Spotify Keeps Making Profits, Surpasses Analyst Predictions On Wall Street!

Spotify continues to improve its financial performance during 2021. (photo: doc. unsplash)

JAKARTA— Spotify Technology SA reversed Wall Street's forecast for their third-quarter earnings. This is due to more paying subscribers signing up for its premium services and advertisers lining up to serve ads between music and podcasts.

Premium subscribers, which account for the bulk of the company's revenue, totaled 172 million, beating analyst expectations of 171.7 million. Total monthly active users rose 19% to 381 million.

Spotify earns revenue from subscriptions and by showing ads to non-paying members. Revenue from advertising, which fell at the height of the pandemic, has now jumped 75% to 323 million euros, and the company plans to hire hundreds of staff to further boost advertising sales.

The company has also invested heavily in its podcast business to rival Apple and subsequently launched a paid subscription platform for podcasters in the United States and opened it up to advertising.

"We're seeing a lot of demand on the podcasting side, which is bringing in more advertisers," Chief Executive Daniel Ek said in an interview.

The company doesn't split the share of advertising generated by podcasts but Ek said the triple-digit growth compared to the same period last year was a significant contributor to overall ad growth.

Spotify ventured into podcasts in 2018 with a series of acquisitions and currently has 3.2 million podcasts on its platform, up from 2.9 million in the last quarter.

"While we are relentless in our efforts to become the largest audio platform in the world, it is still early days and we are just getting started," said Ek.

Spotify expects fourth-quarter revenue of 2.54-2.68 billion euros with 177-181 million premium subscribers. The top end of both measures topped analyst estimates of average 2.62 billion euros in revenue and 180 million subscribers.

Total revenue rose 27% to 2.50 billion euros in the third quarter, beating the 2.45 billion expected by analysts, according to IBES data from Refinitiv. About 40% of Spotify's premium subscribers are based in Europe and 29% in the United States.

The company reported a net profit of 2 million euros (Rp32.9 billion) compared with a loss of 101 million euros a year earlier.