Spotify Technology SA, the world’s largest audio streaming service, gave some hints of improving trends in advertising sales and music listening with its second-quarter results.
The Swedish company said Wednesday that advertising revenue fell 25% in the quarter from a year earlier, unsurprising as the world reeled from the coronavirus pandemic. But most of the trouble was in April and May, with June down only 12%, suggesting the ad slump is abating.
Growth in the key metric of monthly active users exceeded Spotify’s expectations in North America, where music listening started to rise again in May and is back at pre-Covid levels, according to Billboard. Listening declined as commuting and travel, frequent venues for music, dried up amid lockdowns.
While Spotify saw lower-than-expected growth in its “Latin America and rest of world” segment in April and May, “encouragingly, things rebounded significantly in June as we saw increased reactivations and a step down in churn,” the company said in its earnings statement.
Overall second-quarter revenue and average revenue per user missed analysts’ expectations, and Spotify shares slid as much as 6% to $251.02 in New York trading before rebounding somewhat.
The stock has surged 79% this year thanks to deals for exclusive podcasts from Joe Rogan, Michelle Obama and Kim Kardashian. Spotify plans to offer all the shows free, using them as a tool to attract new listeners and advertisers. Investors hope Spotify can turn podcasting into a multibillion-dollar advertising business, and maybe gain leverage in its relationship with major music companies.