Swedish music streaming behemoth Spotify experienced a surge in user numbers in the last quarter, driven by its year-end “Wrapped” campaign and new features on its free tier.
The company reported a peak of 38 million new users in the fourth quarter, bringing its total monthly active users to 751 million, a significant 11% increase from the previous year. Paying subscribers also grew by 10% to reach 290 million in the same quarter.
Spotify’s “Wrapped” campaign garnered over 300 million engaged users and 630 million shares across social media platforms in 56 different languages.
Revenue for the quarter reached €4.53 billion ($5.39 billion), marking a 7% rise from the previous year, primarily fueled by an 8% increase in subscription revenue. Despite this growth, the company’s ad-supported business saw a slight decline in revenue to €518 million ($616.6 million). The gross margin also improved by 83 basis points to a record high of 33.1%, driven by increased ad sales for podcasts and music.
The strong performance coincides with the appointment of Spotify’s new co-CEOs Gustav Söderström and Alex Norström, who have taken over from co-founder Daniel Ek. They are now leading a business that has expanded beyond its original music streaming roots to include podcasts, audiobooks, and even physical bookstores. Spotify has introduced features like music videos, video podcasts, and social elements such as group chats and music sharing, enhancing user engagement and retention.
The company has also integrated AI-driven functionalities like an AI DJ, AI-generated playlists, and the ability for users to exclude specific tracks from recommendations, catering to individual preferences.
In a bid to enhance profitability, Spotify has raised subscription prices in certain regions and introduced new features to its ad-supported tier, attracting users from competitors like YouTube Music and Amazon Music. Users now have more control over song selection and search capabilities.
The company projects a further increase to 759 million users and 293 million paying subscribers in the upcoming quarter.
