From CNET: Spotify wasn't spectacularly unprofitable in the third quarter. And it has a big Chinese streaming service to thank for that.
The world's biggest subscription streaming music service by members, Spotify routinely reports wide losses in the hundreds of millions of euros, primarily because royalties eat up the majority of its revenue. But its latest three-month period was the exception, thanks to a one-time tax windfall that was big enough to tap Spotify's profit into positive territory for once.
Why? Last year, Spotify and a big Chinese streaming music service, Tencent Music Entertainment Group, swapped investments in each other to become strategic partners. Then this summer, Tencent Music registered to go public in the US -- it's expected to be one of the biggest tech IPOs ever. That registration meant Tencent Music publicly detailed the company's value, which in turn meant Spotify needed to adjust how much it values its own investment in Tencent Music. That resulted in a tax benefit, which pulled Spotify into a quarterly profit for the first time ever.
But Spotify expects its bottom line to move back into the red in the current quarter, so enjoy it while it lasts.
Spotify also hit 87 million subscribers at the end of September, the music streaming service said Thursday in its third-quarter report. Spotify's growth was near the high end of the range that the company predicted in July. Presumably, that keeps Spotify above its closest competitor, Apple Music, which had 50 million subscribers as of April.
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