Earnings

Spotify earnings: The lure of a free product

Spotify added more subscribers than expected, beating analysts' profit estimates

Spotify
Spotify
  • Q1 revenue: $2.02 billion (+22% YoY, vs. $2.03 billion expected)
  • Q1 earnings: $1.09 million (up from -$141 million Q1 2019, above expectations)
  • Full-year guidance: The company reiterated full-year guidance, but reduced revenue forecasts from $8.84 - 9.28 billion to $8.37 - 8.81 billion.

The big number: Spotify says it now has 130 million premium subscribers, a 31% jump from a year ago and above expectations of 128.6 million. Guidance for next quarter was pretty much in line with expectations, though: Spotify said it expects 133 million to 138 million vs. the 136.5 million analysts expect.

People are talking: "Today, 19% of our Total MAUs engage with podcast content, up from 16% in Q4 2019." — Spotify told investors that its investment in podcast production seems to be paying off.

Opportunities: Spotify thinks its free tier presents an opportunity in a downturn. CEO Daniel Ek said it allows the company to better compete against services like Apple Music, which are paid-only, at a time when consumer finances are under pressure. "60% of our paid subscribers come from our free tier," Ek said on the earnings call, so the company could see long-term benefits from that. However, the company cited a slowdown in advertising as a reason it reduced revenue expectations, although it said currency fluctuations were having a greater impact.

Threats: Churn "ticked up just a teeny bit sequentially" last quarter, Ek said, and that's a trend that could continue as the economy worsens. Still, Spotify stressed the improvement in churn rates year-on-year, and said 80% of those who said they canceled due to COVID told the company they're likely to return "once the economic situation improves."

The power struggle: Ek made it very clear that he doesn't view Apple Music as his major competitor, instead saying that Spotify's going after the billions of radio listeners that don't use any streaming service — some of whom, no longer in their cars, may now be trying Spotify for the first time. "Linear and physical will move to on demand, and that trend line will be accelerated due to this pandemic as more and more people are learning new habits," he said.

Workplace

Ask a tech worker: How many of your colleagues have caught omicron?

Millions of workers called in sick in recent weeks. How is tech handling it?

A record number of Americans called in sick with COVID-19 in recent weeks. Even with high vaccination rates, tech companies aren’t immune.

Illustration: Christopher T. Fong/Protocol

Welcome back to Ask a Tech Worker! For this recurring feature, I’ve been roaming downtown San Francisco at lunchtime to ask tech employees about how the workplace is changing. This week, I caught up with tech workers about what their companies are doing to avoid omicron outbreaks, and whether many of their colleagues had been out sick lately. Got an idea for a future topic? Email me.

Omicron stops for no one, it seems. Between Dec. 29 and Jan. 10, 8.8 million Americans missed work to either recover from COVID-19 or care for someone who was recovering, according to the Census Bureau. That number crushed the previous record of 6.6 million from last January, and tripled the numbers from early last month.

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Allison Levitsky
Allison Levitsky is a reporter at Protocol covering workplace issues in tech. She previously covered big tech companies and the tech workforce for the Silicon Valley Business Journal. Allison grew up in the Bay Area and graduated from UC Berkeley.

COVID-19 accelerated what many CEOs and CTOs have struggled to do for the past decade: It forced organizations to be agile and adjust quickly to change. For all the talk about digital transformation over the past decade, when push came to shove, many organizations realized they had made far less progress than they thought.

Now with the genie of rapid change out of the bottle, we will never go back to accepting slow and steady progress from our organizations. To survive and thrive in times of disruption, you need to build a resilient, adaptable business with systems and processes that will keep you nimble for years to come. An essential part of business agility is responding to change by quickly developing new applications and adapting old ones. IT faces an unprecedented demand for new applications. According to IDC, by 2023, more than 500 million digital applications and services will be developed and deployed — the same number of apps that were developed in the last 40 years.[1]

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Denise Broady, CMO, Appian
Denise oversees the Marketing and Communications organization where she is responsible for accelerating the marketing strategy and brand recognition across the globe. Denise has over 24+ years of experience as a change agent scaling businesses from startups, turnarounds and complex software companies. Prior to Appian, Denise worked at SAP, WorkForce Software, TopTier and Clarkston Group. She is also a two-time published author of “GRC for Dummies” and “Driven to Perform.” Denise holds a double degree in marketing and production and operations from Virginia Tech.

The fast-growing paychecks of Big Tech’s biggest names

Tech giants had a huge pandemic, and their execs are getting paid.

