Spotify forecasts $100 billion in revenue over 10 years
Spotify said it expects to reach $ 100 billion in annual revenue over the next 10 years. Such high profits should bring its further expansion in the field of podcasts and audiobooks.
The streaming audio company has organized its first investor day since going public in 2018, hoping to warm up Wall Street’s enthusiasm despite the global economic slowdown. To achieve its ambitious goal, Spotify had to increase its revenue by almost ten times. In 2021, its revenue amounted to 11.4 billion US dollars, and CEO Daniel Eck also predicts that gross profit will increase to 40% and operating profit to 20%. ‘Spotify has very ambitious goals, and we follow them because that’s how we perceive the world and therefore our investments,’ Ek said.
Shares rose 6.5% on Wednesday after losing 53% of their market value in 2022, worse than a 24% drop in the S&P 500, which includes Spotify and other media companies. and social networks.
Ek began a nearly four-hour presentation to investors, trying to change Wall Street’s attitude toward the company, saying some may think ‘we have a bad business or at least a bad profit business in the near future.’
One of the reasons for the failure to achieve long-term goals was the aggressive cost of expanding the podcasting and audiobook platform. However, Eck said the investment is already showing ‘better-than-expected’ results with a gross margin of 28.5%, which is in line with the company’s long-term goal of 30% -35%. Spotify content director Don Ostroff said the company has allocated more than $1 billion to podcasts and expects podcast revenue to grow significantly this year from the $215 million (€200 million) it earned last year. She said the company was still in the investment stage, but said the podcast industry was a $20 billion opportunity.
Thus, the podcasting business is expected to have a margin potential of 40% to 50%, and audiobooks also have a margin of over 40%. Ek did not specify how long it will take the company to achieve these figures.
In addition to music, podcasts and audiobooks, Spotify plans to introduce new types of content over the next 10 years that will increase the average revenue per user, said CTO Alexander Nordström. He said Spotify is on track to reach its 1 billion targets by 2030.
The beginning of the year was difficult for such streaming companies as Spotify and Netflix. The Swedish company has faced disagreements over the moderation of popular podcasts by Joe Rogan.
However, in the first quarter, the site continued to increase the number of users and paid subscribers, recording 422 million users per month, which exceeds forecasts.
