The Spotify logo is displayed on a screen on the floor of the New York Stock Exchange (NYSE) in New York, U.S., May 3, 2018. REUTERS/Brendan McDermid/File Photo

June 8 (Reuters) – Spotify Technology SA (SPOT.N) said on Wednesday it expects to hit $100 billion in revenue a year over the next 10 years and pledged high-margin returns from its expansion expensive in podcasts and audiobooks.

The audio streaming company held its first Investor Day since its IPO in 2018, hoping to stoke Wall Street’s enthusiasm despite the slowing global economy.

To achieve its lofty goal, Spotify would need to increase revenue nearly 10-fold from 2021 revenue of $11.4 billion, and Chief Executive Daniel Ek also expects gross margins to increase to 40% and operating margin to 20% at the same time.

“Spotify will come up with these pretty bold goals and we’ll pursue them because that’s how we see the world and we’re going to invest behind that,” Ek said.

Shares of the company rose 6.5% on Wednesday after losing 53% of its market value so far in 2022, worse than the 24% drop in the S&P 500 communications services sector index (. SPLRCL), which includes Spotify and other social media and networks. businesses.

Ek began the nearly four-hour investor presentation by trying to reset Wall Street’s perceptions of the company, saying some might think “we’re a bad company or at least a company with bad margins for the foreseeable future. “.

One of the reasons it fell short of its long-term goals was its aggressive spending to grow its podcast and audiobook platforms. Although Ek said his investments were already performing “better than you probably expected”, with gross margins of 28.5%, on track to hit the long-term target of 30% to 35 % of the society.

Spotify chief content officer Dawn Ostroff said the company has committed more than $1 billion to podcasting and expects podcast revenue to rise significantly this year from $215 million ( 200 million euros) that it made last year. She said the company is still in investment mode, but she thinks podcasting is a $20 billion opportunity.

Ek expects the podcast business to have the potential to generate margins between 40% and 50% and audiobooks to also have margins above 40%. He did not say how long it would take the company to reach those numbers.

Besides music, podcasts and audiobooks, Spotify also plans to introduce new types of content over the next 10 years, which would increase its average revenue per user, said engineering director Alexander Nordstrom. He said Spotify is on track to reach its goal of one billion users by 2030.

While it’s been a rough start to the year so far for streaming companies like Spotify and Netflix (NFLX.O), the Swedish company has also faced controversy over the moderation of its popular Joe Rogan podcasts.

The service continued to add paid users and subscribers in the first quarter, however, reporting monthly users of 422 million, ahead of the consensus estimate. Read more

($1 = 0.9314 euros)

Reporting by Dawn Chmielewski in Los Angeles and Supantha Mukherjee in Stockholm; Editing by Leslie Adler and Lisa Shumaker

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