Spotify announces a profit in latest financial report
Since it went online in 2008, Spotify has burned through billions of dollars, not because of bad management but because of the onerous conditions under it has to work. As subscriber numbers and revenues go up, its music licenses dictate that expenses go up in lockstep. The more the company brings it, it owes a like a amount That’s made it very difficult to increase margins through efficiencies and synergies.
Today (July 23), Spotify announced its financial results for Q2 2024. Here’s what we learned.
- Revenues are up 20% to €3.81b (US$4.13b). A year ago, the company lost €247 million.
- The company achieved a record operating profit of €266 mill. That has to have been the result of diversifying into areas like podcasting where the company doesn’t have to pay out royalties. People use the platform for podcasts (which Spotify likes) and it costs virtually nothing. The company’s controversial “bundling” strategy is paying off. Good for margins.
- Spotify now has 626 million monthly average users (MAUs), which is up 14% from this time last year. However, that’s 5 million less than they’d predicted.
- Premium (paid) subscribers jumped to 246 million. That’s one million more than what the company had predicted.
- There’s big growth outside of Europe, North America, and Latin America. The ROW (rest of the world) accounted for 33% all all monthly users, which is up almost ten points in two years.
What about the future? For Q3, Spotify says it expected 13 million more MAUs and €4 billion in revenues, and an operating profit of €405 million.
More analysis here.
