Music streaming giant Spotify to spend 1 bn dollars buying its own stock

New York

The company would commence a stock repurchase programme beginning in the third quarter of 2021.

"Repurchases of up to 10,000,000 of the Company's ordinary shares have been authorised by the Company's general meeting of shareholders, and the Board of Directors approved such repurchases up to the amount of $1.0 billion. The authorisation to repurchase will expire on April 21, 2026," it said in a statement late on Friday.

The timing and actual number of shares repurchased will depend on a variety of factors, including price, general business and market conditions, and alternative investment opportunities.

"The repurchase programme will be executed consistent with the Company's capital allocation strategy, which will continue to prioritise aggressive investments to grow the business," the company added.

"This announcement demonstrates our confidence in Spotify's business and the growth opportunities we see over the long term," said Paul Vogel, Chief Financial Officer at Spotify.

"We believe this is an attractive use of capital, and based on the strength of our balance sheet, we continue to see ample opportunity to invest and grow our business."

Several tech companies like Apple, Alphabet (Google) and Microsoft, have active share repurchase programmes.

In its June quarter, Spotify announced that it now has 165 million premium subscribers and 365 million monthly active users.

It's a year-over-year increase of 20 per cent and 22 per cent, respectively, and up from the 158 million subscribers and 356 million MAUs reported in the last quarter.

"Q2 was a strong quarter for Spotify overall, with the majority of our major metrics performing better than expected," Daniel Ek, Spotify CEO and founder, said.

The company, presenting its June quarter earnings, said that it added seven million subscribers in Q2, which drove healthy double digit year-over-year growth across all regions.

Spotify also said that the revenue of 2,331 million euros grew 23 per cent year-over-year in Q2 and was toward the top end of guidance range due to significant advertising strength and subscriber outperformance.