Spotify's Q4 userbase jumps 23% to 602 million; paid subscribers rise 15%

Spotify's monthly user growth, subscribers beat expectations

Audio streaming service Spotify added 28 million monthly active users (MAUs) for the quarter ended December 31, 2023, registering the company's second largest quarterly net addition in the fourth quarter.

The increase in users takes Spotify's overall user base to 602 million in the quarter, from 574 million in the previous quarter. The growth was driven by double-digit yearly growth across all regions, with "outperformance" in Latin America and the Rest of the World region that includes India.

Spotify, which counts India among its top five markets in terms of the user base, however, didn't disclose specific information on its performance in the country for the quarter.

Paying subscribers grew by 15 percent year-on-year (YoY) to 236 million subscribers for the quarter, with double-digit yearly growth across all regions and outperformance led by Rest of World and Latin America. The company said that it also witnessed better-than-expected intake from promotional campaigns.

Spotify now expects to reach 239 million subscribers and 618 million monthly active users in Q1 2024.

During the quarter, Spotify cut 1,500 jobs, or 17 percent of its global workforce, to rein in costs and drive profitability in a tough environment.

Revenue from subscriptions, which account for the majority of the company's revenue, grew by 17 percent YoY to €3.71 billion for the quarter, led by subscriber growth and the effects of the recent price hikes.

The company's advertising business grew 12 percent YoY to €501 million. The segment contributed about 13.6 percent of Spotify's revenues for the quarter.

Podcast advertising revenue grew in the healthy double-digit range, driven by significant growth in sold impressions across its Original and Licensed podcasts and the Spotify Audience Network, partially offset by softer pricing, the streaming service said.

During the quarter, Spotify also expanded Spotify Audience Network into five new markets, including India, Japan, Brazil, Mexico and Sweden. The product is now available in 14 total markets.

Total revenue was at €3.67 billion for the quarter, up 16 percent year-on-year from €3.16 billion. Operating loss improved to €75 million for the quarter from €231 million in the same quarter last year, due to lower marketing and personnel and related costs.

Spotify however noted that excluding the net severance related and real estate optimisation charges of €143 million, it generated €68 million in adjusted operating income.

During the quarter, Spotify made over 200,000 audiobooks available to eligible Premium Subscribers in the United States with up to 15 hours of audiobook access a month in November 2023. The service also launched its first ever in-app Merch Hub, that provides personalised merchandise recommendations based on user listening habits.

The streaming major also said that more than 225 million monthly active users engaged with its annual year-end Spotify Wrapped campaign, up more than 40 percent year-on-year, with strong yearly growth across all regions and demographics.

"The 2023 campaign included Your Artist Messages with video clips of over 40,000 artists thanking their most loyal fans, generating nearly 725 million video views with over half coming from Gen Z users" the streaming platform said.