Spotify Q2 Monthly Active Users Jump 29% To 299 Million, Podcast Engagement Grows; But Losses Widen, Stock Slips

Spotify
Andrew Matthews/PA Wire

Spotify saw monthly active users jump 29% to 299 million last quarter with boosts in paid and premium subscribers but earnings were squeezed by costs associated with the streaming music giant’s stock price gains.

Premium subscribers rose 27% from a year earlier. Paid subscribers, 138 million, beat Wall Street estimates for the three months ended in June. A growing number of users, 21%, engaged with podcast content where consumption continues to grow at triple digit rates year over year, the company said.

Founder-CEO Daniel Ek and executives will discuss the numbers on a conference call at 8 ET.

Ad momentum in podcasting continued into July,” the company said. Earlier this month it inked a $20 million global advertising partnership with Omnicom Media.

The quarter was in amassing content. Spotify announced a multi-year exclusive licensing deal with The Joe Rogan Experience, which will debut on Spotify in September 2020 and become exclusive on the platform later this year, and a multi-year partnership with Warner Bros. and DC to produce and distribute an original slate of narrative scripted podcasts exclusively on Spotify. The Michelle Obama Podcast premiered with former President Barack Obama as a first guest.

Revenue rose 13% to €1.89 billion ($2.22 billion), shy of estimates. A loss of €1.91 a share widened sharply €0.42 a year earlier on what the company called “social costs.” It means payroll taxes associated with employee salaries and benefits, including share-based compensation, the company is subject to in various countries.

“When the fair market value of our ordinary shares increases on a quarter-to-quarter basis, the accrued expense for social costs will increase,” it explained. It noted that 31% of employees are based in Sweden, where it’s required to pay a 31.42% tax to the government on the profit an employee realizes on the exercise of stock options or the vesting of restricted stock units.

The stock was down 4.35% in pre-market trading.

Spotify said that after a “modest” drop in consumption hours driven by COVID in the first quarter, as of June 30 “global consumption hours have recovered to pre-COVID levels.”

“Our liquidity position and free cash flow remain strong, and we are encouraged with the underlying trends of the business.”

Spotify said expects monthly average users in the third quarter of 312 million to 317 million.

This article was printed from https://deadline.com/2020/07/spotifys-q2-montly-active-users-jump-29-to-299-million-podcast-engagement-grows-but-losses-widen-stock-dips-1202998233/