Highlights
- Spotify’s paid subscribers surge to 236 million, a 4% quarterly increase.
- Ad-supported user base grows to 602 million, up 5%.
- Transition from Q3 profit to Q4 loss of €70 million highlighted.
- Ongoing battle with Apple over App Store policies continues to draw attention.
Spotify, the world’s leading music streaming service, has unveiled its latest financial results, presenting a mixed bag of achievements and challenges.
The company has witnessed a significant uptick in its user base, with paid subscribers reaching 236 million, marking a 4% increase from the previous quarter.
The free, ad-supported tier also saw a noteworthy rise, climbing 5% to 602 million users.
“Excluding one-time charges, we generated 68 million euros in adjusted operating profit, which is more than double the third quarter as the business continues momentum towards sustainable growth and profitability,” Spotify said in a statement.
On the company’s earnings call Tuesday, Chief Executive Officer Daniel Ek said
“The creator wants to have broader audience, and I feel like with these new deals we’ve been making for most of 2023, we’re better aligned with the creator,”.
Spotify’s Financial Woes
Despite these positive trends in user growth, Spotify has encountered financial hurdles, transitioning from a rare profit in the third quarter to a loss-making status in the fourth quarter.
The shift was accentuated by a transition from a €65 million profit in Q3 to a €70 million loss in Q4.
The company also emphasized an operating loss of €75 million for Q4, which was, however, more favorable than anticipated.
Adjusting for one-time charges, Spotify claimed a €68 million adjusted operating profit, doubling its performance from the third quarter.
The one-time charges were primarily linked to a series of layoffs aimed at reducing expenses and steering the company towards sustainable growth.
Spotify vs Apple: An Ongoing Tussle
The ongoing tussle with Apple over App Store policies remains a significant thorn in Spotify’s side.
Company CEO Daniel Ek has been vocal in its criticism of Apple’s compliance strategies with antitrust laws, which it finds unsatisfactory for fostering a competitive subscription model within apps.
Daniel Ek has signaled a continued emphasis on cost management, hinting at further job cuts in 2024 following the significant workforce reduction in December 2023.
“We’re going to continue to be more resourceful with the resources we have. That’s just the new modus operandi.But make no mistake, we will continue to make bold bets, invest, and seize on opportunities when they make sense, but hopefully, it’s clear now with a much more disciplined approach going forward,” Ek said.
Spotify’s critique is part of the broader battle for fair play in the digital marketplace, with Apple defending its role in Spotify’s success story.
User growth remains a bright spot for Spotify, with the company ending 2023 with a record increase in both paying subscribers and monthly active users.
Despite the financial recalibration, Ek assures stakeholders of Spotify’s commitment to innovation and growth, albeit with a more disciplined approach to investments.
FAQs
How many paid subscribers does Spotify now have?
Spotify reached 236 million paid subscribers, marking a 4% increase from the previous quarter.
What was Spotify’s financial outcome in the fourth quarter?
Spotify reported a loss of €70 million in Q4, despite previously achieving a €65 million profit in Q3.
What are the main reasons behind Spotify’s Q4 operating loss?
The operating loss of €75 million in Q4 is attributed to one-time charges, mainly from layoffs aimed at reducing costs.
How is Spotify addressing its competition with Apple?
Spotify criticizes Apple’s App Store policies, arguing they hinder a competitive subscription model, and urges the EU to act against Apple’s proposals.
What future plans does Spotify’s CEO Daniel Ek have for the company?
Daniel Ek aims for continued cost management, including potential job cuts in 2024, but remains committed to innovation and disciplined investment in growth.
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