Spotify Goes Public: 7 Revelations From the SEC Filing
Today, Spotify made it official—the streaming giant is officially going public. The details, in a filing with the SEC, would run to 264 printed pages. Based on the numbers in the filing, the company has been valued at as much as about $23 billion in private trading. Though Spotify’s planned debut on the New York Stock Exchange is being called an IPO, it’s not an initial public offering in a traditional sense. Instead, Spotify is undertaking a rare “direct listing,” which means there’s no fixed number of shares for sale and, as Spotify explains in the filing, the price could rise or fall more dramatically than normal.
Another previously undisclosed chunk of information pertains to the company’s most recent financial results. In 2017, Spotify lost about $1.4 billion on revenues of roughly $4.6 billion, according to the filing. Also—like Google, Facebook, and Snap before it—Spotify has taken steps to ensure that its co-founders, Daniel Ek and Martin Lorentzon, keep control of the company after going public. Spotify’s ticker symbol? SPOT. Here are seven standout tidbits from Spotify’s massive regulatory disclosure.
Read “What Spotify Going Public Could Mean for Music Fans” on the Pitch.
Spotify is still much bigger than Apple Music
“With a presence in 61 countries and territories and growing, our platform includes 159 million [Monthly Average Users] and 71 million Premium Subscribers as of December 31, 2017, which we believe is nearly double the scale of our closest competitor, Apple Music.”
Spotify’s playlists account for almost one-third of streams on the platform
“We now program approximately 31% of all listening on Spotify across these and other playlists, compared to less than 20% two years ago.”
Spotify is earning less money per Spotify Premium subscriber due to student and family discounts
Average revenue per Premium subscriber “declined by 9% from 2015 to 2016 and 14% from 2016 to 2017, in part due to the launch of the Family Plan in 2016.” The launch of its Student Plan also dropped average revenue per subscriber. (The percentage of cancelled Premium subscriptions also fell during those periods.)
Spotify intends to keep expanding beyond music
“We are an audio first platform and have begun expanding into non-music content like podcasts. We hope to expand this offering over time to include other non-music content, such as spoken word and short form interstitial video.”
Spotify plans to take on traditional radio
“We believe there is a large opportunity to grow Users and gain market share from traditional terrestrial radio. ... A migration away from radio broadcasting is likely and it will benefit both consumers and artists alike.”
Spotify has found shortcomings in its accounting and has some work to do in guaranteeing its books are in order
“We identified material weaknesses in our internal control over financial reporting at December 31, 2015, 2016, and 2017… We are in the very early stages of the costly and challenging process of compiling the system and processing documentation necessary to perform the evaluation needed to comply with [the U.S. law on how public companies make sure financial statements are reliable].”
Spotify has “even bigger aspirations”
Co-founder and CEO Daniel Ek says in the filing: “We envision a cultural platform where professional creators can break free of their medium’s constraints and where everyone can enjoy an immersive artistic experience that enables us to empathize with each other and to feel part of a greater whole. But to realize this vision, professional creators must be able to earn a fair living doing what they love, where monetization is at the core of a creative proposition and not an afterthought. We care deeply about our creators and our users and we believe Spotify is a win-win for both.”
