Spotify unveiled its quarterly balance sheet for the period from October to December 2022. The music streaming service continues to see its number of subscribers skyrocket, but is still struggling to be profitable.
The Swedish company’s financial director, Paul Vogel, wants to reassure investors: “ We always knew that 2022 would be a year of investment and that 2023 would be a year where we would slow expenses, and therefore operating costs, while revenues continued to climb. »
Operating costs still too high
For several years now, and particularly in 2022, Spotify has invested heavily to develop podcasts on the platform. It has also multiplied its efforts to land in the audiobook market. As a result, its operating costs rose twice as fast as its revenues last year, amid the global economic downturn. Recently, the company announced the dismissal of 600 of its employees.
” Looking back, I probably got a little carried away, and overinvested in the face of the looming market uncertainty. Admitted Daniel Ek, CEO of Spotify, during a conference call on the company’s fourth quarter.
In 2023, Spotify predicts an improvement in its gross margins, the ratio that measures the profitability of a company’s sales, and expects its revenue to start growing faster than its operating expenses. Above all, the Swedish giant is banking on increasing its number of subscribers.
Spotify continues to win over consumers
Indeed, despite difficulties in making its activities profitable, Spotify continues to acquire new subscribers. Its number of monthly active users reached 489 million during the fourth quarter, beating its own forecasts as well as those of analysts who expected an additional 477.9 million users. The company owes this success in particular to the Asian market, and especially to India and Indonesia, where it is conducting major marketing campaigns.
Paid subscribers, which make up the bulk of the company’s revenue, rose 14% to 205 million. Following this trend, Spotify is thinking big for 2023 and expects to hit half a billion users in the current quarter.
Last year, Daniel Ek announced his goal of reaching 1 billion users and earning an annual turnover of 100 billion dollars by 2030.
See the offer
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- Many subscription offers according to everyone’s needs
- Lifesaving content personalization
- An effective interface and ergonomics
Despite a few minor flaws (including sound quality that is about to be improved to better meet new market standards), Spotify remains a reference in the field of music streaming. With over 200 million regular users worldwide, it is quite simply the most popular service today. Thanks to a total customization of its service, numerous options for subscribing (or the possibility of enjoying it for free), a simple and efficient interface, Spotify is undoubtedly here to last and still impose itself for many years to come. as a leader.
Despite a few minor flaws (including sound quality that is about to be improved to better meet new market standards), Spotify remains a reference in the field of music streaming. With over 200 million regular users worldwide, it is quite simply the most popular service today. Thanks to a total customization of its service, numerous options for subscribing (or the possibility of enjoying it for free), a simple and efficient interface, Spotify is undoubtedly here to last and still impose itself for many years to come. as a leader.
Source : Reuters
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