Spotify Aims to Reach $100 Billion Annual Revenue in 10 Years with Podcast and Audiobook Expansion

Audio streaming company, Spotify Technology SA, has set ambitious targets to reach $100 billion in annual revenue over the next ten years. In its first investor day since going public in 2018, the company sought to reassure investors of its long-term growth prospects. To reach its goal, the company would need to grow revenue almost ten-fold from 2021 levels of $11.4 billion. CEO, Daniel Ek, forecast gross margins to increase to 40% and operating margin to 20% in the same period. Shares of the company rose by 6.5% on the day of the announcement.

Ek acknowledged that the company’s aggressive spending to build up its podcast and audiobooks platforms had impacted its ability to reach its long-term goals. However, he indicated that the investments were performing better than expected, with gross margins of 28.5%, well on their way to reaching the company’s 30%-35% long-term goal. According to Spotify’s chief content officer Dawn Ostroff, the company has invested over $1 billion in podcasting and foresees significant revenue growth this year, up from last year’s $215 million.

Ostroff believes podcasting to be a $20 billion opportunity, with potential margins between 40% to 50%, and audiobooks also holding margins over 40%. While the company is still in investment mode, CEO Daniel Ek has set ambitious goals for high-margin returns from its expansion into podcasts and audiobooks.

Spotify also plans to introduce new types of content over the next decade to boost its average revenue per user and is on track to achieve its goal of 1 billion users by 2030. Despite the challenging year for streaming companies, Spotify has continued to gain users and paying subscribers, with 422 million monthly users in the first quarter, exceeding market expectations.

. While the company has invested heavily in podcasting and audiobooks, these investments are showing positive results, and the company remains confident that these segments will contribute significantly to revenue growth in the future.

In conclusion, Spotify is targeting $100 billion in annual revenue over the next ten years, a ten-fold increase from 2021 levels. While the company has invested heavily in podcasting and audiobooks, it remains confident that these segments will contribute significantly to revenue growth in the future, with margins expected to be between 40% to 50%. The company is also planning to expand into new types of content over the next decade to increase its average revenue per user. Despite a tough start to the year for streaming companies, Spotify’s large user base and continued growth in users and paying subscribers bode well for the future.