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Summary
- Spotify currently has 345 million active subscribers across different geographies.
- Subscription revenue rose by 15% to €1.89 billion as new users from India, Russia sign-up.
- Ad revenue saw consecutive quarterly growth, rising by 29 percent to €281 million.
NYSE-listed Swedish communications and technology company reported an overall revenue growth of 17 percent to €2.17 billion (US$2.5 billion) in its fourth quarterly report released Wednesday.
The company’s better-than-expected performance was boosted by a 27 per cent increase in its user base to 345 million active subscribers, compared to the same period a year ago.
Furthermore, its most lucrative segment, paying subscribers, grew by 24 per cent to 155 million, compared to the corresponding period last year.
Its music and the podcast segment saw an upsurge in new listeners during Covid as more people sought leisure indoor activities during the pandemic.
But revenue collection per subscriber fell by 8 per cent to €4.26, or US$5.13, from a year ago. The company offered various discounts to attract new subscribers, mainly from India and Russia.
The music streaming app has a market capitalisation of more than C$ 65 billion.
New Subscribers Boost Spotify Sales Revenues
The streaming music services provider had hiked the family plan rates in seven markets in October and plans to do the same in Europe, Latin America, and Canada in February this year.
The company said that its subscription revenue rose by 15 per cent to €1.89 billion from a year ago. Ad revenue saw consecutive quarterly growth, rising by 29 per cent to €281 million. Advertising accounted for less than 10 per cent of Spotify’s top-line growth, generating 13 per cent of revenue.
Spotify currently has 2.2 million available podcasts, whose hourly consumption nearly doubled from the corresponding period. In 2017, revenue from premium and ad-supported services had accounted for 90 per cent and 10 per cent of Spotify's total revenue, respectively.
Spotify’s saw a 50 per cent increase in sponsored music recommendations from the previous quarter. Furthermore, its billings by over 80 per cent from album promotional campaigns.
The company has also narrowed the losses by more than 67 per cent to €125 million, compared to €209 million in the corresponding period last year.
It also reported a cash flow of €74 million, down from €169 million in the same period a year ago.
The company hopes to add some 10 to 15 million more monthly active users to its subscription base and generate a revenue of €1.99-€2.19 billion in the first quarter of 2021.
Spotify stocks (NYSE:SPOT) were trading at US$345.05 per share at close on the NYSE on Tuesday.
