Spotify reported its first quarterly earnings since going public in April, and its numbers were mostly in-line with what analysts had expected. Spotify reported revenue of €1.14 billion or $1.37 billion USD, which was in-line with what analysts expected. Paid subscribers were slightly lower than expected, posting 75 million versus 75.1 million expected. Now its ad-supported monthly users (or the ones that use Spotify and don’t pay for it) were 99 million versus 98 million expected. Spotify also beat on the expected losses this quarter, posting a loss of €169 million versus analysts expecting it to be €173 million.
Spotify did grow pretty significantly and even beat its own guidance, but the bottom line with this first quarter earnings is that Spotify is still losing money. Since Spotify’s inception, the company has not turned a profit, ever. This is mostly because of the vast royalties the company has to pay to record labels and artists, and it appears that isn’t letting up anytime soon. The company has 170 million users, and 75 million of those are paid users. That is actually a pretty good ratio there, and are up 30-percent and 45-percent, respectively, year-over-year. So Spotify is adding more paid users, which is definitely important towards getting into profitability, but the company has some more room to grow.
Obviously, Spotify is in a pretty tough spot right now, competing in the music streaming industry against some of the biggest companies in the world – Alphabet, Amazon and Apple. It’s hard for any company to really compete with them, just take a look at Pandora, which has had a pretty rough few years since going public. Spotify can turn it around, and it is looking too, by adding in new features, and getting more users to spend more time within the app. It has recently added new playlist features as well as podcasts and video, to keep users interested and using the app more. Which translates to more revenue.