Spotify Technology SA recently announced their fourth-quarter results, surpassing expectations for both active users and subscribers. The company reported that the number of monthly active users increased to 489 million, exceeding both Spotify’s guidance and analysts’ predictions of 477.9 million. Furthermore, premium subscribers, who generate the majority of the company’s revenue, rose by 14% to 205 million, exceeding the estimated 202.3 million. The growth was attributed to marketing campaigns and a surge in sign-ups from countries such as India and Indonesia.
Spotify is confident about the future, forecasting the number of listeners to reach 500 million next quarter and premium subscribers to reach 207 million in the current quarter. The company also expects revenue to hit 3.1 billion euros, exceeding analysts’ expectations of 3.05 billion euros. The quarterly revenue was reported to be 3.2 billion euros, surpassing analysts’ predictions of 3.16 billion euros.
Spotify’s grand vision for the future involves reaching 1 billion users and generating $100 billion in annual revenue. This goal was accompanied by the promise of high margin returns from the company’s costly investment into the world of podcasts and audiobooks.
To achieve this, Spotify has poured over $1 billion into the growth and development of its podcast business, which now boasts a collection of over 4 million titles. However, these investments have taken a toll on the company’s gross margins.
Recently, Spotify announced its intention to lay off 600 employees in an effort to control its operating expenses, which rose twice as fast as its revenue growth last year.
Looking ahead, the company predicts that its revenue will soon begin to outpace operating expenses, which have increased due to growth in headcount and higher advertising costs.
Spotify’s fourth-quarter results were impressive and exceeded expectations for both active users and subscribers. The company’s investment into podcasts and its vision for the future give us a glimpse of what is to come, and we can expect to see more positive results from Spotify in the future.