Spotify reports squeezed profit margins

Spotify says its profit margins are squeezed, as the company fans economic concerns

Spotify believes slow advertising led to its shares slipping by 4 per cent in the third-quarter of this year.

The music-streaming giant was hit by Google’s parent company missing its own market estimates for quarterly revenue, and advertisers cutting spending altogether.

At the same time, the company’s operating expenses grew by 65 per cent year-on-year.

In its latest report, the company said acquisitions like Podsights, Findaway, Sonantic, Chartable, Whooshkaa and Heardle were the reason behind the increased costs.

Spotify’s stocks have fallen by close to 60 per cent this year. But the company’s chief executive told Reuters he is not concerned for the long haul.

“It’s definitely impacting us in short term, and it contributed to the gross margin hit that we had this quarter, too,” Daniel Ek said.

Spotify’s ad-supported income grew 19 per cent in the last quarter.

However, Europe remains a challenging market for the music service. It believes worsening economic conditions are the reason behind the slump in the region.

Investors maintain consumer spending on entertainment is suffering amid the rising cost of living, alongside the impacts of the pandemic, and the war in Ukraine.