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Spotify slumped to a €302mn loss last quarter as the group racked up costs axing podcasts and cutting jobs, overshadowing the record number of new users signed up during the period.
After investing heavily in an ambitious push into podcasts during the pandemic, Spotify has retreated over the past year as investors have grown impatient with the strategy.
The company revealed the cost of the retreat on Tuesday, saying it had incurred €91mn of expenses “related to efficiency efforts” such as real estate impairments and paying severance to employees it had fired.
The hit contributed to an overall loss of €302mn in the three months to the end of June, more than double the €125mn it lost in the same period last year. The group’s revenues rose 11 per cent to €3.2bn from a year ago.
Spotify has cancelled a number of its original podcast shows over the past year, including several true crime series during the quarter, as it merged its Gimlet and Parcast studios.
While Spotify’s bottom line suffered during the quarter, the company added 10mn paying subscribers and 36mn users overall. More than half a billion people — 551mn users — are now signed up for Spotify worldwide.
The robust growth shows that the subscriber slowdown revealed by Netflix, which sparked a bruising correction across US media stocks, has not materialised at Spotify.
Shares in Spotify were down more than 8 per cent in pre-market trading in New York.
It remains under pressure from shareholders to curb costs. Activist investor ValueAct in February purchased a stake in Spotify, arguing that costs at the music service had “exploded” as it built out its podcast business.
Chief financial officer Paul Vogel told the Financial Times earlier this year that podcasts were a “big drag on our business in 2022” and that “when things aren’t working, we will be quicker to pull the plug”.
The group said on Monday that it was raising prices in the US, UK and several other countries. In the US, a standard Spotify subscription will now cost $11, up from $10 — the first such increase since launching in the country more than a decade ago. The move comes after rival Apple Music last year raised the price of its subscription to $11.
On its website, Spotify explained the price rise as a move to help the company “keep innovating in changing market conditions”.