Spotify 2Q23 Earnings, Spotify’s Podcasting Disappointment, Revisiting Apple Podcasts

We kick things off with Neil’s thoughts on Spotify’s earnings. The discussion then turns to the WSJ’s deep dive into Spotify’s podcasting strategy. We go over three specific problems with the strategy. The update concludes by bringing Apple Podcasts into the mix and looking at the overall podcasting space.

Hello everyone.

One follow-up to yesterday’s update. In late 2022, Apple announced $450M was being spent on U.S. infrastructure to support Emergency SOS via satellite. A majority of the funding is earmarked for Globalstar. The reimbursements that Apple will provide Globalstar for 95% of capital expenditures related to updating its satellite constellation is part of that $450M commitment.

Spotify 2Q23 Earnings

Back at the end of July, Spotify reported 2Q23 earnings. With 3Q23 nearly two-thirds over, we will keep our focus broad. The more interesting topic is found with Spotify and podcasting, which we will discuss shortly.

Spotify’s earnings were similar to those of the past few quarters. User growth is exploding higher – thanks to a ramp up in marketing and promotions – while the company treads water financially.

The following slide did a good job of summing up Spotify’s current status.

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Final Thoughts Heading Into Apple Earnings, Spotify Earnings (Daily Update)

Hello everyone. On Monday, we went over my expectations heading into Apple’s earnings tomorrow. We also talked briefly about my thoughts on what Apple may say about FY2Q23. Yesterday’s update included my granular financial estimates and updated Apple earnings model. One item that has been on my mind is that noise found with tomorrow’s earnings may drown out the numbers and topics that should grab attention. In today’s update, we go over those key earnings items to keep an eye on tomorrow. The discussion then turns to Spotify’s 4Q22 earnings.

Final Thoughts Heading Into Apple Earnings

One item that has been on my mind is that noise found with tomorrow’s earnings may drown out the numbers and topics that should grab attention.

  1. iPhone strength. As alluded to in yesterday's update, earnings recap headlines will probably be focused on

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Sonos 4Q22 Earnings, Spotify Subscriber Trends (Daily Update)

We kick off today’s update by looking at the latest earnings release from Sonos. The discussion then turns to Spotify’s earnings with a focus on the company’s subscriber trends.

Hello everyone. Welcome to December. This month is going to fly by.

Two quick notes:

1) The Elon Musk saga took another twist yesterday. Tim Cook invited Musk to Apple Park. This was the first time Musk and Cook have talked with each other. According to Musk, "Tim was clear that Apple never considered [removing Twitter from the App Store]." Musk had just said the opposite - that Apple had "threatened to withhold Twitter from its App Store" without explanation – two days earlier. Musk’s initial tweet never sounded accurate to me. It’s not clear what Cook actually told Musk while walking around Apple Park yesterday. The following tweet that I wrote yesterday sums up the situation:

2) Looking back over the past two months of updates, we have gone over 10 earnings reports from various Apple competitors.

  • Warner Bros. Discovery (Nov 16)

  • Roku (Nov 10)

  • Peloton (11/10)

  • Disney (11/9)

  • Amazon (11/8)

  • Microsoft (11/8)

  • Meta (11/2)

  • Apple (10/28, 10/31, 11/1)

  • Alphabet (10/26)

  • Netflix (10/19)

  • Nike (10/3)

In today’s update, we will go over two earnings reports that have been on my list: Sonos and Spotify. Sonos was one of the last companies to report earnings. As for Spotify, it’s been six months since we took a closer look at the company’s subscriber trends.

Sonos 4Q22 Earnings

Sonos reported FY4Q22 earnings two weeks ago. Management had previously warned that things were going to look funky with demand slowing a bit over the summer and the company placing what ended up being poorly-timed bets on inventory.

  • 4Q22 revenue was down 12% to $316M.

  • Gross margins dropped by 720 basis points (to 39.2%). Management claims the drop is temporary.

An Above Avalon membership is required to continue reading this update. Members can read the full update here. An audio version of this update is available to members who have the podcast add-on attached to their membership. More information about the podcast add-on is found here.

(Members: Daily Updates are always accessible by logging into Slack. If you haven’t logged into Slack before, fill out this form to receive an invite.)

Above Avalon Membership

Payment is processed and secured by Stripe. Apple Pay and other mobile payment options are accepted. Special Inside Orchard bundle pricing is available for Above Avalon members.

More information about Above Avalon membership, including the full list of benefits and privileges, is available here.