Spotify stock sinks on weaker-than-expected first quarter subscriber numbers


STOCKHOLM/LOS ANGELES (Reuters) -Spotify on Wednesday forecast present quarter subscribers decrease than Wall Street expectations, sending its shares down 18% in late buying and selling.

The outlook overshadowed fourth-quarter income, which got here in greater than analysts’ estimates, because the music streaming firm offered extra commercials and newer companies reminiscent of podcasts, whereas recording a wholesome 16% enhance in paid subscribers for its premium service.

Total month-to-month lively customers rose 18% to a document 406 million.

The firm, nonetheless, forecast current-quarter paid subscribers of 183 million, beneath expectations of 184 million. Revenue is predicted to satisfy estimates of two.60 billion euros.

Spotify stated it will not provide annual steering on subscribers.

“While we now have not given full 12 months steering anymore on subscribers … we do not anticipate a cloth distinction within the web additions for both customers or subscribers in 2022 relative to 2021,” Chief Financial Officer Paul Vogel informed Reuters.

“So if you happen to have a look at ’21 as a form of proxy for sort of web additions that 2022 shall be good, not materially totally different.”

The subscription music streaming service has invested over a $1 billion within the podcasting enterprise, led by marquee unique reveals reminiscent of The Joe Rogan Experience.

But the attract of the podcast star additionally drew condemnation after his present aired controversial views round COVID-19, drawing protests from artists Neil Young and Joni Mitchell.

Rogan, a well-liked web commentator, has since apologized and Spotify stated it will begin including content material advisories to episodes discussing COVID.

Chief Executive Officer Daniel Ek stated the corporate already has a “sizable” content material moderation workforce in place. “We have taken motion on greater than 20,000 podcasts for the reason that begin of the pandemic,” Ek informed Reuters. “So that tells you one thing in regards to the scale of this operation. It’s really a world operation.”

Spotify stated podcast’s share of general consumption hours on its platform reached an all-time excessive and it expanded its paid podcast subscriptions in 33 extra markets and enabled podcasts for customers in Russia, Egypt and Saudi Arabia.

Premium subscribers, which account for many of the firm’s income, rose to 180 million, beating analysts’ expectations of 179.9 million.

Quarterly income rose to 2.69 billion euros ($3.04 billion) for the quarter from 2.17 billion a 12 months earlier, and above the two.65 billion euros anticipated by analysts, in keeping with IBES information from Refinitiv.

Revenue from customers who hear commercials rose 40% to 394 million euros or 15% of whole income.

“Investors largely ignored Spotify’s promoting enterprise throughout Spotify’s first few years as a public firm, with subscriber development dominating the narrative,” LightShed Partners analyst Richard Greenfield stated in a be aware.

“As Spotify moved from a music platform to an audio platform (podcasting, reside audio, audiobooks), it has unlocked the potential for a strong promoting enterprise that’s now too giant for traders to disregard.”

Spotify ventured into podcasts in 2018 with a collection of acquisitions to compete with Apple Inc. Since then it has launched a paid subscription platform for podcasters within the U.S., opened it up for promoting, and have become the most important podcaster dethroning Apple.

Unlike the music enterprise, which is basically commoditized and low margin because it pays out part of the income to the rights holders, podcasts have interaction listeners for hours on finish, creating beneficial promoting stock that has underpinned the optimism by Wall Street over its long run future.

($1 = 0.8843 euros)

(Reporting by Supantha Mukherjee in Stockholm and Dawn Chmielewski in Los Angeles; Editing by Bernard Orr)

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