Spotify Turns First Profit Since Launch
Popular music streaming service, Spotify, has outperformed its own expectations, posting its first-ever profit since its launch in 2008, to the tune of €94 million (AUD$150.26 million).
“For the first time in company history, Operating Income, Net Income, and Free Cash Flow were all positive,” reads Spotify’s financial announcement.
The 10-year-old Swedish streaming service states it notched 207 million monthly active users this past quarter, in addition to its 96 million paid subscribers — nearly double Apple Music’s 50 million.
Although active users and premium subscribers increased, the average revenue per user (ARPU) fell 7% in the quarter, as the number of cheaper subscription options rose.
Spotify has seen revenue and sales growth slow considerably over the past three years, with shares dipping 6% since it went public in April 2018.
“Movements in our share price in Q4 had a sizeable impact on our reported results, although the business would have been profitable regardless,” Spotify states.
However, despite the favourable figures, the streaming service is forecasting a loss of €50 to €100 million (approx. AUD$80m to AUD$160m) next quarter and €200 to €360 million (approx. $319.65 million to AUD$575.3 million) over 2019.
Spotify is known to favour growth over profitability, and even with the negative forecast announced its acquisition of two podcast companies – Gimlet Media and Anchor – hinting that the streaming giant has eyes to expand.
“We want Spotify to continue to be at the centre of the global audio economy,” CEO and co-founder Daniel Ek wrote in a company blog post.
“[As] we expand deeper into audio, especially with original content, we will scale our entire business, creating leverage in the model through subscriptions and ads.”