Spotify Reaches 124 Million Premium Subscribers — But Quarterly Losses Top $85 Million

Spotify Offices in Manhattan
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Spotify Offices in Manhattan
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Spotify Offices in Manhattan

Spotify, the world’s largest music streaming service, recently released its financial report for the fourth quarter of 2019. The report showed that the company ended the year with 124 million premium subscribers, a 29 percent increase from the previous year. However, despite this impressive user influx, the company reported heavy overall losses.

The earnings report also revealed that the streaming service’s premium-subscriber base grew 10 percent between the third and fourth quarters of 2019. Additionally, 153 million users have adopted the free version of the platform, which features ads. This new free-version user total is 29 percent higher than it was at the end of 2018 and nine percent higher than it was during the previous quarter.

Spotify’s total revenue jumped from about $1.65 billion to $2.05 billion, thanks to an increase in free-user revenue (about $240 million, up 23 percent from last year) and premium-subscriber revenue ($1.8 billion, up 24 percent from last year). Despite these encouraging figures, Spotify’s operating losses reached $84.8 million, a substantial decrease from Q3’s $59 million profits. Predictably, the streaming platform also reported a dip in earnings per user and a hike in operating expenses, which executives attributed to higher costs brought on by an increase in Spotify’s stock value.

It appears that Spotify will continue to bet big on podcasts as part of its long-term plan to achieve consistent profitability. The platform’s acquisition of The Ringer, a sports and pop culture outlet that includes a collection of successful podcasts, was confirmed as the Q4 2019 financial report was released. The Ringer founder Bill Simmons and his 90 or so employees will remain employed by Spotify and will continue to operate independently.

Last year, Spotify signed exclusive podcast deals with Reba McEntire, Kevin Bacon, Barack and Michelle Obama, and several others. This move is part of Spotify’s push to become a dominant player in the podcast industry and to diversify its revenue streams beyond music. The company has said that it plans to invest up to $500 million in podcast-related acquisitions in the coming years.

However, despite Spotify’s efforts to expand its offerings, its stock price fell about four percent from the previous day’s end at the time of writing. This decline is likely due to the company’s heavy losses and increased operating expenses.

Despite these setbacks, Spotify remains the top music streaming platform in the world, with a user base that continues to grow. The company’s focus on podcasts is a smart move, as it allows them to diversify their offerings and expand into new markets. Additionally, the acquisition of The Ringer and exclusive podcast deals with high-profile celebrities show that Spotify is serious about establishing itself as a dominant player in the podcast industry.

In conclusion, Spotify’s Q4 2019 financial report showed that the company continues to experience impressive growth in its user base, both in terms of premium subscribers and free users. However, the company’s heavy losses and increased operating expenses are cause for concern. Nonetheless, Spotify’s focus on podcasts and its recent acquisition of The Ringer demonstrate that the company is taking steps to diversify its offerings and expand into new markets. It remains to be seen whether these efforts will pay off in the long run, but for now, Spotify remains a major player in the music streaming industry.