Spotify expects to reach $100 billion revenue in 10 years
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2 years ago 06:00:33am Television

Spotify expects to reach $100 billion revenue in 10 years

New Delhi, 10-May-2023, By IBW Team

Spotify cleans up playlists, removes thousands of AI-made songs

Spotify Technology SA has said it expects to reach $100 billion revenue annually in the next 10 years and promised high-margin returns from its costly expansion into podcasts and audiobooks.

To reach its ambitious goal, the audio streaming company would need to make its revenue grow nearly 10-fold from 2021 revenue of $11.4 billion, and Chief Executive Daniel Ek also forecast gross margins to jump to 40% percent and operating margin to 20 percent in the same time.

“Spotify will put out these pretty audacious targets and we are going after these because that’s how we see the world and we are going to invest behind that,” Ek said Wednesday, according to a Reuters report.

Ek began the nearly four-hour investor presentation Wednesday trying to reset Wall Street’s perceptions of the company, saying some may think “we’re a bad business or at least a business with bad margins for the foreseeable future”.

One of the reasons for not reaching its long-term goals was its aggressive spending to build up its podcast and audiobooks platforms. Though Ek said its investments are already performing “better than you probably expect”, with gross margins of 28.5 percent, well on its way to reaching the company’s 30-35 percent long-term goal.Spotify’s chief content officer, Dawn Ostroff, said the company has committed more than $1 billion to podcasting, and expects podcast revenue to increase materially this year from the $215 million (200 million euros) it made last year.

She said the company was still in investment mode, but it believes podcasting to be a $20 billion opportunity.

Ek expects the podcast business to have the potential to generate margins between 40 to 50 percent and audiobooks to also have margins over 40 percent. He did not specify how long it would take for the company to hit those numbers.

Apart from music, podcasts and audiobooks, Spotify is also planning to enter new types of content over the next 10 years that would boost its average revenue per user, engineering manager Alexander Nordstrom said.

He said Spotify was on track to hit its goal of 1 billion users by 2030.

While it has so far been a rough start to the year for streaming companies like Spotify and Netflix, the Swedish company also faced a controversy over moderating of its popular Joe Rogan podcasts.


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