Swedish music streaming giant Spotify recorded its highest user count last quarter, helped by its year-end “Wrapped” campaign, which collects statistics and listening highlights for users, as well as new free-tier features.
The company said it saw a record 38 million new users in the fourth quarter, bringing its total to 751 million monthly active users, up 11% from a year earlier. The number of paying subscribers increased 10% in the quarter to 290 million.
Spotify says its “Wrapped” campaign attracted more than 300 million engaged users and 630 million social shares across 56 languages.
Revenue was 4.53 billion euros ($5.39 billion), up about 7% from a year earlier, driven by an 8% increase in subscription revenue. However, the company's advertising-related revenue saw a decline of 4% to 518 million euros ($616.6 million). Gross margin, an important metric investors watch as Spotify improves its profitability, improved 83 basis points to a record 33.1% as the company sold more podcast and music advertising.
The solid results came as Spotify's new co-founders, Gustav Söderström and Alex Norström, took the reins from co-founder Daniel Ek and will now oversee a company that has far outgrown what it initially set out to do.
After launching Spotify as a music streaming platform, it expanded to include podcasts, audiobooks and even physical bookstores. It hosted music videos and video podcasts on the app and doubled down on its storage strategy, adding social features like group chats and allowing users to share what they were listening to. You can even use Spotify to book concert tickets or learn about song history.
The company has also added AI features such as AI DJ and AI-generated playlists, and now allows users to exclude songs from recommendations to help them better tailor what they listen to.
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Spotify's main focus in recent years has been on profitability, and the company has tried to achieve this by raising subscription prices in the US and Europe. It has also added new features to the free, ad-supported tier to attract more people from rivals such as YouTube Music and Amazon Music, allowing users to search and select the songs they want to listen to.
The company expects to reach 759 million users and 293 million paying subscribers in the current quarter.
