Spotify gains more subscribers but sees 2020 losses triple

Yolanda Curtis
February 4, 2021

However, despite a strong performance (or at least stronger than expected) in 2020, the company's full-year revenue forecast for 2021 fell below expectations.

Spotify reported sales of almost €7.9 billion, up by 16.5% year-on-year and in line with estimates from analysts polled by Bloomberg.

For Q1, Spotify expects revenue of between €1.99 and €2.19 billion versus a consensus estimate of €2.20 billion from analysts.

It, however, expects total premium subscribers in the range of 155 million to 158 million for the first quarter, whereas analysts were expecting it to hit 163.5 million.

The company added 25 million users during Q4 bringing its total monthly active users (MAUs) 345 million, a 27% increase compared to Q4 2019. Its premium users grew 24 percent year-on-year from 124 to 155 million, while ad-supported usage grew from 153 to 199 million year-on-year.

Still, more important to investors is what those customers are paying.

The company's advertising business has grown after a fall in the early months of the pandemic, with sales reaching 281 million euros.

Spotify has added more users to its service as it bets big on podcasts but said the ongoing pandemic may hamper gains.

Spotify recently raised subscription prices of some its plans in certain markets, including its family plan and this week it launched in South Korea but without the free option offered in other markets.

"We have seen per user consumption in large regions such as Europe and North America return to growth, while Latin America and the rest of the world show signs of improvement but remain slightly below pre-Covid levels", the company said.

"We continue to see strong growth in podcast consumption, with consumption hours in Q4 almost doubling since Q4 2019", Spotify said in the statement.

In its full-year 2021 guidance, Spotify said it expected total users across ad-supported and premium accounts of 407 million to 427 million.

It expects to end 2021 with between 172m and 184m premium subscribers and operating losses between €200m and €300m. "As of Q4, we had 2.2 million podcasts on the platform (up from more than 1.9 million podcasts in Q3)".

The company's substantial investments in podcasts have seen a spike in paid users but it presented a reserved forecast for this year.

Spotify was down 6.9 per cent to US$321.25 at 9:39 NY.

Spotify revealed its much-anticipated Q4 2020 earnings specifics this morning, and at the time of publishing, Spotify stock was trading for $317.15 per share - down some 8.2 percent from Tuesday's closing price of $345.43.

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