Spotify beat Wall Street estimates for third-quarter revenue on Wednesday, as the music streaming company reported a 19 percent jump in paid subscribers for its premium service, driven by demand in Europe and North America. Premium customers, which account for the majority of the company’s revenue, earned $172 million, beating analysts’ expectations of 171.7 million.
Total monthly active users grew 19 percent to 381 million.
Spotify earns money from subscriptions and by showing ads to non-paying members. Revenue from ads, which fell at the height of the pandemic, jumped 75 percent to EUR 323 million (about Rs 2,810 crore), and the company plans to hire hundreds of employees to further boost ad sales.
According to Refinitiv’s IBES data, total revenue rose 27 percent to 2.50 billion euros (about Rs 21,760 crore), beating the 2.45 billion expected by analysts.
About 40 percent of Spotify’s premium subscribers are located in Europe and 29 percent in the United States.
The company is also investing heavily in its podcast business to rival Apple and in April launched a paid subscription platform for podcasters in the United States.
Spotify currently has 3.2 million podcasts on its platform, up from 2.9 million at the end of the second quarter.
“While we are working tirelessly in our pursuit of being the world’s largest audio platform, it is still early days and we are just getting started,” Chief Executive Daniel Eck said in a statement.
The top end of the company’s current quarterly forecast for revenue and premium customers also exceeded estimates.
Spotify forecasts EUR 2.54 billion (around Rs 22,110 crore) – EUR 2.68 billion (around Rs 23,330 crore) and 177-181 million premium subscribers in the fourth quarter. Analysts expect an average revenue of 2.62 billion euros (about Rs 22,810 crore) and 180 million subscribers.
The company reported a net profit of 2 million euros (approximately Rs 17 crore) compared to a loss of 101 million euros (approximately Rs 880 crore) a year ago.
© Thomson Reuters 2021