approx. Rs.22,110 billion) – EUR 2.68 billion (approx. Rs. 23,330 billion) and 177-181 million premium subscribers. Analysts expect an average turnover of 2.62 billion euros (around 22.810 billion rupees) and 180 million subscribers.
The company reported net income of EUR 2 million (approximately Rs.17 billion) compared to a loss of EUR 101 million (approximately Rs. 880 billion) in the previous year.
© Thomson Reuters 2021