Tag: financial

Spotify Is Building on Megaphone’s Capabilities With the Acquisition of Whooshkaa

December 16, 2021

Over the last two years, Spotify has been focused on modernizing digital audio advertising to drive growth for creators and publishers while delivering impact for advertisers. In November 2020, we acquired Megaphone, which enabled us to offer podcast publishers innovative tools to help them earn more from their content. Throughout 2021, we unveiled new features for Streaming Ad Insertion, unlocked podcast ad buying in Spotify Ad Studio, and introduced the Spotify Audience Network. Since the launch of the Audience Network, we’ve seen a double-digit increase in fill rates and a double-digit lift in CPMs for opted-in Megaphone publishers. 

Simply put, by modernizing ad monetization for podcasts, we’ve been able to help enterprise podcast publishers grow their businesses, with nearly one in five Spotify advertisers now participating in the marketplace.

We’re committed to continuing to help publishers worldwide grow their podcast businesses. That’s why today we’re announcing our acquisition of Whooshkaa, an Australia-based podcast technology platform that gives independent creators, publishers, broadcasters, and brands a cost effective, end-to-end platform to host, distribute, monetize, and track on-demand audio. Whooshkaa offers radio broadcasters a specialized tool that makes it simple to turn their existing audio content into on-demand podcast content. As part of the acquisition, we plan to soon integrate this technology into the Megaphone suite. 

Here’s what it means for publishers and advertisers.

Supercharging publishing

Megaphone, the podcast platform of choice for leading enterprise publishers like AdLarge Media, the Wall Street Journal, and the Australian Radio Network, offers a comprehensive suite of powerful podcasting tools that can help publishers create, monetize, and measure their podcast businesses alongside our white-glove customer service. With the integration of Whooshkaa’s broadcast-to-podcast technology into Megaphone, radio broadcasters will be able to more easily and quickly turn their existing audio content into a podcast and access Megaphone’s industry-leading, differentiated suite of tools and technology.

Growing audience for advertisers

Audiences worldwide are tuned in to digital audio at record rates, with no signs of slowing. As the world’s most popular audio platform, Spotify is the place for advertisers to reach them.

With the Spotify Audience Network, advertisers are able to target audiences listening across our network of podcasts, including Spotify Originals & Exclusives, and third-party content via Megaphone and Anchor. Integrating Whooshkaa’s innovative broadcast-to-podcast technology means we’ll be able to bring even more third-party content into the Spotify Audience Network, helping advertisers to connect with even more audiences.

Just getting started

We believe we’re on the precipice of immense growth for the entire digital audio industry. To learn more about what the acquisition means for radio broadcasters, check out Megaphone.FM.

 

Forward-Looking Statements

We would like to caution you that certain of the above statements represent “forward-looking statements” as defined in Section 27A of the United States Securities Act of 1933, as amended, and Section 21E of the United States Securities Exchange Act of 1934, as amended. The words “will,” “expect,” and similar words are intended to identify forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements we make regarding the potential benefits of the acquisition and the anticipated timing of the closing of the acquisition. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and include this statement for purposes of complying with the safe harbor provisions. Such forward-looking statements involve significant risks, uncertainties and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections, including but not limited to the risks as set forth in our filings with the United States Securities and Exchange Commission. We undertake no obligation to update forward-looking statements to reflect events or circumstances occurring after the date hereof.

Spotify Reports First Quarter 2020 Earnings

April 29, 2020

Today, we (NYSE: SPOT) announced our first quarter 2020 financial performance. Click here to review the full earnings release, and take a look at the highlights below:

Interested in hearing more? You can listen to the webcast Q&A on the IR site here. Instead of the typical “hold” music, we upped it a notch this quarter with a sizzle reel to showcase audio trailers from a few of our original and exclusive podcasts. Click below to check out the sizzle reel.

IPOs Are Too Expensive and Cumbersome

August 8, 2018

This article first appeared in the Financial Times.

The US initial public offering market is broken.

The process as we know it was born on October 13 1971, when Intel raised less than $10m from 64 underwriters. That valued the company at $58m after the fundraising. But IPOs haven’t changed much since 1971, and the process no longer works in many key areas. Among those areas are the quiet period, which limits what companies can tell investors ahead of the float, the lock-up rules that would have prevented our employees from selling their shares, and the size of the underwriting fees.

That is why Spotify, the streaming service where I serve as chief financial officer, opted for a direct listing instead.

But the real elephant in the room is the enormous discount that investors extract from newly-floated companies. Bankers told us that they try to price new listings so that they rise 36 per cent once trading starts.

That gain is what the institutional investors who buy IPO shares ahead of time insist on as their reward for taking the risk of buying into untested companies. With hits such as LinkedIn, the investors double their money in a day, while January’s flop ADT saw them lose 12 per cent. The economics makes sense for the investors, but the system penalises successful individual companies.

At Spotify, we chose more of a free market approach. A direct listing involves selling shares straight to the public, without paying an underwriter to line up investors at a set price.

Avoiding the lock-up period was a very important part of our decision to list Spotify directly, but there were also clear financial benefits. First, we saved on the underwriting fees, which range from 3.5 to 7 per cent of the money raised. But the bigger cost saving was avoiding the IPO discount.

Think of it this way: the bigger the first-day gain in the closing price of your newly-issued stock, the higher the “cost” of your IPO. The investors who bought shares before the market opened pocket the gain in the stock price, instead of the company.

Many news stories I have read about Spotify’s direct listing also emphasise the fact that, unlike a lot of newly-listed companies, we didn’t need to raise capital to fund our growth. That is true. We deliberately developed our company in a way that enabled us to go public without raising additional money.

Other companies might not have that luxury, but they can still benefit from a direct listing. Here’s why. Deciding whether a company needs to raise money is an important strategic question. So is the issue of whether it needs a public stock listing. But it is a mistake to conflate the two.

Raising money from an IPO is an entirely tactical decision and should be weighed against all the other funding alternatives for private and public companies. Many of the other choices are considerably less expensive than a traditional IPO. If you want to take your company public, that is a different question — one that should not be solely about raising capital.

At Spotify, for instance, if we needed to raise capital today, we believe we could sell additional shares in the public or private markets at a 2 to 4 per cent discount to fair market value and pay a 1 per cent advisory fee to our investment bankers.

We also could sell convertible bonds, or do both. So could any other company that chose a direct listing instead of a traditional IPO. There is no reason that going public has to be part of a company’s decision about how to finance its growth.

The IPO process may not have changed much since 1971, but the rest of the capital markets have. And that is the point. Companies have more flexibility than they may realise when it comes to raising capital. And the same is true when it comes to going public.