Spotify Broadcasts Quarterly Loss but Subscriber Growth Gains

Spotify posts a third-quarter loss even as subscriber growth jumps on demand for music and podcasts from Taylor Swift and BTS, and Joe Rogan and Michelle Obama.
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An earlier version of this article incorrectly reported Spotify's third-quarter earnings and revenue. The story has been rewritten with the correct information.

Spotify Technology  (SPOT) - Get Report posted a third-quarter loss even as subscriber growth jumped amid strong demand for new music from Taylor Swift and BTS, and for podcasts from the likes of Joe Rogan and Michelle Obama.

Luxembourg-based Spotify on Thursday posted a net loss of €101 million, or €58 cents a share, vs. income of €241 million, or €36 cents a share, a year earlier. 

Revenue totaled €1.98 billion, up from €1.73 billion a year ago though just shy of the €2 billion expected by analysts. Operating expenses totaled €529 million, Spotify said, an increase of 37%. 

Ad-supported revenue grew 9% year over year, coming in at €185 million, ahead of the company's forecasts, "exhibiting a return to growth following the impact of the global pandemic," Spotify said. Free cash flow was €103 million, a €55 million increase.

The number of monthly active users, or MAUs, grew 29% to 320 million in the quarter, above the top end of the company's guidance range, driven mainly by growth in Europe and North America, though also buoyed by strong growth in India.

"We are particularly encouraged by our MAU strength this quarter, as it supports the long-term health of our customer acquisition funnel and gives us confidence as we continue to expand into new markets," Spotify said.

The number of subscribers to its premium service, meantime, gained 27% to 144 million in the quarter, with what Spotify described as strong growth across all regions, particularly in Russia. The global rollout of its Duo product also helped boost premium subscriptions.

Spotify said it saw a 13% increase in new music releases compared with the second quarter, led by Taylor Swift’s "Folklore" album, which set a record for the most first day album streams by a female artist. 

Korean boy band sensation BTS also released its first all-English-language single "Dynamite" in August, and had the biggest first day globally on Spotify for a single in 2020, the company said.

The July launch of the Michelle Obama Podcast, as well as ongoing demand for the Joe Rogan Experience podcast spurred more listeners during the quarter, as did select content launches in the U.S. including Mama Knows Best with influencer Addison Rae and Best Kept Secrets with Lele Pons and 10 Questions with Kyle Brandt (The Ringer).

For the fourth quarter, Spotify said it expects to post an operating loss between €112 million and €32 million and total revenue of between €2 billion and €2.2 billion. It expects total MAUs of between 340 million and 345 million and total premium subscribers of between 150 million and 154 million.

Shares of Spotify were down 4.88% at $262.87 in trading in New York on Thursday.