Spotify also said it would end the first quarter shy of Wall Street estimates on both its total users and paid subscribers fronts.
After a month of controversial involving podcast host Joe Rogan, Spotify Technology SA disclosed a more immediate business problem: its growth in the first quarter of the year.
The company said it would end the first quarter with 418 million total users and 183 million paid subscribers, shy of Wall Street forecasts on both numbers. The company didn’t provide a reason for the shortfall, though it did say the uncertain environment of Covid-19 made it harder to forecast.
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- The company didn’t say whether a recent artist boycott of Spotify is impacting its growth. Musicians Neil Young, Joni Mitchell and others have pulled their music from Spotify to protest Rogan, whom they say is peddling misleading information about the pandemic and Covid-19 vaccines. Spotify has pledged to put advisories on podcasts that discuss Covid-19. But more musicians and hosts have joined the boycott, and social media users have said they are deleting the app.
- The company’s results for 2021 exceeded analysts’ forecasts. Spotify credited India, Indonesia and Latin America with driving a lot of its growth in the most-recent quarter. While many people live in those regions, the average customer has less money to spend.
- Spotify will no longer issue a full-year guidance, but it does plan to host an investor day late this year to update people on its strategy.
- Podcasting is helping the company’s advertising business. Advertising sales accounted for 15% of revenue in the final quarter of 2021, a new high for the company. Spotify said advertising rates were going up and that its growing audience has also created more advertising inventory.
- Spotify shares tumbled as much as 17% in after-hours trading. The company’s stock has slipped about 18% so far this year.