In its latest quarterly earnings report, digital music service, Spotify revealed a 4% increase in its paid user base, reaching 236 million subscribers, and a 5% growth on the free ad-funded tier, which rose to 602 million users.
The company also achieved a record net addition of 28 million users in the fourth quarter, contributing to a total of 31 million net additions for the full year. Additionally, revenue increased by 16% year-on-year.
Despite these gains, the company is still struggling with losses in Q4, which is a cause for concern. Spotify posted a profit of €65 million in Q3, but reported a €70 million loss in Q4. The operating loss for the quarter was €75 million, albeit better than the updated guidance. Notably, excluding one-time charges, the company generated €68 million in adjusted operating profit, more than doubling the third-quarter figure.
The losses suffered in Q4 were partially attributed to one-time charges related to the costs of layoffs undertaken by Spotify in 2023 as part of efforts to lessen losses. Furthermore, Spotify continues to battle with Apple over the App Store changes necessitated by European antitrust law.
Spotify has criticised Apple’s plans and urged the European Union to reject Apple’s proposed version of compliance with the Digital Markets Act. Apple, in response, has defended its position, arguing that it played a major role in Spotify becoming “the most successful music streaming app in the world.”
As Spotify navigates the challenges posed by its financial performance and regulatory battles, the company continues to focus on its growth trajectory and pursuit of sustainable profitability in an increasingly competitive streaming market.