Spotify offers modest outlook for 2021 after big podcast spending

3 Feb 2021202 Views

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The company’s substantial investments in podcasts have seen a spike in paid users but it presented a reserved forecast for this year.

Spotify has added more users to its service as it bets big on podcasts but said the ongoing pandemic may hamper gains.

According to the Swedish company’s fourth quarter earnings report, it now has 345m monthly active users with 155m of those being premium subscribers. However average revenue per user dropped to €4.26.

Spotify said that the pandemic helped in pushing more users to the service and advertising revenues recovered from a slump in 2020, now clocking in at €281m in the last quarter.

It booked more than €2.16bn in quarterly revenue with an operating loss of €69m. Its losses for the full year were €293m.

The company warned shareholders in its 2021 forecast that there is uncertainty over revenue growth in the first quarter of this year.

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“[We] face increased forecasting uncertainty versus prior years due to the unknown duration of the pandemic and its ongoing effect on user, subscriber, and revenue growth.”

It expects to end 2021 with between 172m and 184m premium subscribers and operating losses between €200m and €300m.

Spotify has made considerable investments in podcasts to attract users beyond its core music offering. These included a $100m deal for the Joe Rogan podcast and the acquisition of podcasting app Megaphone.

“Podcast performance benefited from strong, underlying demand from advertisers with a 50pc increase in the number of companies spending in this channel versus Q3,” the company said in its shareholder letter.

It has also inked a deal with Prince Harry and Meghan Markle to produce their own show, which started with a holiday special last month and a full scale launch is due this year.

Spotify recently raised subscription prices of some its plans in certain markets, including its family plan and this week it launched in South Korea but without the free option offered in other markets.

Jonathan Keane is a freelance business and technology journalist based in Dublin

editorial@siliconrepublic.com