The Spotify logo is displayed on a screen on the trading floor of the New York Stock Exchange (NYSE) in New York, the United States, May 3, 2018. REUTERS/Brendan McDermid/File Photo
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June 8 (Reuters) – Spotify Technology SA (SPOT.N) promised high-margin returns from its costly expansion into podcasts and audiobooks on Wednesday, as the audio-streaming company hosted its first investor day since going public in 2018, in hopes , to boost Wall Street enthusiasm despite the slowing global economy.
The company’s shares are up 6% in morning trade after shedding 53% of its market value so far in 2022, worse than the 24% decline in the S&P 500 index for the communications services sector (.SPLRCL), Spotify and other media and social media includes network companies.
“We’re doing a lot better than you’re probably guessing, around 28.5% (margin), which represents significant progress toward our long-term goal of 30% to 35%,” Chief Executive Daniel Ek told investors.
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One of the reasons it didn’t meet its long-term goals was aggressively spending to build its podcast and audiobook platforms.
The company said it has committed more than $1 billion to podcasting and expects podcast revenue to grow significantly this year compared to the $215 million it earned last year Has.
Ek expects the podcast business to have the potential to generate margins of between 40% and 50%, and audiobooks to have margins in excess of 40% as well.
He didn’t specify how long it would take for the company to reach those numbers.
While it’s been a rough start to the year for streaming companies like Spotify and Netflix (NFLX.O) so far, the Swedish company has also faced controversy over hosting its popular Joe Rogan podcasts.
However, the service added more users and paying subscribers in the first quarter and reported monthly users of 422 million, ahead of the consensus estimate. Continue reading
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Reporting by Dawn Chmielewski in Los Angeles and Supantha Mukherjee in Stockholm; Edited by Leslie Adler and Lisa Shumaker
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