The audio giant said it ended 2019 with 124 million premium subscribers globally, up 29% from the year earlier and up 10% from the previous quarter. It was the highest net-add quarter ever, Spotify said. Ad-supported monthly users stood at 153 million, up 32% on the year and 9% on the quarter. The numbers confirm the Stockholm, Sweden-based company’s big lead over its two closest rivals – Apple Music had more than 60 million subscribers as of June and Amazon had over 55 million subscribers globally.
Revenue rose to 1.86 billion euros ($2.05 billion), up 24% from $1.5 billion euros a year earlier. Analysts were expecting revenue of 1.89 billion euros, Spotify forecast current first-quarter revenue will come in from 1.71 to 1.91 billion euros, largely below estimates.
Ad-supported revenue of 217 million euros was up 23%, a bit weaker than anticipated, the company said. “We had a slower start than usual in Q4, particularly in our Direct business, following some of the technical issues we had implementing a new order management system last quarter. By December, momentum in bookings had returned to normal levels but wasn’t enough to compensate for the slower start to the quarter.”
Premium revenue, which makes up the bulk of sales, was 1.638 million euros, up 24%.
The company slipped into the red, reporting a loss attributable to shareholders of 1.14 euros per share for the fourth quarter.
Podcasting was a big theme. Spotify said streaming hours rose 200% in the fourth quarter from the year before and that it’s seeing “clear indications that podcast usage is driving increased overall engagement and retention. We have seen early indications that our investments in podcasts are having a positive impact on conversion of free to paid users.”
The ramp up in podcasts and entertainment and storytelling in general at the music-streaming service is being spearheaded by chief content officer Dawn Ostroff, the former entertainment president at Cond Nast who joined Spotify in 2018. She’s spiked the number of podcasts on the service to approaching half a million titles, using a war chest allocated by the company to shop for studios, acquiring Gimlet Media in New York and Parcast in Los Angeles.
Spotify said overall growth re-accelerated across its largest regions, Europe, North America, and Latin America, although the ‘rest of world’ segment is still the fastest growing. Of note, North America saw the fastest quarterly growth since the fourth-quarter of 2018. Each of its top 20 markets has seen improvement in retention year on year.
Churn improved more than 80 basis points year on year and more than 50 bps sequentially.
Average revenue per user fell 5% in the quarter to 4.65 euros in the quarter, driven by the extension of a free trial period across the entire product suite in the quarter.