Spotify Stock Soars on Promising Q3 Earnings: What to Expect for Q4

The Spotify banner hangs from the New York Stock Exchange on the morning that the music streaming service begins trading shares at the NYSE on April 3, 2018 in New York City.

Indeed, the streaming giant performed very well in the period spanning July to September. That revenue growth was the highest rate in two years and subscription revenue -- up 21.7% from the same period last year -- had its best improvement since the first quarter of 2020. User growth was typically strong both sequentially and annually.

The churn rate, however, which measures the percentage of subscribers lost in a given quarter, did increase by an unspecified amount from the same period a year earlier . There’s probably no cause for concern, though. Spotify shows no sign of changing direction on discounted plans that help the churn rate and increase a subscribers’ lifetime value. And, still, even with the uptick in churn, Spotify netted 9 million new subscribers that generated 122 million euros for rights holders and creators.

“We will crack the code,” Ek said. “I’m 100% sure of it. I just can’t tell you exactly when.” Spotify has enough resources to spend years figuring out new markets. Investors and the music business may have less patience.Aided by podcasts, advertising revenue grew 74.6% compared to the same period last year to 323 million euros and accounted for 12.9% of revenue -- one of the highest proportions since Spotify began hosting podcasts original podcasts in 2019.

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