Spotify CEO says COVID slump ‘behind us’ as podcasts fuel ad rebound

Music streaming giant Spotify said it continued to grow its subscriber base and advertising revenue thanks to podcasts in the third quarter, as the effects of the pandemic waned.

Shares of Spotify rose over 5.6 percent in early-morning trading to $266.67.

Spotify Chief Executive Daniel Ek told investors Wednesday that subscriber “choppiness in the first half of the year was primarily due to Covid — and is now largely behind us.”

The Swedish streamer ended September with 172 million paid subscribers, up from 165 million from the second quarter, due in part to a promotion offered during the period. Overall, total subscribers — paid and free — rose to 381 million from 365 million.

The CEO added that advertising revenue growth, which had taken a hit during the pandemic, had rebounded, lifted by Spotify’s growing podcast business.

Ek called out the company’s popular exclusive shows, “The Joe Rogan Experience” and “Armchair Expert” with Dax Shepard and “Call Her Daddy,” adding that Spotify “recently became the No. 1 podcast platform US listeners use the most.”

The CEO called the feat “significant” given that the US market is the world’s largest.

Advertising revenue rose 75 percent in the third quarter, reaching a company record for quarterly ad revenue of $375 million. Ek said he expects annual ad sales this year to exceed $1.2 billion for the first time. He tied the expected increase in ad revenue to the podcast push.

Overall, the Swedish streamer swung to a third-quarter profit of $2.3 million, as total revenue grew 27 percent to $2.90 billion.