Spotify Pulls 31 Million Paying Users Last Year; Records $80m Operating Loss in Q4 2023

Earlier this month, Spotify released its Q4 2023 financial results following an impressive outing in Q3 2024, as previously discussed.

Paying Subscriber Count (Premium Users)

In Q4 2023, Spotify's global premium subscriber base reached 236 million paying users, marking a 15% year-over-year increase from Q4 2022, with a net increase of 10 million subscribers compared to the 226 million I’d reported for Q3 2023. This exceeds Spotify's projection by 1 million, initially pegged at 9 million. So basically, Spotify amassed a total of 31 million premium subscribers in 2023 alone.

Spotify highlights an outperformance in premium subscriber base in the Rest of World and Latin America regions.

Monthly Active Users (MAUs)

By the end of Q4 2023, Spotify's total number of Monthly Active Users (MAUs), encompassing both paying and ad-supported users, reached 602 million, surpassing projections by 1 million. In this period, Spotify records an increase of 28 million MAUs, bringing the total additions for 2023 to 113 million MAUs. Spotify also mentions an outperformance in MAUs from Latin America and Rest of World regions.

Premium Revenue

In Q4 2023, Spotify's premium revenue from paying users amounted to $3.40 billion, marking a 21% year-over-year increase from same quarter in 2022. This growth is attributed to subscriber gains and the impact of price adjustments. Remember Spotify raised its prices in multiple regions last July, marking the first price increase in its 15 years of operation.

Ad Revenue

In Q4 2023, Spotify achieved $538.62 million in ad-supported revenue, representing a 17% year-over-year increase. This contributed to total revenue of $3.946 billion in Q4 2023, marking a 20% increase compared to the same quarter of the previous year.

Profitability

As discussed in Q3 2023, Spotify reported an operating income of $34.82 million.

Throughout 2023, Spotify generated USD $14.336 billion in revenue and distributed $9 billion (about 62.8%) to music rightsholders (more on this later).

For Q4 2023, Spotify recorded an operating loss of $80.63 million, which is less severe compared to the operating loss of $248.34 million in Q4 2022.

Spotify attributes its operating loss in the last quarter to severance ($153.73 million) and real estate optimization expenses ($149.43 million). Remember Spotify laid off about 1500 of its global workforce last year, shortly after reporting its Q3 financial result.

Q1 2024 Projections

For Q1 2024, Spotify projects a total of 618 million Monthly Active Users (MAUs), reflecting an increase of 16 million.

The platform projects its Total Premium (paying) Subscriber base to reach 239 million, marking an addition of 3 million new subscribers compared to the previous quarter. It also anticipates an operating income of $194 million and a total revenue of $3.8 billion.

Spotify said to its investors: