You will be redirected back to your article in seconds

Spotify Hits High End of Q3 Subscriber Forecast, CFO Barry McCarthy to Exit

Spotify kept packing on millions of listeners and subscribers for the third quarter of 2019, with the company claiming it’s growing twice as fast as chief rival Apple.

The company also announced that CFO Barry McCarthy will retire from Spotify on Jan. 15, 2020, to be replaced by Paul Vogel, who is currently Spotify’s VP of financial planning and analysis, treasury and investor relations. McCarthy is to be reappointed to the Spotify board, a role he held prior to joining the company as CFO.

McCarthy, who is a former CFO of Netflix, led Spotify through its public debut in March 2018 through its unusual direct listing on the Nasdaq.

For Q3, Spotify’s total monthly active users grew 30%, to 248 million, and paid subscribers were up 31%, to 113 million at the end of the period. Net subscriber growth “exceeded our expectations and was led by strong performance in both Family Plan and Student Plan” tiers, the company said in its earnings letter.

Spotify reported total revenue of $1.92 billion (€1.73 billion), in line with Wall Street expectations, which was up 28% year over year. The company posted earnings per diluted share of 36 cents, thanks to $240 million (€216 million) net new finance income recorded during the quarter (which represents a benefit for the fair-market value decline of Spotify stock options held by founders Daniel Ek and Martin Lorentzon).

Spotify shares climbed 10% in early trading Monday on the results.

Relative to Apple, “the publicly available data shows that we are adding roughly twice as many subscribers per month as they are,” Spotify said in the letter. Additionally, the company said it believes Spotify’s monthly engagement is roughly twice as high and our churn is at half the rate of Apple Music. “Elsewhere, our estimates imply that we continue to add more users on an absolute basis than Amazon,” Spotify said.

Spotify said its ad-supported business grew revenue 20% year-over-year to about $189 million (€170 million) — under its expectations. About 80% of the miss was related to “self-inflicted implementation and integration issues” Spotify experienced with the rollout of a new0order management software to replace Google’s Doubleclick Sales Manager, which was phase out in July. That resulted in a combination of lost orders and under delivery of other orders totaling about €9 million of “lost” revenue.

For Q4 2019, Spotify forecast total MAUs of 255 million-270 million; Premium subscribers to be 120 million-125 million; revenue to be $1.93 billion- $2.15 billion (€1.74 billion-€1.94 billion) and operating loss between $34 million-$145 million (€31 million and €131 million).

Spotify plans to ramp up its efforts to sell services to music artists and their partners, in addition to monetizing its user base through ads and subscription fees. The company said it will provide investors more detail on the expected upside to 2020 earnings from the “Two-Sided Marketplace” strategy with its fourth-quarter earnings report. “These initiatives drive both revenue growth and content cost savings,” Spotify said. Among its efforts on this front: Last week, it launched sponsored full-screen recommendations for indie artists to pay to promote new releases.

The company touted momentum for its podcast push, though it still remains a small piece of the business. About 14% of Spotify’s monthly users listen to podcasts, with the number of podcast hours streamed in Q3 up 39% sequentially — although the company admitted that’s off a small base. The majority of podcast listenership occurs in the U.S. but Spotify said usage is growing faster in several European countries. “Podcast engagement is clearly a growing global phenomenon,” the company told investors.

Spotify now offers more than 500,000 podcast titles, launching 22 original or exclusive titles in Q3 including Gimlet’s “The Clearing” and Parcast Studios’ “Natural Disasters,” “Medical Mysteries” and “Summer of ‘69.”

Also in the investor letter, Spotify noted that its stock currently is trading around 33% lower than Wall Street 12-month price targets when it went public in March 2018. Meanwhile, the company’s full-year 2019 guidance is above projections on all metrics. “Sometimes the stock price reflects the performance of the business and sometimes it doesn’t. But eventually, it always does,” the company said.

More Digital

  • Morning Show Apple

    Golden Globe Noms: 'The Morning Show' Turns Apple TV Plus Into a Kudos Contender

    “Euphoric” was the word to describe the atmosphere around the Apple TV Plus offices in Culver City, Calif., on Monday morning as staffers awoke to the news that the fledgling service’s cornerstone drama series, “The Morning Show,” had landed three major Golden Globe Award nominations. Apple Worldwide Video had exactly two employees — heads Jamie [...]

  • Game of Thrones Avengers Endgame

    'Game of Thrones,' 'Avengers: Endgame' Among Most Popular Tweets of 2019

    Twitter released its top-trending topics and tweets of 2019 with “Game of Thrones,” “Avengers: Endgame,” and actor Tom Holland commanding the most tweets in the TV, movies, and actors categories. BTS holds both the No. 1 spot in the most-tweeted-about musicians category and the second-most-retweeted tweet worldwide. Since its release in June, a video of [...]

  • Portugal's Cristiano Ronaldo celebrates his side's

    Canal Plus, beIN Sports In Exclusive Talks For Distribution Deal

    Vivendi-owned pay-TV banner Canal Plus Group and the global network beIN Sports have started exclusive talks to sign a five-year exclusive distribution and sub-licensing deal in France. The two companies previously tried to forge a partnership in 2016 but it was denied by France’s anti-trust board. Under the proposed deal, Canal Plus would distribute all [...]

  • NBCUniversal Peacock

    Comcast to Spend $2 Billion on NBCU's Peacock Streaming Service in First Two Years

    Comcast expects to pump $2 billion into NBCUniversal’s Peacock streaming service in aggregate over 2020 and 2021, while the company is projecting it will not be profitable for the first five years, according to CFO Mike Cavanagh. Cavanagh, who provided the details Monday at UBS’s Global TMT Conference in New York City, tried to put [...]

  • Watcher Entertainment - Steven Lim, Ryan

    Ex-BuzzFeed Video Staffers Launch Watcher Entertainment Digital Studio (EXCLUSIVE)

    UPDATED: After building their careers as internet personalities at BuzzFeed, the creators and hosts of three of the company’s biggest shows — Steven Lim, Ryan Bergara and Shane Madej — have formed their own digital-video venture. They quit BuzzFeed earlier this year and founded L.A.-based Watcher Entertainment, with the trio looking to get full creative [...]

  • 25. Oktober 2019, Berlin, Deutschland, JustWatch[Foto:

    Streaming Guide JustWatch Acquires Video Search Engine GoWatchIt (EXCLUSIVE)

    Berlin-based streaming guide JustWatch has acquired media search engine GoWatchIt from Plexus Entertainment, and is using the acquisition to open up its first office in New York. Terms of the deal, which was stock- and cash-based, haven’t been disclosed. GoWatchIt founder and CEO David Larkin will join JustWatch as its new senior vice president of [...]

  • CBS Joins Open AP Audience-Targeting Alliance

    CBS Joins Open AP Audience-Targeting Alliance

    “Young Sheldon” leads CBS’ Thursday-night schedule. Soon it may help to lead advertisers to a new way of placing their commercials. CBS has joined “Open AP,” the audience-targeting alliance working to accelerate the emerging advertising practice known as “audience buying.” Open AP works to give advertisers a way to buy impressions from particular types of [...]

More From Our Brands

Access exclusive content