In its letter to shareholders, Spotify highlighted increased subscription rates, its success in betting on podcasts and its operating profit of €54m.
On Monday (28 October), Spotify announced its earnings for Q3 2019. The music streaming platform exceeded expectations in the quarter, posting an operating profit of €54m.
This is the third time in the company’s history that it has turned a profit, with one of those occasions being the result of a tax windfall in 2018.
In its letter to shareholders, the company highlighted the faster new subscriber rate it has seen, which has given the company 113m paying active monthly users and 248m monthly active users overall. The company also said that it has reduced its budget for promoting original content and artist marketing.
The company is still investing in podcasts, as demonstrated by its rumoured plans to introduce a podcast creation feature, The company has recently acquired podcast recording platforms Anchor and Soundtrap, as well as podcast network Gimlet.
Spotify’s new product Duo, which is a discounted bundle that can be purchased by two people (in a couple, living together or in a family, similarly to the family bundle), has also helped the platform increase its number of paying subscribers. Users availing of this deal have to have a shared residency.
When announcing its earnings report, Spotify addressed the fact its stock had dropped by more than a fifth over the last three months. The company said that the business is performing well, but “sometimes the stock price reflects the performance of the business and sometimes it doesn’t. But eventually, it always does”.
CFO Barry McCarthy steps down
In the company’s letter to shareholders, the music streaming company announced that its chief financial officer (CFO) Barry McCarthy will be retiring from his role at the company.
Spotify said: “After playing a pivotal role in Spotify’s listing and helping to establish Spotify as a public company, Barry McCarthy will retire from Spotify on 15 January 2020, stepping down as the company’s CFO.”
The company announced that its new CFO will be Paul Vogel, who is currently vice-president of financial planning and analysis, treasury and investor relations.
The company said: “Paul and Barry have worked together closely for the last three years. Pending shareholder approval, it is expected that Barry will be reappointed to the Spotify board of directors, a role he held prior to joining the company as CFO.”
Speaking to the Financial Times this week, McCarthy said that he felt as though his work within the company was complete.
He said: “Daniel [Ek, Spotify’s CEO,] asked me to do three things: take [Spotify] public, build a team that was capable of running a public company and recruit and train my successor. I’ve been on the rod with Spotify for five years now, first in Sweden and then in New York. I’m going home [to California].”
After the business published its earnings report, shares went up 8.5pc in pre-market trade in New York on Monday morning.