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Spotify Exceeds Expectations with User Growth, Predicts Positive Year Ahead
Spotify's user base grew by 23% in the fourth quarter, reaching 602 million monthly active users. Premium subscribers rose by 15% to 236 million, exceeding estimates. Quarterly revenue fell slightly short of expectations due to foreign exchange losses.
In a surprising turn of events, Spotify has reported impressive growth in its user base, surpassing estimates and projecting a promising year ahead. The popular Swedish music streaming company has expanded its reach into podcasts and audiobooks, aiming to achieve a staggering 1 billion users by 2030. Additionally, Spotify has implemented price hikes for its subscribers and made strategic staff cuts to boost profitability.
During the fourth quarter, Spotify witnessed a remarkable 23% increase in monthly active users, reaching a total of 602 million. This figure not only exceeded Spotify's own guidance but also surpassed analysts' forecasts of 601.33 million. Furthermore, the number of premium subscribers, who contribute significantly to the company's revenue, rose by 15% to 236 million, surpassing estimates of 235.1 million.
Despite these impressive user growth figures, Spotify's quarterly revenue of 3.67 billion euros (US$3.94 billion) fell slightly short of expectations due to foreign exchange losses. However, the company remains optimistic about its future revenue and profitability trends.
CEO Daniel Ek expressed confidence in Spotify's ability to navigate the market, stating, "We have plenty of levers to pull, including price increases, so you will see us work with all of these levers at various times and in various markets. We are now a lot more focused on the bottom line as well."
Spotify's foray into the podcasting industry has also proven fruitful. The company has invested heavily in this sector, signing popular hosts like Joe Rogan, and podcast advertising experienced double-digit growth in the fourth quarter. Ek emphasized the company's commitment to podcasting, stating, "We never stopped investing in it, but from a financial point of view, what we did say was that podcasting was a drag on the business in 2023. And that we would turn it around and achieve consistent profitability on the podcasting side in 2024, and I feel really good about our ability to do just that."
Looking ahead, Spotify anticipates its premium subscriber count to reach 239 million in the current quarter, surpassing estimates of 238.3 million. However, the company's first-quarter forecast falls below Wall Street expectations for total users and revenue. Spotify projects a monthly user count of 618 million for the quarter, slightly lower than estimates of 618.8 million. Additionally, the company expects an operating income of 180 million euros in the current quarter, following a fourth-quarter operating loss of 75 million euros.
Spotify's user base grew by 23% in the fourth quarter, reaching 602 million monthly active users.
Premium subscribers rose by 15% to 236 million, exceeding estimates.
Quarterly revenue fell slightly short of expectations due to foreign exchange losses.
Source: REUTERS