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Last quarter, Spotify incurred a €302 million loss due to the expenses associated with cutting podcasts and reducing staff. This overshadowed the company’s record number of new sign-ups during the same period.
After heavily investing in podcasts during the pandemic, Spotify has faced criticism from investors for its strategy and has since scaled back its podcast efforts.
Incurring €91 million in expenses related to efficiency measures, such as real estate impairments and severance pay for terminated employees, contributed to the overall loss of €302 million in the three months ending in June. However, the company saw an 11% increase in revenue to €3.2 billion compared to the previous year.
During the quarter, Spotify canceled several original podcast shows, including true crime series, as it merged its Gimlet and Parcast studios.
Despite the financial loss, Spotify gained 10 million paying subscribers and 36 million users overall in the same period. The total number of Spotify users worldwide has now surpassed half a billion, reaching 551 million.
This impressive growth demonstrates that Spotify has not experienced the subscriber slowdown seen by Netflix, which had a negative impact on US media stocks. However, Spotify’s shares closed more than 14% lower on Tuesday in New York.
The company continues to face pressure from shareholders to reduce costs. Activist investor ValueAct purchased a stake in Spotify in February, highlighting concerns about the increasing expenses related to the expansion of its podcast business.
Earlier this year, Chief Financial Officer Paul Vogel acknowledged that podcasts had a negative impact on Spotify’s business in 2022 and emphasized the company’s determination to discontinue underperforming ventures swiftly.
In addition, Spotify recently raised its prices in the US, UK, and other countries. In the US, the standard subscription now costs $11, marking the first price increase since the service was launched over a decade ago. This decision follows Apple Music’s price increase to $11 last year.
On its website, Spotify justified the price hike as necessary to support continued innovation in response to changing market conditions.
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