Spotify shares jumped more than 12% Wednesday morning on strong quarterly numbers that showed a shift in listening patterns fueled solid subscriber growth last quarter amidst a global pandemic. The Stockholm, Sweden-based music streaming giant said monthly average users jumped 31% to 286 million, including 130 million premium subscribers and 163 million ad-supported.
Listening through TV and game consoles jumped more than 50% last quarter from the year earlier in the U.S and 40% globally as drive-time streaming, listening on the go, at the gym fell, obviously, and advertising was soft. CEO Daniel Ek noted on a conference call that consumers are “creating new habits” for listening at home, and that advertising is a relatively small part of revenue.
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Game consoles continue to be a top two or three platform in terms of consumption for the better part of this month, Ek said.
The company reported revenues of €1.848 billion (about $2 billion) and posted net income of $1 million for the three months ended in March.
He noted increased consumption of podcasts (there are 1 million on the service) and catalog music, in part because of fewer new releases. The Weeknd was a top draw, and he anticipated an increase in new releases in the second and third quarters.
Asked about traditional radio, Ek didn’t mince words, saying the inexorable trend is that “everything linear dies” in economic crises and that the current one will fan “the tailwinds of what’s already been happening – of linear moving to on-demand.”
Spotify said 60% of its paid subs come from its free service, which is growing slightly faster right now. Churn was in line with forecasts but showed a “modest” increase in cancellations and payment failures at the very end of the quarter. The company said 1 in 6 respondents to a U.S. exit survey cited COVID-related reasons for cancelling accounts and more than 80% said they were extremely likely or likely to renew once the economic situation improves.
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