Spotify Banks on Podcasts and Audiobooks to Boost Margins | Photo credits: Nyse Community manager
by Dawn Chmielewski and Supantha Mukherjee
June 8 (Reuters) – Spotify Technology promised high margins from its costly expansion into podcasts and audiobooks on Wednesday on its first investor day since going public in 2018.
Shares of the audio streaming company, down 53% year-to-date, jumped 6% in morning trading in New York.
“Our performance is much better than you probably suspect, around 28.5% (margin), which is major progress towards our long-term goal of 30% to 35%,” said chief executive Daniel Ek to investors.
Spotify has yet to meet its long-term goals due in part to its heavy spending on the development of its audiobook and podcast platforms, which are worth more than $1 billion, according to the group.
The company expects podcasts to generate margins of between 40% and 50%. It also expects margins in excess of 40% for its audiobooks.
Daniel Ek didn’t specify how long it would take for Spotify to reach those numbers.
While it’s been a tough start to the year for streaming companies like Spotify and Netflix, the Swedish company managed to grow its number of users and paying subscribers in the first quarter, reporting 422 million monthly users — above analysts’ average estimates.
(Reporting by Dawn Chmielewski in Los Angeles and Supantha Mukherjee in Stockholm; French version Dina Kartit, editing by Jean-Stéphane Brosse)