Spotify Technology SA took on 4 million customers in the quarter, compared with the 3.3 million forecast by analysts.
Business
Standard : Spotify has reached 100 million paid subscribers,
a first for any online music service, adding more customers in the
latest quarter than analysts expected and boosting confidence the
company has lots of room to grow.
Spotify
Technology SA took on 4 million customers in the quarter,
compared with the 3.3 million forecast by analysts. But its
first-quarter loss was 79 cents a share, wider than the 41-cent loss
analysts expected. After a brief rise, the stock fell as much as 2
percent to $135.50 in New York trading.
Competition
from Apple Inc., Amazon.com Inc. and YouTube
has done little to slow Spotify’s growth around the world, and the
company has relied on its independence from some of the world’s
largest companies to its advantage. It has boosted its customer base
through promotional deals with Hulu, Samsung and even Alphabet Inc.’s
Google (YouTube’s parent company).
“The
music industry market is way bigger than most people realized,”
Chief Executive Officer Daniel Ek said on a call with analysts.
The
company forecast it would add a further 7 million to 10 million
subscribers in the current quarter. While Spotify has amassed its
current user base thanks to music, the company has acquired three
podcasting companies in the past few months to drive subscriber
growth through other mediums.
Spotify
spent about $400 million to buy Gimlet Media Inc., Anchor and
Parcast, hoping that podcasting will turn the company into the
world’s top audio platform and reduce its reliance on music. Record
labels collect the majority of its annual sales.
Label
Payments
Payments
to labels are a big reason the Swedish company is still losing a lot
of money. Spotify attributed the first-quarter loss largely to higher
costs for stock options and restricted stock units, thanks to its
share-price gains. Gross margin was 24.7 percent, above the high end
of the company’s guidance range.
Spotify
is in the midst of negotiations with the world’s three largest
music companies -- Universal, Sony and Warner. Executives have
cautioned investors not to expect those deals to reduce its costs,
but still sounded enthusiastic about concluding talks. “We’re
feeling good about the progress we’re making,” Chief Financial
Officer Barry McCarthy said in an interview.
