Spotify Reports Surprise Profit in Q4, Announces Acquisition of Gimlet Media, Anchor

Spotify Reports Surprise Profit in Q4, Announces Acquisition of Gimlet Media, Anchor

Spotify, the world's most popular paid music streaming service, reported an unexpected fourth-quarter operating profit on Wednesday but its sales growth was well below expectations and it said it sees a loss of 200-360 million euros in 2019.

Spotify posted fourth-quarter operating profit of EUR 94 million ($107 million) compared with a mean forecast for a loss of EUR 16 million in a Reuters poll of analysts and a year-ago loss of EUR 87 million.

The company, which has said it prioritises growth over profitability, saw sales rise by 11 percent in the fourth quarter, considerably lower than the 31 percent seen by analysts.

Average revenue per user (ARPU) fell 7 pct in the quarter, as the percentage of cheaper subscriptions rose and as growth in relatively lower ARPU markets outpaced areas with higher ARPU.

Investors have been concerned by Spotify's slowing rate of revenue growth. Sales grew 29 percent in 2018, down from 39 percent growth in 2017 and 52 percent in 2016.

The service has reached 96 million paying subscribers since its launch in Sweden in 2008. That compares with around 50 million paying subscribers for its closest rival Apple's Apple Music, which launched in 2015.

Spotify's shares are down by some 6 percent since the listing in April last year on the New York Stock Exchange, weighed down by a global tech sell-off at the end of the year.

Separately, the company said it will acquire podcast companies Gimlet Media and Anchor for an undisclosed amount.

© Thomson Reuters 2019

We discussed Spotify's India launch on Orbital, our weekly technology podcast, which you can subscribe to via Apple Podcasts or RSS, download the episode, or just hit the play button below.


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