Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Free trials boost Spotify subscribers at cost of revenue

Stock MarketsFeb 05, 2020 12:16PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. FILE PHOTO: A smartphone is seen in front of a screen projection of Spotify logo, in this picture illustration

By Supantha Mukherjee and Kenneth Li

(Reuters) - Spotify (NYSE:SPOT) Technology SA on Wednesday forecast current-quarter revenue largely below analysts' estimates, as the streaming service spends more on promotions to lure listeners in its battle against Apple (NASDAQ:AAPL) Music and Amazon (NASDAQ:AMZN).

Shares of the Swedish company were down 5% at $147 in midday trading.

Spotify's paid subscriptions rose a better-than-expected 29% in the fourth quarter, largely from discounted promotional plans.

The company ran several campaigns in the quarter, including a "3 months on us" intro offer for new users and a win-back offer for returning customers.

Spotify is also spending more on podcasts, trying to keep pace with its two closest rivals - Apple Music with more than 60 million subscribers as of June and Amazon, which has more than 55 million subscribers globally.

Paid subscribers, which make up nearly 90% of its revenue, tallied 124 million for the three months ended Dec. 31. Analysts on average expected 122 million, according to FactSet.

The company forecast first-quarter premium subscriber numbers largely in line with estimates. It expects total premium subscribers in the range of 126 million to 131 million for the first quarter compared with the estimate of 128 million, according to FactSet Estimates.

But Spotify reported a decline in average revenue per user (ARPU) for the fourth quarter.

"Our ARPU was down 5% in Q4 and we expect similar declines for 2020," Chief Financial Officer Paul Vogel told Reuters.

Spotify also said it bought Ringer, the sports and entertainment podcast network founded by Bill Simmons, for an undisclosed price.

"What we really did with The Ringer, I think, is we bought the next ESPN," said Chief Executive Officer Daniel Ek in a post-earnings call.

"And we think that's going to be a tremendously valuable property as we look at the development of sports over the next decade."

The company, which launched its music service over a decade ago, has invested over $500 million to build its podcast business and currently has over 700,000 podcast titles.

"It's clearer than ever to us that podcast listening is driving the overall health of our business," Ek said.

Fourth-quarter revenue rose 24% to 1.86 billion euros ($2.05 billion), missing expectation of 1.89 billion euros, according to IBES data from Refinitiv.

Spotify expects first-quarter revenue in the range of 1.71 billion euros to 1.91 billion euros, compared with estimate of 1.90 billion euros.

The company reported a loss attributable to shareholders of 209 million euros, or 1.14 euros per share, hurt mainly by social costs in Sweden.

Free trials boost Spotify subscribers at cost of revenue

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email