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Spotify swings to Q4 loss while premium subscribers top forecasts

By Elena Berton

Subscriber numbers surged as the audio streaming company invested heavily in podcasts, which it sees as key in luring paying listeners

Spotify premium subscriptions rose a better-than-expected 29 per cent in the fourth quarter of 2019. Yet the world’s largest audio streaming company swung to a loss of €209m ($239.8m, £176.9) as investments bit into profits.

It had reported a profit of €442m in the same quarter a year earlier.

At the end of the fourth quarter Spotify had 124 million paying subscribers, its most lucrative type of customer, which was at the high end of its guidance.

Total users, which include those who do not pay for its service, totalled 271 million, above forecasts for 265 million and a 31 per cent increase from a year earlier.

Fourth-quarter revenue rose to €1.86bn from €1.50bn in 2018, just below analysts’ expectations of €1.89bn.

Spotify has been investing in podcasts to stay abreast of its two closest rivals. Apple Music has more than 60 million subscribers, while Amazon has more than 55 million.

The company thinks podcasts are key in attracting more paying subscribers as well as lessening its reliance on music, where it pays royalties to record companies.

Spotify spent heavily last year buying podcast start-ups Gimlet Media, Anchor and Parcast. Its latest addition is The Ringer, the sports and entertainment podcast network it has just acquired for an undisclosed price.

Spotify said 2020 would be an “investment year” as it seeks to capture more growth from podcasts. Sixteen per cent of its users now listen to podcasts on the platform.

The company said it was expecting to have between 328 and 348 million active users by the end of the year and to report an operating loss between €150m and €250m.

FURTHER READING: Spotify to give away free Google Home speakers to its Premium subscribers

FURTHER READING: Streaming wars get serious as Disney pulls box set from Sky

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