Swedish music streaming giant Spotify saw its user numbers peak last quarter, driven by its year-end “Wrapped” campaign, which rounds up stats and best listening moments for users and new features in its free tier.
The company said it saw a record 38 million new users in the fourth quarter, bringing its total to 751 million monthly active users, up 11 percent from a year earlier. Paying subscribers rose 10% to 290 million in the quarter.
Spotify said the “Wrapped” campaign resulted in more than 300 million engaged users and 630 million social media shares in 56 languages.
Revenue came to 4.53 billion euros ($5.39 billion), about 7 percent more than last year, thanks to an 8 percent increase in subscription revenue. However, the ad-supported business saw revenue fall 4 percent to 518 million euros ($616.6 million). Gross margin, a key metric that investors watch for signs of improvements in Spotify’s profitability, improved 83 basis points to a record high of 33.1 percent as the company sold more ads for podcasts and music.
The good performance comes as Spotify’s new co-CEOs, Gustav Söderström and Alex Norström, take over from co-founder Daniel Ek, and will now oversee a business that has gone far beyond what it originally set out to do.
After launching as a pure music streaming play, Spotify has expanded its remit to include podcasts, audiobooks, and even physical bookstores. It features in-app music videos as well as video podcasts, and has doubled down on its retention strategy by adding social features like group chats and letting users share what they’re listening to. You can even use Spotify to book concert tickets or explore the story behind the songs.
The company has also added AI features, such as an AI DJ and AI-generated playlists, and now lets users block tracks from being recommended to help them better tailor what they listen to.
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Profitability has been a big focus for Spotify in recent years, and the company has tried to achieve this by raising subscription prices in the US and Europe. It’s also adding new features to its ad-supported free tier to lure more people away from competitors like YouTube Music and Amazon Music, allowing users to search for and select songs they want to listen to.
The company expects to reach 759 million users and 293 million paying subscribers in the current quarter.
