Spotify has published its financial results for the fourth quarter of 2022, and thus for the entire year. It’s a familiar story of growth in listeners, subscribers and revenues, but also operating losses.
The music streaming services ended 2022 with 489 million monthly active users, having added 33 million during Q4. That’s 20% growth year-on-year, and it’s 10 million more than Spotify predicted in its guidance for the quarter.
205 million of those listeners were using a paid Spotify subscription, which means 10 million net new additions during Q4 (three million more than its guidance) and year-on-year growth of 14%. Just under 42% of Spotify listeners are now subscribers.
What does that mean for the financials? Spotify’s subscription revenues grew by 18% year-on-year to €2.72bn in Q4 2022, although the quarter-on-quarter growth was only 2%.
The company’s advertising revenues grew by 14% year-on-year (and 17% quarter-on-quarter) to €449m, meaning that Spotify’s overall revenues for Q4 were €3.17bn – up 18% year-on-year, and 4% quarter-on-quarter.
Profit? No. Spotify recorded an operating loss of €231m for the quarter compared to a €7m loss in Q4 2021.
Overall in 2022 Spotify added 83 million active users, although the company said that would have been 88 million if it hadn’t pulled out of Russia.
The company made a point of showing how the geographic spread of those listeners has changed over the last five years. The percentage of Spotify listeners coming from Europe has fallen from 36% to 30% since 2018, with the percentage from North America falling from 30% to 21%.
Even Latin America, which the music industry thinks of as an emerging / high-potential region, saw its share of Spotify listeners dip slightly from 22% in 2018 to 21% now – although obviously all these territories have seen growth in the number of listeners.
It’s everywhere else – the ‘Rest of World’ in Spotify’s figures – that has been growing its share of the company’s listenership: from 12% in 2018 to 28% now. In 2023, it seems set to become the largest segment for Spotify.
It’s not quite the same story for subscribers, with Europe’s share falling only slightly from 40% to 39% since 2018; North America’s from 30% to 28%; and Latin America’s growing from 20% to 21%. The rest of the world now accounts for 12% of Spotify’s paid customers, up from 10% five years ago.
Other figures from the financials: Spotify’s revenue from advertising around music grew by “mid single digits” year-on-year, but the growth was “in the mid 30% range” for podcast ad revenues. Perhaps not surprising, but we think it may be the first time Spotify has separated the two revenue streams out publicly.
Meanwhile, Spotify’s annual Wrapped promo in December, showing artists and listeners alike their stats for the year, was accessed by 156 million monthly active users. Which is a lot of people – and up 30% year-on-year – but less than a third of all Spotify users.
Finally, the company is predicting that it will end Q1 2023 on a milestone figure: 500 million monthly active users, of whom around 207 million will be premium subscribers. Spotify is also predicting quarterly revenues of €3.1bn, and an operating loss of €194m.
All this comes a few days after Spotify announced plans to lay off around 600 staff, in what CEO Daniel Ek said was a need to “operate with efficiency” in the current challenging economic environment.
Ek will doubtless be asked some questions about those cuts and what they’ll mean for Spotify in the year ahead during the company’s investor call this afternoon. We’ll bring you key talking points from that call in tomorrow morning’s bulletin.
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