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.

 Shakeel Hashim

Shakeel Hashim ( @shakeelhashim) is a former growth manager at Protocol, based in London. He was previously an analyst at Finimize covering business and economics, and a digital journalist at News UK. His writing has appeared in The Economist and its book, Uncommon Knowledge.

Fintech

Judge Zia Faruqui is trying to teach you crypto, one ‘SNL’ reference at a time

His decisions on major cryptocurrency cases have quoted "The Big Lebowski," "SNL," and "Dr. Strangelove." That’s because he wants you — yes, you — to read them.

The ways Zia Faruqui (right) has weighed on cases that have come before him can give lawyers clues as to what legal frameworks will pass muster.

Photo: Carolyn Van Houten/The Washington Post via Getty Images

“Cryptocurrency and related software analytics tools are ‘The wave of the future, Dude. One hundred percent electronic.’”

That’s not a quote from "The Big Lebowski" — at least, not directly. It’s a quote from a Washington, D.C., district court memorandum opinion on the role cryptocurrency analytics tools can play in government investigations. The author is Magistrate Judge Zia Faruqui.

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Veronica Irwin

Veronica Irwin (@vronirwin) is a San Francisco-based reporter at Protocol covering fintech. Previously she was at the San Francisco Examiner, covering tech from a hyper-local angle. Before that, her byline was featured in SF Weekly, The Nation, Techworker, Ms. Magazine and The Frisc.

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Enterprise

AWS CEO: The cloud isn’t just about technology

As AWS preps for its annual re:Invent conference, Adam Selipsky talks product strategy, support for hybrid environments, and the value of the cloud in uncertain economic times.

Photo: Noah Berger/Getty Images for Amazon Web Services

AWS is gearing up for re:Invent, its annual cloud computing conference where announcements this year are expected to focus on its end-to-end data strategy and delivering new industry-specific services.

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Donna Goodison

Donna Goodison (@dgoodison) is Protocol's senior reporter focusing on enterprise infrastructure technology, from the 'Big 3' cloud computing providers to data centers. She previously covered the public cloud at CRN after 15 years as a business reporter for the Boston Herald. Based in Massachusetts, she also has worked as a Boston Globe freelancer, business reporter at the Boston Business Journal and real estate reporter at Banker & Tradesman after toiling at weekly newspapers.

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Farewell from Protocol

Image: Protocol

We launched Protocol in February 2020 to cover the evolving power center of tech. It is with deep sadness that just under three years later, we are winding down the publication.

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Bennett Richardson

Bennett Richardson ( @bennettrich) is the president of Protocol. Prior to joining Protocol in 2019, Bennett was executive director of global strategic partnerships at POLITICO, where he led strategic growth efforts including POLITICO's European expansion in Brussels and POLITICO's creative agency POLITICO Focus during his six years with the company. Prior to POLITICO, Bennett was co-founder and CMO of Hinge, the mobile dating company recently acquired by Match Group. Bennett began his career in digital and social brand marketing working with major brands across tech, energy, and health care at leading marketing and communications agencies including Edelman and GMMB. Bennett is originally from Portland, Maine, and received his bachelor's degree from Colgate University.

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As companies expand their use of AI beyond running just a few machine learning models, ML practitioners say that they have yet to find what they need from prepackaged MLops systems.

Photo: artpartner-images via Getty Images

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Kate Kaye

Kate Kaye is an award-winning multimedia reporter digging deep and telling print, digital and audio stories. She covers AI and data for Protocol. Her reporting on AI and tech ethics issues has been published in OneZero, Fast Company, MIT Technology Review, CityLab, Ad Age and Digiday and heard on NPR. Kate is the creator of RedTailMedia.org and is the author of "Campaign '08: A Turning Point for Digital Media," a book about how the 2008 presidential campaigns used digital media and data.

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