Bolstered by its podcast business, Swedish streaming giant Spotify
Monthly active users (MAU) were up 22% year over year, reaching 365 million over the past 3 months. While impressive, that number fell short of the street's expectations. Shares of the streamer fell 9% on the heels of the results.
In the earnings call, Spotify's leadership contended that the intensity of the pandemic in certain breakthrough markets, like India and Brazil, led to a decline in interest in listening to music on the go, just as the company pulled back on its marketing efforts in these regions.
"While I'm disappointed that our [user] growth was softer in the last half of Q1 and the first half of Q2, the good news is that we've seen that trend line reverse, and all the leading indicators I'm seeing show that we are back on track," said Spotify Chief Executive Daniel Ek during the earnings call.
Meanwhile, Spotify managed to swell the ranks of its premium subscribers by 20% year over year, well within its own projections. At the same time, ad sales expanded their share of the company's total revenue from 10 to 12%, marking the fourth consecutive quarter of growth for that segment of Spotify's business. All in all, the company managed to pull in roughly $2.3 billion from subscription fees and $326 million from advertisers.
Much of this new growth comes down to Spotify's unrelenting focus on boosting its podcast business. Podcast sales at Spotify Studios were up 165% year over year last quarter. The number of podcasts on the platform grew from 2.6 million last quarter to 2.9 million, while podcast engagement reached an all-time high. Additionally, the company claimed that the rollout of its targeted ad service, Spotify Audience Network, helped triple the number of monetizable podcasts on the platform.
For Ek, Spotify's CEO, it will be crucial for the company to focus on podcasts and their associated ad revenues as the company shifts from a "premium subscription service to an audio platform."
"If you looked at us for a long time you would have said Spotify is a paid subscriptions business in music and ads is a sideline business. We're now finally seeing the ad-supported side break out and become a significant revenue driver for the firm," Ek told the Wall Street Journal. "We're excited about fishing from that," he added in reference to $50 billion in global radio ad revenue currently up for grabs.
