Spotify posted middling results for the fourth quarter of 2021 — a period that does not include the recent controversy over Neil Young and other musicians removing their music from the streaming giant, which is the world’s largest paid music-subscription service.
Premium subscribers grew to 180 million — up 8 million from the 172 million reported last year — and monthly average users grew 18% to 406 million, from 381 million. Total revenue was €2.69 billion ($3.04 billion), representing 24% growth year-over-year. Subscription revenue was €2.3 billion euros, up 22% year-over-year. Advertising revenue was €394 million, up 40% year over year.
However, ARPU (average revenue per user) grew just 3% year over year in the quarter, and just 1% on a constant currency basis. Ad-Supported revenue reached a record 15% of total revenue, according to the announcement, with gross margin at 26.5%.
Spotify’s market capitalization fell about $2.1 billion over a three-day span last week after Youngpulled his songs from the audio-streaming giant. However, it quickly recovered on Monday — not after co-founder/CEO Daniel Ek announced on Sunday that the company would institute warnings and links to health information on podcasts that talked about Covid-19, but rather after Rogan himself posted a 10-minute video in which he agreed with Spotify’s new policies and would work to bring people on his show with broader perspectives.
In after-hours trading, Spotify stock was down 10%, erasing gains from a bullish analyst upgrade earlier this week. That’s after shared closed down 5.8% Wednesday (Feb. 2) at $191.92/share.
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Revenue of €2,689 million grew 24% year over year in Q4 (or 20% on a constant currency basis), which the company said was due to “significant strength in advertising and favorable FX movements.” Premium Revenue grew 22% to €2,295 million (or 18% constant currency) while ad-supported revenue grew 40% year over year to €394 million (34% constant currency).
Gross margin finished at 26.5% in Q4, flat versus the prior year period.Premium gross margin was 29.2% in Q4, and ad-supported gross margin was 10.8%, or flat.Operating expenses totaled €719 million, an increase of 12% year over year.
Spotify’s stock price was already on the slide — having plummeted 25% year-to-date as of Jan. 25, the day before Young’s catalog was pulled off Spotify. Investors have been rattled by signals that Spotify’s growth may be slowing, particularly afterNetflix’s warning of a significant cooldown in first quarter subscriber net adds(which precipitated a 24% drop in its share price).
A New York Times piece last July, titled“Joe Rogan Is Too Big to Cancel,”included this detail: “[A]mong top Spotify leadership, people familiar with the company say, the notion that Mr. Rogan presents any kind of regrettable executive headache is laughable.”
More to come…
