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(Bloomberg) – Spotify has reached 100 million paying subscribers, a first for any online music service, with more customers in the last quarter than predicted by analysts and boosting trust, the company has a lot of leeway growth.
Spotify Technology SA captured 4 million customers during the quarter, compared to 3.3 million analysts. But its loss in the first quarter was 79 cents per share, more than the 41 cents expected by analysts. After a brief rise, the stock fell 2% to $ 135.50 in New York.
Competition from Apple Inc., Amazon.com Inc. and YouTube did little to slow down Spotify's growth worldwide, and the company relied on its advantage over the independence of to the world's largest companies. It has expanded its customer base with promotional deals with Hulu, Samsung and even Google (the YouTube parent company) of Alphabet Inc.
"The music industry market is far more important than most people thought," said managing director, Daniel Ek, during a phone call with analysts.
The company plans to add 7 to 10 million additional subscribers during the quarter. While Spotify has increased its current user base through music, the company has acquired three podcasting companies in recent months to boost subscriber growth in other media.
Spotify has spent approximately $ 400 million on the purchase of Gimlet Media Inc., Anchor and Parcast, in the hope that podcasting will enable the company to become the world's first audio platform and reduce its dependence on music. The labels record the majority of its annual sales.
Payments Label
Payments to labels are one of the main reasons why the Swedish company still loses a lot of money. Spotify attributed the loss in the first quarter largely to rising costs of stock options and restricted stock units, thanks to the appreciation of its share price. The gross margin was 24.7%, above the top of the company's forecast range.
Spotify is in full negotiation with the three largest music companies in the world – Universal, Sony and Warner. Leaders warned investors not to expect these deals to reduce costs, but nevertheless seemed enthusiastic about the conclusion of the talks. "We are pleased with the progress we have made," said Barry McCarthy, chief financial officer, in an interview.
Although Spotify premium subscribers have exceeded expectations, the number of monthly active users has just dropped to 217 million. According to estimates by Bloomberg News, Spotify had about 218.3 million users and 99.3 million premium subscribers.
Expansion into new territories, such as India, will support growth in the number of free users for years to come, the company said. Spotify has added 2 million customers since its expansion in India earlier this year and McCarthy said Latin America and Asia are growing rapidly. Spotify offers a free ad and limited use service, selling a full buffet of on-demand songs and ad-free playlists for a fee.
Its growth in recent years has stimulated the entire music industry. Record sales increased four years in a row and exceeded $ 19 billion in 2018. Continuous music streaming has increased 22% this year, compared to 17% for the S & P 500.
– With the help of Karen Lin.
To contact the reporter about this story: Lucas Shaw in Los Angeles at [email protected]
To contact the editors responsible for this story: Nick Turner at [email protected], John J. Edwards III, David Welch
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