TIm Cook received $82 million in stock awards on top of his $3 million salary as Apple's CEO.

Photo: Mario Tama/Getty Images

Tech leaders are making more than ever.

As tech giants thrive amid the pandemic, companies like Meta, Alphabet and Microsoft have continued to pay their leaders accordingly: Big Tech CEO pay is higher than ever. In the coming months, we’ll begin seeing a lot of companies release their executive compensation from the past year as fiscal 2022 begins.

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Nat Rubio-Licht
Nat Rubio-Licht is a Los Angeles-based news writer at Protocol. They graduated from Syracuse University with a degree in newspaper and online journalism in May 2020. Prior to joining the team, they worked at the Los Angeles Business Journal as a technology and aerospace reporter.
Boost 2

Can Matt Mullenweg save the internet?

He's turning Automattic into a different kind of tech giant. But can he take on the trillion-dollar walled gardens and give the internet back to the people?

Matt Mullenweg, CEO of Automattic and founder of WordPress, poses for Protocol at his home in Houston, Texas.
Photo: Arturo Olmos for Protocol

In the early days of the pandemic, Matt Mullenweg didn't move to a compound in Hawaii, bug out to a bunker in New Zealand or head to Miami and start shilling for crypto. No, in the early days of the pandemic, Mullenweg bought an RV. He drove it all over the country, bouncing between Houston and San Francisco and Jackson Hole with plenty of stops in national parks. In between, he started doing some tinkering.

The tinkering is a part-time gig: Most of Mullenweg’s time is spent as CEO of Automattic, one of the web’s largest platforms. It’s best known as the company that runs WordPress.com, the hosted version of the blogging platform that powers about 43% of the websites on the internet. Since WordPress is open-source software, no company technically owns it, but Automattic provides tools and services and oversees most of the WordPress-powered internet. It’s also the owner of the booming ecommerce platform WooCommerce, Day One, the analytics tool Parse.ly and the podcast app Pocket Casts. Oh, and Tumblr. And Simplenote. And many others. That makes Mullenweg one of the most powerful CEOs in tech, and one of the most important voices in the debate over the future of the internet.

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David Pierce

David Pierce ( @pierce) is Protocol's editorial director. Prior to joining Protocol, he was a columnist at The Wall Street Journal, a senior writer with Wired, and deputy editor at The Verge. He owns all the phones.

Hybrid work has some distinct advantages when it comes to onboarding.

Photo: LogMeIn

Jo Deal is the chief human resources officer at LogMeIn. She is responsible for leading global people strategy with a focus on attracting, developing and engaging talent.

The desire for change that sprung up during the pandemic resulted in the highest attrition levels in decades and a fierce war for talent playing out in the market. The Great Resignation forced managers to suddenly make hiring their top priority, and recruitment partners became everyone’s best friend as leaders scrambled to replace key roles within their teams.

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Jo Deal
Jo Deal serves as LogMeIn’s Chief Human Resources Officer. She is responsible for leading global people strategy with a focus on attracting, developing and engaging world class talent by expanding LogMeIn’s reputation as one of tech’s most desirable career destinations, and by providing a collaborative learning environment where employees can grow their careers.
Entertainment

Peloton’s terrible, horrible, no good, very bad year

2022 just started, and Peloton has already halted bike production and is talking about mass layoffs. How did the pandemic darling get here?

How did Peloton go from pandemic star to sinking ship? One answer is the classic problem of supply and demand.

Image: Peloton; Protocol

It’s been a hell of a ride for Peloton. The headlines have been practically nonstop, from 2019’s cringey wife ad to 2021’s series of unfortunate “Sex and The City” events. But in 2020, Peloton could do no wrong. The at-home fitness company saw a 172% spike in sales over the course of that year, buoyed by the pandemic forcing wealthy gym-goers to stay home.

But nothing is ever easy or certain when it comes to Peloton. In the past week, Business Insider reported that Peloton is considering laying off 41% of its sales and marketing staff and closing down stores. CNBC learned that the company has hired McKinsey & Co. to help cut costs. And yesterday, CNBC reported that Peloton is temporarily halting production of its bikes. Peloton shares promptly plunged 24%.

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Lizzy Lawrence

Lizzy Lawrence ( @LizzyLaw_) is a reporter at Protocol, covering tools and productivity in the workplace. She's a recent graduate of the University of Michigan, where she studied sociology and international studies. She served as editor in chief of The Michigan Daily, her school's independent newspaper. She's based in D.C., and can be reached at llawrence@protocol.com.

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