STOCKHOLM (Reuters) — Online music
streaming service Spotify is recruiting a U.S. financial reporting
specialist, adding to speculation that the Swedish start-up is
preparing for a share listing, which one banker said could value the
firm at as much as $8 billion.
Meeting U.S. Securities and Exchange Commission (SEC) standards for
filing financial disclosures is essential for any firm planning to
go public and bankers and lawyers said they inferred from the job ad
that the company is getting ready for an initial public share
offering (IPO), possibly next year.
Streaming and on-demand music have soared in popularity alongside
smartphone use, though such services have so far struggled to make
profits due to the cost of royalty fees.
A Spotify IPO would be one of the most eagerly anticipated global
tech IPOs, and bankers speculate it could come alongside possible
listings by AirBnB, Square and mobile games maker King which was
also created in Sweden.
"It looks like they are preparing themselves for an IPO," said one
corporate finance lawyer, who is not advising the firm.
The job advertisement, posted on Spotify's website and on LinkedIn,
said the successful candidate — an "External Reporting Specialist" — would be required to "prepare the company for SEC filing standards.
Set up all reports necessary to be SEC compliant".
Spotify declined to comment on whether it has IPO plans.
"As Spotify grows and becomes a more mature company we are looking
for people who can help us keep our financial reporting in order and
up to global standards," a spokesman said.
Spotify founder and CEO Daniel Ek has previously played down a
listing to Swedish media, saying he was keen to keep the company
private. But strong investor sentiment and buoyant tech shares have
fuelled speculation by bankers and industry players about a possible
listing.
Following a botched debut by Facebook, shares in the social media
network have soared nearly 80 percent while Twitter shares are up
almost 30 percent since its November IPO.
FIERCE COMPETITION
Spotify raised $250 million in a funding round in November, making
it one of the world's most richly capitalized start-ups.
One senior banker with a global investment bank said that last
year's fundraising meant the company would probably focus on further
expansion so that it could go to the market with a flotation next
year, when the company could be valued at as much as $7 billion to
$8 billion.
He said it would be advisable to employ expertise in filing the
company's accounts to listing standards well in advance of any
flotation.
"They would need such a person, and to make sure that person is
settled in, in order for it to be possible to list the company in
the United States next year."
Early investors in Spotify include Nordic venture capital firms
Northzone and Creandum. Sean Parker's Founders Fund, Kleiner
Perkins, Digital Sky Technologies, Accel Partners and Goldman Sachs
joined in later financing rounds.
Technology Crossover Ventures led the most recent $250 million
funding round, which helped the Swedish music service bolster its
U.S. business, which trails services such as Pandora Media, and
launch in other countries.
Spotify has over 24 million active users compared with Pandora's
73.4 million.
Competition is also fierce with Apple Inc's iTunes Radio, Sirius XM,
Rdio and a handful of smaller players battling it out for listeners.
Corporate filings for 2012 in Luxembourg, where Spotify is
registered, show the company more than doubled revenue that year to
435 million euros ($571 million), but had a net loss of 58.7 million
euros.
Pandora, whose shares have nearly tripled in the past year, reported
higher revenue and profit for the quarter ending in December, but
said costs to expand its audience were rising.
(Additional reporting by Sven Nordenstam;
editing by Tom Bergin and Julien Toyer)
