As the company approaches its much-anticipated IPO, it has yet to convince investors of its future profitability.
The music industry is poised to face its third consecutive year of growth in 2017, thanks to paid subscription streaming services like Spotify. Yet, as it approaches its much-anticipated IPO, that company has yet to convince investors of its future profitability.
The streaming service recorded revenues of 1.9 billion euros ($2.2 billion) in the first half of 2017, according to sources familiar with the matter, which was first reported by The Information. That figure is already nearly 70 percent of the revenue that Spotify reported in the entirety of last year and is on pace to reach 4.1 billion euros (US$4.9 billion) by the end of 2017, a 40 percent increase year-over-year from 2016. Such projections align well with the streaming service's aggressive user-acquisition strategy, which has grown its subscriber base by 40 percent over the last year.
As expected, Spotify also recorded significant operating losses, which sources estimated were anywhere from 100 million to 200 million euros in the first half of 2017. This suggests an improvement in pace from 2016, during which total operating losses were 556.7 million euros.