Mixed feelings for Spotify at the end of 2022. Admittedly, the Swedish music streaming giant has exceeded market expectations by reaching 205 million paying subscribers, a figure up 14% over one year. As for the total number of active monthly users, which includes those of the free version, it now stands at 489 million, up 20%. After crossing the 400 million user mark at the end of 2021, the platform therefore hopes to pass the milestone of half a billion users in the first quarter of 2023.
Despite good momentum in terms of new users at a time when growth in the streaming market is running out of steam, the Scandinavian company widened its losses last year. While it had lost only 34 million euros in 2021, it ended the past year with 430 million euros in losses, in particular due to heavy investments in podcasts to diversify its activity and thus expand its customer base.
6% of workforce cut
If these investments are necessary to keep the competition, represented in particular by Apple Music, Tencent and Amazon Music, at bay, they may have been a little too substantial in 2022. “With hindsight, I was too ambitious by investing faster than our turnover growth”recognized Daniel Ek, the boss of the Swedish giant, a few days ago.
These remarks justified the company’s decision to lay off 6% of its employees, or nearly 600 positions, thus following in the footsteps of Gafam, which are currently cutting their workforce severely. While the losses widened, Spotify garnered 11.7 billion euros in revenue, up 18% year on year.
As a reminder, the rival of Apple Music had announced last year that it was aiming for one billion users by 2030 and 100 billion dollars in revenue within a decade. To achieve this, the group intends to capitalize on its breakthrough in podcasts and audio books to increase its gross margins to 40% and its operating margin to 20%, thus making the company profitable.