Spotify’s long-rumored initial public offering may arrive in the second half of this year, according to a report from Bloomberg this morning, which cited five sources with knowledge of the company’s plan for a market debut.
Spotify refused a request by Billboard for comment or confirmation on the report.
The company’s public market debut has long provided grist for the rumor mill, but there have been some strong indications of its imminence lately. Last month the company lured tech-specialized finance exec Paul Vogel away from Barclays, where he was a senior analyst and head of that company’s internet and media research team. It also brought on the charismatic tech investor and artist manager Troy Carter to act as a liaison to the music industry, akin to Jimmy Iovine’s role at Apple Music. Earlier this year Spotify raised $1 billion in convertible debt — a type of loan drawn from investors that will convert to equity at some point, say a stock market debut — which placed an $8 billion valuation on the company and which a source told Billboard at the time would be used “for strategic purposes” (is there any other kind?). Its announcement of a slate of original video series, and its strategy around “snackable” video similar to Snapchat’s Discover section shows a strong desire to diversify and strengthen its offerings.
The company’s financials, while never posting a global net profit, were strong last year, and the company was responsible for a majority of the global recording industry’s revenue from streaming last year. (The company did report a modest profit in France one year after significant growth in its subscriber numbers.) It added 28 million paying customers year-over-year — those monthly subscribers generate 89.7 percent of its total revenue.
In order to improve the gulf between those two revenue sources, the company announced today (July 20) a partnership with AppNexus that will allow it to target listeners in real time which should, in turn, increase what I can charge advertisers on the platform. “The AppNexus Publisher Suite is built exactly to help companies like Spotify to maximize monetization across all inventory formats — display, native, video, and audio,” the company wrote in a statement today. If Spotify can offer advertisers a robust video advertising avenue, bully all the more for its bottom line.
All that said, digital music companies have not had it incredibly easy on the open market. Pandora lost 35 percent of its revenue last year after analysts grew skittish of the competition posed by Apple. Deezer canceled its own IPO for similar reasons. Maybe Spotify will, too — except that it has a lot of investors who have been waiting patiently for some time to see a return.