Spotify Technology SA’s move into podcasting is starting to pay off.
The company on Thursday reported a 75% jump in advertising sales for the third quarter and projected it would eclipse 1 billion euros ($1.16 billion) in advertising sales for the first time on an annual basis. The company reported overall sales of 2.5 billion euros and operating income of 75 million euros, both surpassing analysts’ forecasts.
Investors have been waiting for Spotify’s multibillion dollar investment in podcasting and advertising technology to turn its money-losing music service into a profitable audio service. After shares of Spotify spiked for most of 2020, they’ve sagged this year as investors soured on the podcasting gambit.
The company has urged patience and said that podcasting is still a drag on profit margins. But CEO Daniel Ek said the company’s efforts to build a podcasting business are now ahead of schedule, and projected advertising would one day account for more than 20% of its total sales. Advertising generated 323 million euros of revenue in the third quarter, which is about 13% of total sales.
“Our advertising business continues to surpass even our own optimistic expectations,” Ek said on a call with investors. The company’s shares spiked as much as 10%, the most since December.