Spotify reports lackluster results for quarter before Neil Young controversy
Spotify posted poor results for the fourth quarter of 2021 – a period that does not include the recent controversy over Neil Young and other musicians pulling their music from the streaming giant, which is the world’s largest paid music subscription service.
The number of Premium subscribers rose to 180 million, up 8 million from the 172 million reported last year, and the average number of monthly users rose 18% to 406 million from 381 million. Total revenue was €2.69 billion ($3.04 billion), a year-on-year growth of 24%. Subscription revenue was €2.3 billion, up 22% year-on-year. Advertising revenue was €394 million, up 40% year-on-year.
However, ARPU (average revenue per user) grew only 3% year over year in the quarter, and only 1% at constant exchange rates. Ad-supported revenue reached a record 15% of total revenue, according to the announcement, with a gross margin of 26.5%.
Spotify’s market capitalization fell by around $2.1 billion over a three-day period last week after Young pulled its songs from the audio streaming giant. However, he recovered quickly on Monday – not after the co-founder/CEO Daniel Ek announced on Sunday that the company would put in place warnings and links to health information on podcasts that talked about Covid-19, but rather after Rogan himself posted a 10-minute video in which he agreed with Spotify’s new policies and would work to bring people to his show with prospects wider.
In after-hours trading, Spotify stock fell 10%, erasing gains of a bullish analyst update earlier this week. That’s after the split close of 5.8% on Wednesday (February 2) at $191.92/share.
Revenue of €2,689 million increased 24% year-on-year in the fourth quarter (or 20% at constant currency), which the company said was due to “significant strength in advertising and favorable currency movements”. Premium revenue increased 22% to €2,295 million (or 18% in constant currency), while advertising-supported revenue increased 40% year-on-year for reach 394 million euros (34% in constant currency).
Gross margin ended at 26.5% in the fourth quarter, stable compared to the prior year period. Premium gross margin was 29.2% in the fourth quarter and advertising-supported gross margin was 10.8%, or flat. Operating expenses amounted to €719 million, an increase of 12% year-on-year.
Spotify’s share price was already down – having fallen 25% year-to-date to January 25, the day before Young’s catalog withdrawal from Spotify. Investors have been rattled by signals that Spotify’s growth may be slowing, particularly after Netflix warned of a major slowdown in net subscriber additions in the first quarter (which precipitated a 24% drop in share price). his action).
A New York Times article from last July, titled “Joe Rogan is too big to cancel,” included this detail: “[A]Among Spotify’s top executives, say people familiar with the company, the idea of Mr. Rogan presenting any type of regrettable executive headache is laughable.
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