Spotify has 205 million subscribers, but widens its deficit

Thanks to Taylor Swift, who, releasing her tenth album Midnights on October 21, 2022, instantly became the most-streamed single-day artist in Spotify’s history. It is partly thanks to her that Daniel Ek, the CEO and founder of the world’s number one audio streaming platform, was able to rejoice on Tuesday, January 31, to have reached a new peak of 205 million paying subscribers. worldwide at the end of 2022 (+14% compared to the end of 2021).

The multiple advertising campaigns have done their job by winning the loyalty, especially in Latin America, of new subscribers from generation Z (born in the late 1990s). This result, better than the 202 million expected by analysts, resulted in a 21% increase in turnover, to 11.72 billion euros for the year 2022.

The total number of users, including those of the free version, peaked at the end of December 2022 at 489 million and is expected to cross the 500 million mark in the first quarter of 2023.

“Too ambitious”

On the other hand – this is indeed the nagging and chronic problem of this Swedish flagship – its net losses have widened significantly in 2022 to plunge to 430 million euros (against 34 million deficit in 2021). As analysts had predicted 441 million losses, the Spotify action jumped 5% before the opening of Wall Street, to 105 dollars (96.65 euros). An epiphenomenon despite everything since for two years, the market capitalization of the group has unscrewed by 70% to 21.2 billion dollars.

Its diversification has earned it a number of accusations, in particular with the American star Joe Rogan, accused of conveying false information on the Covid-19

Is the tide turning for the world’s number one online music company? In the wake of the giants of the Net which like Amazon, Meta, Microsoft and Google have massively laid off to reduce their costs, Spotify announced on January 23 a plan to cut 6% of its global workforce, or 500 employees. “In hindsight, I was too ambitious by investing faster than our turnover growth”had then recognized Daniel Ek.

In fact, Spotify’s investments grew twice as fast as its revenues in 2022. To become the world leader in podcasting, the group has spent a billion euros in recent years. This diversification has also earned him a good number of questions, in particular with the American star Joe Rogan, accused of conveying false information on the Covid-19.

Even though Daniel Ek promised “better efficiency” in 2023, after “excellent growth” in 2022, analysts are struggling to know when this start-up founded in 2006 in Stockholm will be profitable. On the strength of its spectacular lead over Apple Music or Amazon Music, the company is “on the right track” towards profitability, has just promised the CEO, without giving a date. And he feels “Candidly in a better position than [s]are competitors” to face Tik Tok if the latter decides to launch a paid offer.