Spotify Eyeing Podcasts

According to an Edison Research report, nearly 73 million people in the US listen to some form of a podcast on a monthly basis. While podcasts have been around for a while, the service gained popularity in 2014 following the release of an investigative documentary called Serial that provided different views on a murder investigation and trial. Recently, Billion Dollar Unicorn Spotify (NYSE: SPOT) also recognized the importance of the podcast market when it announced two acquisitions in the space. But first, the financial results.

Spotify’s Financials

Spotify recently reported its fourth quarter results that delivered a mixed reaction from the market. The Sweden-based music streaming company saw revenues grow 25% to $1.7 billion, marginally shy of the market’s expectations of $1.71 billion. Spotify’s Premium subscriber service revenues accounted for 88% of its total revenue for the quarter. But this was the first quarter that Spotify reported a profit. The company reported an EPS of $0.41 compared with the Street’s estimated loss of $0.22 per share for the quarter. The increase in profits can be attributed to a growth in its premium subscriber count that grew 36% over the year and 11% over the quarter to 96 million.

Among operating metrics, Spotify reported a 29% increase in the monthly active users (MAUs) to 207 million. During the quarter, Spotify added more than 16 million MAUs to its list. The 96 million premium subscriber count also makes Spotify the world’s most popular paid music streaming service. As a comparison, Apple Music currently has nearly 50 million paid subscribers.

But while the user base may be growing, its average revenue per user fell 7% over the year to the equivalent of $5.58. Spotify attributed the drop to a greater percentage of users on student and family plans in emerging markets.

Spotify ended the year with revenues of $6.21 billion and a loss of $92.1 million, or $0.60 per share.

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