Spotify’s Advertising Sales Grow 14% in the UK

Over in the UK, Spotify has found success in the advertising sales market.

According to a freshly-published financial filing, Spotify’s advertising continues to grow in the UK.

Posting its financial results for 2017 at the Companies House, Spotify UK revealed its principal activity last year was the sale of advertising services.  Moving forward, Spotify UK’s main form of generating revenue will be advertising.  The parent company will provide ongoing financial support.

Historically, the company’s main revenue stream in the UK consisted of premium streaming revenue.  But, as of November 2016, Spotify AB, the Swedish parent company, took over premium streaming subscription revenue sales.  Since then, the UK company has only technically generated revenue from advertising.  This consists of display, audio, and video advertising.

Total revenue at Spotify UK fell 55% from £237.8 million ($312.3 million) to £107.1 million ($140.7 million).  The company attributed the dramatic drop to the premium subscription revenue takeover by its parent company.

Advertising sales increased 14% from £17.5 million ($23 million) to £20 million ($26.3 million).  The company attributed the growth to an increase in the number of impressions sold, driven by an increase of the direct sales advertising business.

Breaking down the UK company’s operations, cost of sales – including distribution and royalties – totaled £31.6 million ($41.5 million), down 81% from 2016’s £166.7 million ($219 million).

Administrative expenses increased to £58.6 million ($77 million), up 53% over 2016’s £38.3 million ($50.4 million).  This led to a significantly lower operating profit of £4.6 million ($6.1 million), down 81.5% from £25 million ($32.9 million) a year earlier.

Profit before tax from continuing operations reached £4.4 million ($5.8 million), up 58.5% from 2016’s £2.8 million ($3.6 million).  The income tax charge remained mostly the same at £891,425 ($1.2 million), up just 6.1% from £840,199 ($1.1 million) a year earlier.

So, for 2017, Spotify UK posted a profit after tax of £3.5 million ($4.6 million), up 81.4% from 2016’s £1.9 million ($2.5 million).

You can read the complete financial report for the year to December 31st, 2017 here.