Spotify just revealed it wants to turn over $100 billion in revenue in the next 10 years - and it could mean higher prices for us!
👉 Background: Spotify is the the big boss of the audio streaming space. It has around 422 million monthly active users, including 182 million paying subscribers.
👉 What happened: The company just held its first ever investor day since going public in 2018... and revealed some fairly lofty goals. Spotify reckons it’ll crack $100 billion in revenue annually in the next 10 years.
👉 What else: That's nearly 10 times its 2021 revenue... and would put it amongst the top 80 largest companies on the planet by revenue. To do that, Spotify needs to boost its average revenue per unit.
💡 Average revenue per unit (APRU for short) is the average amount of revenue generated by each active user of your product or service. It's often used by telco or digital media companies as an indicator of profitability.
💡APRU is calculated by dividing total revenue by the number of subscribers. So, if Spotify makes $11.4 billion in revenue across 182 million subscribers, each subscriber brings in around $62 worth of revenue each year 🤑.
💡To increase its APRU, Spotify could... reduce discounts, add new revenue-generating features or increase the price of its existing products (ouch). Once APRU is up, Spotify can then focus on increasing the margin from each subscriber... so say bye-bye to your pretty pennies!
Sign up for Flux and join 100,000 members of the Flux family
