Spotify expects annual revenue will reach USD 100 billion in ten years

Spotify said on Wednesday that it expects annual revenue to reach $100 billion over the next 10 years. Spotify is expanding its podcasts, and audiobooks business and expansion is expensive, but the company promises high-margin returns on expensive expansion.

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Spotify’s annual revenue in 2021 is about $11.4 billion, which would be equivalent to an eight-fold increase in annual revenue over 10 years if the company’s goals are met. Not only that, but Spotify expects the company’s gross profit margin to climb to 40% within 10 years, and its operating margin to 20%. Spotify will lose about 53% of its market value in 2022, but the company’s shares rose 6.5% on Wednesday.

Wall Street seems to think Spotify is a bad company, believing that the company won’t be very profitable for the foreseeable future because Spotify is investing heavily in podcasts and audiobooks. But Spotify CEO Daniel Ek doesn’t seem to think so, saying that the company’s investments have performed better than expected, with gross margins of 28.5% and on track toward its long-term goal of 30-35%.

Dawn Ostroff, Spotify’s chief content officer, said that the company will invest more than $1 billion in the podcasting business, which is expected to grow significantly this year, from 2.15% last year. She said the company is in the investment phase, and the podcast business is a big pie, potentially as much as $20 billion.

Ike claims profit margins for podcasts are likely to reach 40-50%, and audiobooks can exceed 40%. As for how long it will take to reach this goal, Spotify did not give a timeline. In addition to music, podcasts, and audiobooks, Spotify will expand into other new content in the next 10 years, with the goal of increasing average revenue per user. Spotify hopes to grow to 1 billion users by 2030.

The number of Spotify users and paying users continued to increase in the first quarter, with monthly users reaching 422 million, higher than expected.

(via)