Spotify Reports 271 Million Subscribers In 2019, Remains As The World's Largest Music Streaming Service

In big markets, 80% of the total music consumption is occupied by streaming music. And the largest music streaming platform on the planet, Spotify, reported a really good result in Q4 2019.

Specifically, the platform now has 271 million subscribers, which is 31 percent higher than last year. There was 29 percent more paying users than a year ago, increasing to a total of 125 million. The total revenue of the fourth quarter of 2019 was $2 billion, an increase of 24% compared with one year ago, boasting a 25.6% gross margin.

However, Spotify also suffered from considerable operating losses, $85 million in Q4 2019, equivalent to a $1.26 loss per share.

According to the company, podcasts performed well, registering a 200% growth over the past year. Besides, over 16% of Spotify’s monthly active users are listening to its podcast content. This number is in line with the previous forecast of the company, saying that it expected the MAUs number to rise to 255 million – 270 million and revenue to hit $1.9 billion - $2.1 billion, along with gross margins to go up by 23.7% – 25.7%. Spotify also predicted the operating loss to be from $34.1 million to $144.1 million.

Analysts expected Spotify to hit revenues of $2.09 billion and a loss of $0.25 on earning per share, and the company missed both of these.  In pre-market trading, shares go up by 1.74%.

Currently, Spotify is still the largest streaming services but the competition is getting tougher. Last month, Amazon announced that it has 55 million users while Apple reported 60 million subscribers on its music streaming platform. At the same time, TikTok is about to launch its own music streaming platform, hoping to make a big entry in the business by taking advantage of its current user base.

In the Indian market, Spotify has to face even more competitors, such as Gaana, a platform with 152 million monthly active users just in the country.

Spotify noted that its Q4 MAUs were the highest to increase in a quarter and the shortest time to earn 10 million subscribers. The growth was attributed to its offer for three-month free trials, which is now applicable for family plans, as well as six-month trials sold through retailers. Besides, it partnered with Google Home and gave Alexa owners the ability to stream off its free tier.

It’s worth noting that there were opposite trends in the overall revenue growth, a 24% increase in premium subscribers, a 5% decline in average revenues, and a 23% rise in ad revenue. The company explained that there was an 80% increase in operating expenses in 2019 while the loss per share was because the social charges, including payroll taxes that are associated with stock-based compensation, were higher than expected following a rise in its share price.

Spotify additionally said that by leaving out the social charges, its operating loss would be a bit lower than expected thanks to the good performance of Gross Profit.

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