Spotify released its financial results for the fourth quarter of 2022, revealing an impressive 205 million paid subscribers, exceeding its user growth targets and hitting an all-time high in total quarterly gain. Nevertheless, Spotify continues to lose money.
Spotify added 10 million premium subscribers in Q4 2022, reaching a total of 205 million, exceeding its previous forecasts. Paid subscriber growth, a 14% year-on-year increase, was boosted by promotions and housekeeping plans, the company said.
Q4 “$22SPOT delivered great platform growth. We ended 2022 strongly despite a challenging year. Expect us to move faster with more intensity of effort, driving even greater efficiency in 2023. pic.twitter.com/rII7hHwRy1
—Daniel Ek (@eldsjal) January 31, 2023
In total, Spotify added 33 million monthly active users in the fourth quarter, reaching a record 489 million (both free and paid), a 20% year-on-year increase. Despite an economic downturn, Spotify generated a turnover of 3.17 billion euros, an increase of 18% compared to the previous year and in line with forecasts, with a net loss of 270 million euros (compared to 39 million euros in the 4th quarter of 2021). The operating loss of 231 million euros in Q4 was better than their expected loss of 300 million euros.
Spotify beat its forecast for Q4, ending with 205 million paid subscribers and 489 million total monthly active users, beating their forecast of 202 million paid subscribers and 479 million total monthly active users.
Spotify advertising revenue in Q4 2022
Spotify’s fourth-quarter advertising revenue increased 14% year-on-year to €449 million, driven by strong podcast growth of around 30%. Gross margin for the quarter was 25.3%, slightly better than expected due to lower spending on investments in new podcast content and favorable music trends.
Spotify operating costs
Spotify’s fourth-quarter operating expenses rose 44% to 1.03 billion euros, due to higher personnel costs for headcount growth in global advertising and media sales. the increase in advertising expenditure.
The company said that its projections for the first quarter of 2023 are uncertain and foresees a turnover of 3.1 billion euros and an operating loss of 194 million eurosincluding a charge of 35 to 45 million euros for costs related to severance pay.
They expect to reach 500 million monthly active users and 207 million premium subscribers in Q1, an increase of 11 million and 2 million respectively. Spotify’s 2022 Wrapped campaign saw higher engagement year-on-year, with 150 million users across 111 markets participating, a 30% year-over-year increase.
However, like many technology companies, Spotify also seems to be going through a tough time.. Earlier this month, it laid off about 6% of its staff in a bid to cut costs. Other big tech companies, like Twitter, Meta and Microsoft, have taken similar steps in recent months.
