Daniel Ek, founder and CEO of Spotify, said a surge in ad sales for the three month ended in June has it eyeing a renewed focus on advertising-rich podcasts becoming a bigger chunk of total revenue as he looks to shift perception of the company from a “ premium subscription music service to an audio platform.”
The two have very different business models, Ek noted during a webcast Wednesday to discuss quarterly earning. They were overshadowed by slower than anticipated growth in monthly active users, or MAUS, up 22% from the year earlier to 365 million — “finishing below our guidance range and forecast,” he said. Execs chalked it up to choppiness from Covid including in hard hit countries like India where Spotify suspended all marketing.
Ad-supported revenue, however outperformed internal forecasts led by podcast sales that saw a 165% year-on-year gain at existing Spotify studios (The Ringer, Parcast, Spotify Studios and Gimlet) and contributions from the Megaphone acquisition and exclusive licensing of the Joe Rogan Experience and Higher Ground. During the quarter, Spotify announced exclusive licensing deals with Call Her Daddy and Armchair Expert. It said The Bill Simmons Podcast grew consumption significantly heading into the NBA playoffs.
At the end of Q2, Spotify had 2.9 million podcasts on the platform (up from 2.6 million at the end of Q1). During the quarter, podcast share of overall consumption hours on our platform reached an all-time high.
Premium subscribers grew 20% to 165 million in the quarter, towards the upper end of our guidance range and modestly ahead of forecast with strength in Europe and North America. The churn rate was down 23 bps year to year and down “modestly” from Q1.
Ek also said Spotify wants to expand its live events but didn’t give details. “I can’t really comment on product tests we are doing, but live is a meaningful thing for many of our creators.”
The Stockholm-based company, which reports in euros, lost the equivalent of 23 cents a share on sales of $2.81 billion for the quarter, beating expectations.
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