Quarterly earnings dropped once again at Napster, while revenues continued to increase.
For the fiscal third quarter ending December 31st, the online music store shed $9.5 million, or $0.22 per basic and diluted share. That represents a milder drop than year-ago losses of $17.0 million, or $0.40 per basic and diluted share. Revenues gained significantly, reaching $28.4 million, up 21 percent from $23.5 million in the year-ago quarter. Subscribers moved upward by 48,000 to reach 566,000, though Napster boosted those numbers significantly though acquisitions involving now-defunct, US-based Virgin Digital and AOL’s Music Now. “We are very pleased with our strategic acquisition of AOL’s music subscription business, which should increase our subscriber base by more than 50 percent when AOL’s subscribers are transitioned to Napster in late March,” said Napster chairman and chief executive officer Chris Gorog.
Cash, cash equivalents and short-term investments stayed relatively level quarter-to-quarter, landing at $80.9 million for the period. That is slightly down from $90.3 million during the previous quarter, though the cash total has declined by more than $14 million over the past two quarters. And compared to the same quarter last year, cash reserves declined $30.5 million. On Wall Street, shares dipped 5.13 percent to $4.09, a modest reaction to the narrowing losses. The latest financial diagnosis resembles earlier reports, which usually include significant losses alongside ever-increasing revenues. Looking ahead, large subscriber acquisitions will push Napster towards one million, a much larger pool. Whether that tips the economic fundamentals at Napster remains unclear, though Napster remains a survivor in a difficult landscape.