The Swedish streaming giant Spotify published its last quarterly report for 2022 on January 31, 2023. As a result, the value of company shares on the New York stock exchange NYSE rose by twelve percent within a few hours. The main reason is likely to be the reported user growth of the platform.
Increase in the number of active users
Between September 31 and December 31, the company gained a total of 33 million users worldwide. Among them 10 million paying customers who use Spotify’s premium offer. The number of monthly paying subscribers rose above the 200 million mark for the first time, to around 205. This corresponds to a 41% share of the total customer base of now 489 million different active users per month (“monthly active users”, MAU for short). ).
The geographical distribution of user numbers is also likely to have contributed to the increased trading volume of the share: In the fourth quarter, the number of listeners financed by advertising rose sharply, particularly in India and Indonesia. Overall, increases in the “Rest of the World” segment (compared to the traditionally established markets of Europe, North America and Latin America) are the largest percentage driver of this growth. However, the successes of the “#SpotifyWrapped” strategy and the targeted advertising for “Gen-Z” are also noticeable.
finance
As the number of users increases, so does advertising and subscription revenue. As a result, the Swedes’ turnover grew to 3.17 billion euros. This is also due to the fact that price increases were implemented in over 40 markets last year. In addition, the offer was strengthened by various subscription models.
However, the company continues to post financial losses overall. The rapid growth of recent years has also brought with it rising personnel costs. The driver of both developments was in particular the expansion of the podcast segment through exclusive contracts worth millions and the acquisition of a number of production companies. The company also blames currency fluctuations and rising advertising and production costs for the operating loss of 270 million euros for the full year.
In order to avoid such drastically red numbers in the future, it was announced on January 23 that around 600 employees would be laid off. Including the architect of the podcast offensive Dawn Ostroff, who has been employed since 2018. She has played a key role in shaping Spotify’s current business and is responsible, among other things, for the exclusive contract with the production company of Barack and Michelle Obama. After a phase of rapid growth and heavy investments, especially in podcasts, the group now wants to consolidate its market position. The core of this initiative is to make the business as efficient as possible.
near and distant future
In a speech on the possible future of his company, CEO Daniel Ek announced that he intends to continue to play on the traditional strengths of the business model, especially the easy accessibility and the possibilities for personalization. He also sees great potential in establishing new product types alongside podcasts and traditional music streaming. In 2022, the record LA NENA DE ARGENTINA by the Argentine singer Maria Becerra was released as a so-called “Enhanced Album”, perhaps as the first indication of the concreteness of this project. Optimized for mobile use, Spotify has created a playlist in which the singer explains the themes and creation of the album in short videos between the songs.
Looking ahead, MAU numbers are projected to increase to over half a billion worldwide in the first quarter of 2023. In addition to this milestone, the operating loss should drop relatively drastically to 194 million euros. The number of subscribers is also expected to continue to grow, although it has recently fallen by two and three percent in the established markets of Europe and North America. The global nature of the Spotify brand is currently its greatest strength.