Earlier today we reported on Spotify’s latest financial results. Since that story, Spotify has published its full financials filing, including some interesting news about its investment in distributor DistroKid.
That’s the deal it struck in October 2018, which was described at the time as a “passive minority investment” in the independent distributor.
According to the new filing, the stake was valued at €49m at the start of 2021, but by 30 September had grown to €205m. The relevant context here being DistroKid raising a new funding round in August, which it said at the time valued the company at $1.3bn.
And now the news. “On October 1, 2021, the Group [Spotify] completed the sale of two thirds of its equity interest in DistroKid, realizing a gain of €132 million, which has been reflected as an unrealized increase in fair value as of September 30, 2021. Proceeds from the sale were €144 million,” explained Spotify in its filing.
Some rough calculations: if Spotify made €144m from selling two thirds of its DistroKid stake, that suggests its overall stake was around €216m before that. Around $250m at current conversion rates. Which, in turn, suggests that Spotify’s passive minority stake in DistroKid was around 19% of the business.
Spotify still has a stake in DistroKid according to the filing: worth around €72m by our calculations. It’s a useful insight into one of the less-discussed investments that the streaming service has made in recent years.
Talking of those, the filing also reveals some less positive news for Spotify: the value of its stake in Tencent Music Entertainment fell from €2.23bn at the end of 2021 to €885m at the end of September 2022, due to the fall in Tencent Music’s share price over that nine months.
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