Spotify adds 10 million new subscribers in Q4 2023

This follows the release of its latest earnings report on 6 February, which shows that its monthly active users (MAUs) increased by 23% year-on-year (YoY) to 602 million – an extra 28 million new users, representing the second largest Q4 performance in the company’s history.

The number of subscribers increased by 15% YoY to 236 million, marking an addition of 10 million new subscribers and contributing to a record full-year of net additions of 31 million.

The company says that its Premium subscriber base saw double-digit YoY growth across all regions with an outperformance led by Rest of World and Latin America, as well as a better-than-expected Q4 promotional campaign intake.

In terms of finances, Spotify’s Premium/subscriber revenues stood at $3.4bn, up 21% YoY at constant currency, and driven “by subscriber gains and the effects of price increases,” the company said.

In July 2023, Spotify increased its flagship subscription price in several territories including the US and UK for the first time in its 15-year history.

Ad-supported revenue, meanwhile, topped $539m, up 17% YoY, reflecting YoY growth “across all regions”, with music advertising revenue growing “by double-digits driven by growth in impressions sold and stable pricing.”

The company generated $3.946bn in total quarterly revenue – including Premium and ad-supported – which was up 20% YoY. Its gross margin profitability stood at 26.7%, up from 25.3% in Q4 2022, but posted an operating loss of $81m in Q4 2023, versus an operating loss of $248 in Q4 2022.

Spotify attributes the operating loss in Q4 2023 to net severance and real estate optimisation charges that came to $154m, of which $149m were included in operating expenses. Those severance-related expenses followed Spotify’s move to cut down about 17% of its global workforce during a round of job cuts in December, with more 1 500 jobs were affected by that round of layoffs.

Spotify reported that it generated $73m in adjusted operating Income, which it notes is more than double the operating income it achieved in Q3 2023.

Spotify also posted an operating income of $34.82m for Q3 2023 ending September 30 as operating expenses in Q4 2023 rose 6% YoY to $1.134bn, primarily due to “$149m in charges related to efficiency efforts.”

In terms of Q1 2024 outlook, Spotify predicts that it will reach 618 million MAUs and a total Premium subscriber base of 239 million. It also forecasts an operating income of $194m for the same period, and total revenue of $3.8bn.

“We ended 2023 with strong Q4 performance, as all of our KPIs met or exceeded guidance,” Spotify told investors. “With revenue and profitability trends both inflecting favourably heading into 2024, we view the business as well positioned to deliver improving growth and profitability as we progress towards delivering against our Investor Day goals.”