According to information released by Spotify on Tuesday, there are currently 195 million paying subscribers, an increase of 7 million from the previous quarter and a net addition of 1 million more than expected. By the end of the year, the business anticipates passing the 200 million threshold.
Wall Street was not pleased with the outcomes, despite that encouraging subscription news. In trading after hours, the stock is down more than 6%. The gross profit margin for Spotify was 24.7 percent, which was below previous forecasts and two percentage points lower than the same period last year. According to the business an “unfavorable revision to prior period projections for rights holder liabilities,” was to blame for this.
Spotify’s move into podcasting and the expansion of its collection are both explained by the reality that music is only going up in price. The platform currently has 4.7 million podcasts available, up from 4.4 million in the previous quarter. Although Spotify stated it achieved double-digit growth in podcast income, the business is still not profitable from podcasting.
The company’s internal podcasts provide a few challenges, though. Paul Vogel, the CFO of Spotify, mentioned a one-time “restructuring expense” in its podcasting division during a conference call with investors. This appears to be a reference to the earlier this month’s layoffs at Gimlet and Parcast. These modifications “should result in enhanced production at select studios,” according to Vogel.
The price issue is another consideration as CEO Daniel Ek revealed that Spotify would definitely think about price increase, however, he did not state it clearly when the decision will be taken.