The Swedish music streaming company has ventured into podcasts and audiobooks as it seeks to grow its user base to 1 billion by 2030. It has also raised prices for its subscribers and laid off thousands of employees to boost profits.
The number of monthly active users rose by 23% to 602 million in the fourth quarter, beating Spotify’s guidance and analysts’ forecasts of 601.33 million.
Premium subscribers, who account for most of the company’s revenue, rose by 15% to 236 million, topping estimates of 235.1 million, according to IBES data from LSEG.
However, quarterly revenue, which rose 16% to 3.67 billion euros ($3.94 billion), missed estimates of 3.72 billion as it took a hit from foreign exchange losses. Its first-quarter revenue is also expected to fall below expectations.
“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,” CEO Daniel Ek said in an interview. “We are now a lot more focused on the bottom line as well.” Spotify has also been investing heavily in its podcast business, including signing hosts with big followers such as Joe Rogan, and podcast advertising grew by double digits in the quarter.
“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,” Ek said.
“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.”
The company expects current-quarter premium subscribers to reach 239 million, above estimates of 238.3 million.
However, the first-quarter forecast was below Wall Street expectations for total users and revenue.
Spotify’s monthly user forecast for the quarter of 618 million undershot estimates of 618.8 million. It expects operating income of 180 million euros in the current quarter after posted a fourth-quarter operating loss of 75 million euros ($1 = 0.9320 euros)
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