Spotify – The Music Hasn’t Stopped

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Spotify Technology SA (NYSE:SPOT)’s second quarter revenue rose 23% to €2.3bn compared to last year. That reflects a 17% increase in revenue from premium ad-free accounts, and ad-supported revenues more than doubling. However, monthly active user growth was slower than expected, largely because of Covid disruption, including the pausing of some marketing. A technical issue also impacted MAU growth.

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Q2 2021 hedge fund letters, conferences and more

Operating losses swung from €167m loss to profit of €12m. The group forecasts revenue of €2.31-€2.51bn next quarter.

The shares fell 1.6% in pre-market trading.

Spotify's Subscribers Grow

Sophie Lund-Yates, Equity Analyst at Hargreaves Lansdown:

“The music hasn’t stopped for Spotify, with another round of subscriber growth under its belt. Crucially, there was good growth in the free-to-use ad supported subscriber base. It’s these users that keep the top of Spotify’s revenue funnel full. The idea being that as more of these users sign up, a proportion will become premium, read: paying, subscribers so they can enjoy their music and podcasts without ads.

The share price wobbled on news that monthly active users weren’t as good as hoped, as ongoing disruption meant some marketing efforts were canned. What’s more disappointing was news of a technical glitch which made sign ups more difficult. That’s not the kind of thing you’d expect to hear from a company that hinges its image on being at the forefront of slick user-design. The other cloud on the horizon is ongoing question marks over Spotify’s relationship with key artists. That’s not a fully fledged storm right now, but it is something to keep an eye on.”

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