Digital music service Spotify Technology has reported a narrower-than-expected loss in the final quarter of the year, with its net loss standing at $150.3 million, or 0.66 euro per share. 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 revealed in a statement that it expects a revenue of $10.83 billion (9.01 billion euros) to $11.31 billion (9.41 billion euros) for the year 2021.
The largest audio streaming company in the world, Spotify revealed that it faced heightened forecasting uncertainty “due to the unknown duration of the pandemic and its ongoing effect on the user, subscriber, and revenue growth.” In a statement, Spotify announced that its Monthly Active Users (MAUs) have reported an year-on-year growth of 27%, adding an additional 25 million users, reaching a total of 345 million (as opposed to the expected 343 million). Premium subscribers reported an year-on-year growth of 24% to reach 155 million.
Spotify’s revenue in Q4 2020 grew by 17% to reach 216 million euros even as the monthly revenue per user fell to 4.26 euros.
The company’s advertising business has grown after a fall in the early months of the pandemic, with sales reaching 281 million euros. “We saw strong Y/Y revenue growth across all of our regions and channels as advertiser demand continued to rebound from Q2 2020 lows. The strength in Ad-Supported revenue was led by our Podcast, Direct, and Ad Studio channels, with Podcast and Ad Studio both growing over 100% on a Y/Y basis,” Spotify clarified in the statement.
Thus, the company has effectively bounced back after its performance and revenue had taken a dip in the early months of the pandemic. It has expanded into Russia and 12 other countries recently, registering accelerated user growth outside North America and Europe.
“We continue to see strong growth in podcast consumption, with consumption hours in Q4 nearly doubling since Q4 2019,” the statement read. It added that it had 2.2 million podcasts on the platform in the winter quarter, a rise from 1.9 million in the third quarter. Spotify also forecast a loss of 200-300 million euros for 2021 while expecting its user base across ad-supported and premium accounts of 407 million to rise to 427 million. “Our Sponsored Recommendations have continued a strong pace of growth, with December marking the single biggest month ever. During the quarter, we saw more than a 50% increase in the number of campaigns vs. the prior quarter. Additionally, over half of the customers in Q4 were new buyers, which helped drive an 82% increase in billings from the prior quarter,” Spotify said in the statement.
It added that it would continue to add new features for the creator community.