Spotify Q1 2023 earnings: Podcasting and new categories

We looked at Spotify’s Q1 financials HERE. In this post, we review the company’s responses to investor questions about podcasting.

Podcasting was not mentioned even once in Spotify’s prepared remarks, delivered by CEO Daniel Ek and CFO Paul Vogel. But investors on the call certainly wanted to hear some podcasting remarks, and they asked.

One participant asked about podcast engagement, as separate from the money-making. Daniel Ek characterized Q1 as “a phenomenal quarter when it comes to engagement, which reportedly grew more than predicted. Same for music, according to the company chief, who noted a “symbiosis” between the two categories. No engagement numbers from Ek. Paul Vogel chipped in with a general confirmation that listening hours per user were strong in the quarter.

Rich Greenfield, Managing Director and analyst at BTIG wanted to know about future broad audio categories which might be added to Spotify’s current lineup of music, podcasts, and audiobooks. Daniel unsurprisingly declined to issue any headline-making details, but did divulge that the company is working on three new initiative, two of which are “progressing very nicely.” He observed, as a kind of warning against impatience, that large new initiatives can take three to four years to mature.

What about podcast-specific profitability? Seems like an obvious topic, and it was queried by Doug Amruth from JP Morgan. Spotify’s response via Ek was a bit of we’ve-already-discussed-this boilerplate, with a some nuance related to different markets. “We do have some markets and regions where our gross margins aren’t quite where they are in some of our more established and developed advertising markets. And so, we’re still working on getting some of those markets kind of ‘ad-parity’ with our more developed ad markets.” 

Brad Hill