Spotify’s quarterly loss widens despite soaring user growth
Music streaming giant Spotify deepened its loss in the second quarter, even as its total pool of monthly active users neared the 300 million mark.
The Stockholm-based company said its net loss swelled to $418 million from a loss of $76 million a year earlier because of dried-up advertising and higher-than-expected payroll taxes linked to its recent stock run-up.
The firm’s stock soared more than 70 percent since the end of May, when Spotify inked a deal with Joe Rogan to run his podcast exclusively on its platform.
Also juicing Spotify’s stock was a spate of buzzy podcast deals with Warner Bros.’ DC Comics, Kim Kardashian and Michelle Obama. Last week, Spotify struck a new licensing deal with Universal Music Group, deepening its relationship with the world’s largest music company.
Despite the megawatt deals and the big subscriber numbers, Spotify’s quarterly revenue was weighed down by a 21 percent decline in advertising sales that totaled $154 million. Overall revenue grew 13 percent to $2.22 billion, but fell short of analysts’ expectations of $2.26 billion.
Last quarter, the Stockholm-based company had experienced a slowdown related to the global pandemic, with declines in daily active users and overall listening. But Chief Executive Daniel Ek said by the end of June, all regions had rebounded, except for Latin America where COVID-19 cases have spiked.
As a result, Spotify said for the three months ended June 30, it logged 8 million new paying customers, bringing its tally of subscribers that pay for its premium service to 138 million. As of the end of June, Spotify said its total active monthly users were 299 million.
“Last quarter we noted a marked deceleration in sales brought on by the global health crisis where the last three weeks in March were down more than 20 percent relative to our forecast,” Ek said. “Performance continued to lag our expectations through April and May, but we significantly outperformed expectations in the month of June.”