In the latest quarterly earnings report, Spotify has revealed a mixed bag of outcomes. The streaming giant celebrated a substantial increase in its user base, with paid subscribers reaching 236 million, marking a 4% rise from the previous quarter.
The platform’s free, ad-supported tier saw even greater growth, climbing by 5% to reach 602 million users. However, after achieving a rare quarterly profit in the third quarter, Spotify has once again slipped into a loss-making position in the fourth quarter.
Spotify’s positive highlights include a 23% year-over-year growth in Monthly Active Users, totaling 602 million, surpassing the company’s own forecasts. The fourth quarter saw net additions of 28 million users, constituting Spotify’s second-largest Q4 net addition in history. Subscriber numbers rose by 15% year-over-year to 236 million, with net additions also exceeding guidance by 1 million. The quarter’s net additions of 10 million users contributed to a record annual increase of 31 million.
Despite a 16% increase in revenue year-on-year, Spotify reported a transition from a €65 million profit in the third quarter to a €70 million loss in the fourth quarter.
The company attempted to cast this in a positive light, noting that its operating loss of €75 million was better than anticipated after updating guidance. Excluding one-time charges, Spotify generated an adjusted operating profit of €68 million, which it claims as evidence of momentum towards sustainable growth and profitability.
These one-time charges were largely associated with the costs incurred from three rounds of layoffs conducted last year as part of the company’s efforts to reduce its losses.
Amid these financial fluctuations, Spotify finds itself in a contentious battle with Apple over changes to the App Store, aiming to comply with European antitrust laws. Spotify’s critique of Apple’s proposed compliance methods with the Digital Markets Act has been particularly vocal, labeling them as “outrageous” and calling for prompt action from the European Union. Apple, in response, has defended its role in aiding Spotify’s success in the music streaming sector.
This ongoing feud highlights the complex relationship between the two giants, as Apple ceased disclosing its Apple Music subscriber numbers back in 2019, the last reported figure being 60 million.