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Music streaming led by CEO Daniel Ek played podcasts from Joe Rogan and Dax Shepard among others.

With the help of podcasts, music streaming giant Spotify increased the number of subscribers and total users, as well as advertising revenue in the third quarter.

As of the end of September, there were 172 million paying users or paying users, up from 165 million at the end of the second quarter. The result is consistent with the company's previous forecast of 170-174 million.

The earnings update on Wednesday showed that Spotify's total monthly active users (MAU) also reached 381 million, higher than the 365 million in the second quarter and close to the upper limit of its guidance range of 377-382 million.

Spotify, led by CEO Daniel Ek, said that the trend of premium subscribers in the third quarter benefited from promotional testing. “We tested premium promotions in the third quarter, which helped our business’s typical seasonality and also helped offset the tough competition that was successfully launched in Russia and surrounding regions in the third quarter of last year,” it said. “Compared with last year’s historical lows, our average monthly premium churn rate for this quarter has fallen quarter-on-quarter and increased year-on-year. We are satisfied with the churn trend and continue to expect the full-year churn rate in 2021 to be lower than in 2020."

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Stockholm-based Spotify reiterated its previous forecast for the end of 2021, which requires a premium of 177-181 million and a MAU of 40-407 million.

In the earnings conference call, Ek stated that MAU "The volatility in the first half of this year was mainly due to COVID, and it has basically fallen behind us now."

Spotify’s quarterly advertising revenue returned to growth in the third quarter of 2020 due to the coronavirus pandemic. With the help of podcast growth, the revenue continued to grow, an increase of 75% compared to the same period last year. It set a record for the company's quarterly advertising revenue of 323 million euros (375 million U.S. dollars). “Since its launch, the number of podcasts in our network has increased by more than 50%, and nearly one-fifth of Spotify advertisers have participated in it,” the company said.

In the earnings conference call, Eck stated that advertising revenue growth has consistently exceeded the company's expectations and will exceed 1 billion euros ($1.2 billion) for the first time this year. He said that recent momentum proves that advertising has the potential to become "the second largest revenue driver for our business in the future." He said that the advertising business "is accelerating its development and has more room for operation."

The CEO said that next advertising should account for at least 20% of Spotify's total revenue, and may expand to 30-40% in the next 5 to 10 years.

Podcasting has always been Spotify's focus. As of September, there were 3.2 million podcasts on its platform, up from 2.9 million as of the end of June. "Our podcasting business is supported by the strong double-digit year-over-year growth of the existing Spotify studios (The Ringer, Parcast, Spotify Studios and Gimlet) and the acquisition of (podcast advertising company) Megaphone and Joe Rogan Experience, Dax Shepard’s armchair expert and Call Her Daddy," the company said.

Ek said on the earnings call that Spotify is ahead of podcast monetization plans. He also emphasized that data shows that Spotify has become the top podcast consumer platform in more than 60 countries, adding that a research company and company sources now indicate, “We have recently become the number one platform. 1 Podcast platform US listeners use the most ." Given that the U.S. podcast market is the largest in the world, he said, "I think this is very important."

When asked what is the key to getting creators into the podcasting business, Eck replied: “We need to lower the barriers for creators to express themselves.” He added that new formats and opportunities need to be provided, and he emphasized that creators have a great impact on the company. Of video podcasting work has "great interest". "As creators start to experiment with these things, you should start to see more videos on the Spotify platform," Ek said.

Spotify's third-quarter profit shifted from 101 million euros in the same period last year to 2 million euros (2.3 million US dollars). Quarterly revenue increased by 27% to 2.5 billion euros (2.9 billion US dollars). The average revenue per user of the Spotify subscription business increased by 4% to EUR 4.34 (US$5.03), reversing the downward trend with the help of rising family plan prices in multiple markets including the United States

In pre-market trading, as of 8:45 am Eastern Time, Spotify's stock price rose 6.7% to $269.00.

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