Spotify reported their fourth quarter 2022 financial results, revealing an impressive 205 million paid subscribers, outpacing their user growth goals and reaching a historic high in total quarterly gain.
Spotify Q4 2022 Earnings
Spotify added 10 million premium subscribers in Q4 2022, reaching a total of 205 million, surpassing their previous forecast. The paid subscriber growth, a 14% increase YoY, was driven by promotions and household plans, according to the company.
Q4 ‘22 $SPOT delivered great platform growth. We ended 2022 strongly despite a challenging year. Expect us to move faster with more intensity of effort, driving even greater efficiency in 2023. pic.twitter.com/rII7hHwRy1
— Daniel Ek (@eldsjal) January 31, 2023
In total, Spotify had 33 million more monthly active users in Q4, reaching a record high of 489 million (free and paid), a 20% YoY increase. Despite an economic slowdown, Spotify generated €3.17 billion in revenue, an 18% increase from the previous year and in line with guidance, with a net loss of €270 million (compared to €39 million in Q4 2021). The Q4 operating loss of €231 million was better than their projected loss of €300 million.
Spotify exceeded their Q4 projections, ending with 205 million paid subscribers and 489 million total monthly active users, surpassing their predicted 202 million paid subs and 479 million total monthly active users.
Spotify’s Ad-supported Revenue in Q4 2022
Spotify’s Q4 ad-supported revenue increased 14% YoY, reaching €449 million, driven by strong podcasting growth in the mid-30% range. The quarter’s gross margin was 25.3%, slightly above expectations due to lower spending on new podcast content investments and favorable music trends.
Spotify recently announced that Android users will now have Spotify Connect support in the media switcher, allowing for seamless cross-device switching.
Spotify Operating Expenses
Spotify’s Q4 operating expenses rose 44% to €1.03 billion, driven by increased personnel costs for headcount growth in global ad sales and higher advertising expenses.
The company stated their Q1 2023 projections are uncertain and expect revenue of €3.1 billion and an operating loss of €194 million, including a €35 million to €45 million charge for severance-related expenses.
They forecast reaching 500 million monthly active users and 207 million premium subscribers in Q1, an increase of 11 million and 2 million respectively. Spotify’s 2022 Wrapped campaign saw higher engagement compared to the previous year, with 150 million users across 111 markets participating, a 30% YoY increase.
Announcing the fourth quarter 2022 financial performance, Spotify shared,
We ended 2022 with strong Q4 performance as nearly all of our KPIs surpassed guidance. MAU net additions reached a quarterly record-high of 33 million in Q4, 10 million above guidance.
Looking back on 2022 in its entirety, we are pleased with our overall results. Each year presents certain challenges and opportunities and, over the past 12 months, we largely delivered on our internal goals and we are excited about the momentum we are building heading into 2023.