Spotify revenue misses as COVID-19 deters advertisers

Platform News: Spotify music streaming app based out of Sweden

Spotify missed quarterly earnings expectations yesterday and forecast a soft quarter ahead, due mostly to a decrease in ads because the COVID-19 pandemic kept advertisers.

Shares of the Sweden-based firm up about 80% since the start of this season, fell 3 percent to $253 prior to the US market available.

The results overshadowed a rebound in demand for music streaming since more users signed up for its services and paid subscribers reached 138 million, ahead of Wall Street estimates of 136.4 million.

Spotify Technology SA, that leads the market for music streaming ahead of rivals such as Apple and Amazon.com, earns from paid subscriptions and from showing ads to non-paying users.

Ad-supported revenue fell 21% in the second quarter while 29 percent climbed to 299 million.

Chief Financial Officer Paul Vogel told journalists at the news agency Reuters that while advertising had been advancing in the past quarter, there was a”fair amount of conservatism” from the market. Spotify is expecting growth in advertising revenue this season, but it’s going to be”pretty minimal,” he said.

The company said it expected to hit its own financial targets, assuaging investor concerns that a fall in commuting at the pandemic could hit streaming services.

Related Article:
Netflix could lose four million US subscribers in 2020

It anticipates absolute premium subscribers to reach 140-144 million from the third quarter, above expectations of 141.4 million, according to IBES information from Refinitiv.

“User trends remain strong on a headline number basis, but mix shift to lower price tiers and geographies continues to weigh on subscription average revenue per user, leaving subscription revenues below where some investors had hoped,” explained Evercore ISI analyst Kevin Rippey.

Spotify forecast total revenue of 1.85-2.05 billion euros (approximately $2.17-$2.40 billion) for the third quarter. Analysts were expecting 2.01 billion euros.

Revenue rose 13 percent to 1.89 billion euros for the three months ended June 30, but missed analyst estimates of 1.93 billion.

The net loss attributable to Spotify was 356 million euros, or 1.91 euros per share, as well as 76 million or 42 euro cents a year before. Analysts were expecting a loss of about 45 euro cents.

The loss was mostly because of societal charges – payroll taxes in Sweden, which increase with an increase in the share price of the company.

The team at Platform Executive hope you have enjoyed this news article. Initial reporting via our content partners at Thomson Reuters. Reporting by Supantha Mukherjee in Stockholm and Ken Li in New York. Editing by Louise Heavens and Mark Potter.

Related Article:
European Union needs a long-term plan to tackle 5G fake news

To stay on top of the latest developments across the platform economy and gain access to our problem-solving tools and content sets, you can become a member for just $7 per month.

Share this article