Spotify’s chief financial officer is leaving the company, the latest turnover at the music streaming group whose shares have slumped in recent months.
Barry McCarthy was the architect of Spotify's unconventional direct listing last year and played a big role in guiding its first year and a half as a public company, having previously led Netflix through a public offering as its CFO in 2002.
Paul Vogel, head of investor relations, is set to replace Mr McCarthy from January. Mr McCarthy, who has been Spotify’s number two to chief executive Daniel Ek since 2015, aims to rejoin the company’s board pending shareholder approval.
The upheaval comes at a time when Spotify’s stock has dropped more than a fifth in the past three months, underperforming the broader market.
Spotify addressed this in a letter to investors alongside results on Monday. "The business is outperforming and the stock price is down 33 per cent versus. the consensus," the company said.
“Sometimes the stock price reflects the performance of the business and sometimes it doesn’t. But eventually, it always does.”
The news came as Spotify revealed broadly better than expected third-quarter results.
Spotify added five million subscribers in the quarter, eclipsing analyst forecasts for four million and at the high end of Spotify’s guidance. Total users, which includes those using its free service, were 248 million, also above consensus forecasts for 243 million, which Spotify attributed to growth in Latin America and south-east Asia.
Trading
Shares rose more than 6 per cent in pre-market trading.
With 113 million paying subscribers globally, Spotify is the leader in paid music streaming by a wide margin – but it faces a fresh competitive threat.
Apple has begun talks with rights-holders to bundle together Apple Music with its upcoming television and movie service, the Financial Times reported this month, which could boost sign-ups. Apple has overtaken Spotify to become the most popular paid music service in the US, the largest music market.
Spotify has bet on podcasts to help differentiate itself from competitors and sign up more customers. This year Spotify has spent hundreds of millions to buy the podcast start-ups Gimlet Media, Anchor and Parcast, as it looks to invest in areas outside of music.
Mr McCarthy has likened Spotify’s podcast investment to Netflix’s initial move into original streaming content.
The company on Monday gave an update on this quest. Spotify claims that 14 per cent of all users are listening to its podcasts, and those who do are switching from its free service to its paid service at a rate that it “almost too good to be true”.
In the third quarter Spotify posted a gross margin of 25.5 per cent; analysts were looking for 24.6 per cent.
Spotify swung to a quarterly operating profit of €54 million on revenues of €1.73 billion. Analysts were looking for a loss of €30 million on €1.72 billion in sales.
Shares were up 6.2 per cent in premarket trade on Monday morning in New York. – Copyright The Financial Times Limited 2019
