Spotify’s stock price fell 9% on Wednesday morning after the company reported that its second-quarter earnings were lower than its previous guide for total monthly user growth.
Streaming media companies registered 365 million monthly active users, a year-on-year increase of 22%. But it did not reach its 366 million to 373 million user guide. The company pointed out that the ongoing Covid19 pandemic has affected the performance of various markets and stated that it has stopped some marketing activities. The company said that user registration issues have also affected the growth of MAU. Spotify said these trends improved in the second half of the quarter.
“Because Spotify is a global business MAUs are one of the hardest things to forecast.We knew that going into the year we’d be impacted by the pull-forward. I’m a little disappointed we didn’t realize it would affect us in Q2 as well. We would have expected some of these markets to open a little faster.”
Spotify’s premium, or paid, subscribers grew 20% year over year to hit 165 million in the quarter. That’s within the company’s guidance range.
Spotify expects 377 million to 382 million total MAUs and to hit 170 million to 174 million paid subscribers in its third quarter.
The company’s ad-supported revenue benefitted from strong demand and favorable comparisons from 2020′s lows.
“The strength in Ad-Supported Revenue was led by our Direct and Podcast sales channels, with the latter benefiting from a triple-digit Y/Y gain at existing Spotify studios (The Ringer, Parcast, Spotify Studios, and Gimlet) along with contributions from the Megaphone acquisition, the exclusive licensing of the Joe Rogan Experience, and Higher Ground,” Spotify said in its report.
Spotify indicated it doesn’t plan to slow its push into podcasts. At the end of Q2, the company had 2.9 million podcasts on the platform, up from 2.6 million the prior quarter.
“Spotify historically has been a music subscription company, now is an audio platform,” Ek said. “We’ve been investing in podcasts the last two years and deliberately started investing in advertising to make that a new leg of the stool. Advertising is breaking out and becoming a second big revenue driver for Spotify.”WATCH