Spotify has posted its latest earnings report, stating that both paid and free users were up more than 10% year-on-year, but the company returned to making a loss …
Spotify announced solid growth in both subscribers and revenue:
Subscribers climbed 12% Y/Y to 276 million.
climbed 12% Y/Y to 276 million. Monthly Active Users grew 11% Y/Y to 696 million.
grew 11% Y/Y to 696 million. Total Revenue increased 10% Y/Y to €4.2 billion.
increased 10% Y/Y to €4.2 billion. Gross Margin improved by 227 bps YoY to 31.5%.
improved by 227 bps YoY to 31.5%. Operating Income reached €406M.
However, the streaming music business operates on notoriously slim margins, with most subscription and ad revenue being paid direct to music labels, and Spotify has struggled to turn a profit. While it did manage this in Q2 last year, it returned to a loss in the same quarter this year.
The company says that “social charges” were a key factor.
Gross Margin of 31.5% was in-line with guidance and reflected 227 bps of Y/Y expansion. Operating Income of €406 million was below guidance due to €116 million in Social Charges, higher payroll and related expense and Revenue mix shift. Social Charges were €98 million above forecast due to share price appreciation during the quarter.
... continue reading