Spotify U.K. Reports $312M Revenue, 7.1M Monthly Active Users in 2016

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Courtesy of Spotify

       

Subscription sales accounted for the bulk of the income, accounting for $285 million -- up from $227 million the previous year.

Sustained subscriber growth and a rise in advertising revenue helped Spotify's U.K. arm make significant gains in 2016.    

According to the company's latest set of financial results, which cover the year ending Dec. 31, gross revenue climbed to £237 million (US$312 million), up from £187 million ($247 million) in 2015. Subscription sales accounted for the bulk of that total, accounting for £216 million ($285 million), up from £172 million ($227 million) the previous year. 

Advertising sales also grew to £17.5 million ($23 million), up from £10.8 million ($14 million) -- fueled by an increase in monthly active users, which climbed to 7.1 million. Of that total, 2.8 million were paying subscribers, up from 1.7 million just 12 months previously. 

Spotify attributed this growth to the launch of its new global family plan and “strong holiday and summer” marketing campaigns. Going forward from November 2017, the company’s main form of generating revenue will be from display, audio and video advertising, says the financial report.

In line with the rise in subscriber numbers, payments to rights holders and record labels climbed to £167 million ($220 million) from £149 million ($197 million). Distribution costs climbed from £3.2 million ($3.9 million) to £7.7 million ($10 million). 

Total year-end profit after taxation stood at £1.9 million ($2.5 million), up from £1.2 million ($16 million).

"Streaming music is an emerging market, which makes it difficult to evaluate our current and future prospects," said Spotify U.K. co-director Barry McCarthy in a statement included in the Companies House filing.

"We face strong competition both for users, listening hours and advertising spending, and we face competition from players with substantial resources at their disposal," he added, noting that Spotify depends “on acquiring content licenses from a limited number of major and minor content owners and other rights holders in order to provide our service.”

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