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Spotify Closed 2021 With 180M Subscribers, $3B Revenue in Q4

Advertising revenue was 394 million euros, up 40% year over year and 22% sequentially. 

Spotify finished 2021 with revenue of 9.67 billion euros ($10.93 billion), up 22.7% from 2020, 180 million subscribers and a strong gain in advertising revenue, the company revealed Wednesday (Feb. 2) in its fourth quarter earnings.

Fourth-quarter revenue was 2.69 billion euros ($3.04 billion), slightly above guidance of 2.54 billion to 2.68 billion euros, representing 24% growth year-over-year. Subscription revenue was 2.3 billion euros ($2.6 billion), a 22% increase year over year. Advertising revenue was 394 million euros ($445 million), up 40% year over year and 22% sequentially.   


Spotify’s share price fell over 12% in after-hours trading following the earnings release. The company expects first quarter of 2022 revenue to be 2.6 billion euros ($2.94 billion), slightly lower than the recent quarter’s tally. Its forecast of 183 million subscribers for the first quarter would represent a three million-subscriber gain, on par with the prior-year period. Its share price dropped 5.8% to $191.92 on Wednesday after rebounding 17.7% over the previous two days. 

The 180 million subscribers were at the high end of its previous guidance, representing a 7% increase from the third quarter and 18% more than a year earlier. Europe and Latin America contributed the most to the subscriber growth in the quarter.  

Average revenue per user was 4.40 euros ($4.97) in the fourth quarter, up 1% from 4.34 euros ($4.91) in the third quarter. Spotify attributed the gain primarily to price increases. At the same time, Spotify’s churn — the percent of subscribers who leave the service in a given quarter — “has continued to come down [and was] down year-on-year,” said CFO Paul Vogel during Wednesday’s earnings call. 

Advertising revenue recovered from a sluggish 2020 to grow 80.9% in 2021. CEO Daniel Ek noted there are “gigantic companies being built with advertising” in China despite widespread doubts a decade ago that internet advertising could build sustainable business models. “That bodes really well for [developing] regions such as India, Indonesia and others where Spotify is,” he said. Fourth-quarter advertising revenues improved 40% year-over-year gain and accounted for 14.7% of revenue in the fourth quarter, an improvement from 12.9% in the third quarter and 13.0% in the prior-year quarter. 

Wednesday’s earnings arrived a week after Spotify acquiesced to musician Neil Young’s request to remove his catalog over comments about COVID-19 made on The Joe Rogan Experience podcast, which Spotify licenses exclusively. Two of Young’s contemporaries, Joni Mitchell and Nils Lofgren, also requested to be removed from the platform. In turn, Spotify announced on Sunday it will place an advisory on all podcasts with COVID-19 content. “We’re trying to balance creative expression with the safety of our users,” said Ek during Wednesday’s earnings call. “I think the important part here is we don’t change our policies based on one creator, nor do we change it based on any media cycle or calls from anyone else.”  

The company did not break out podcasting advertising from music advertising but said podcast consumption reached an all-time high and increased 20% year-over-year on a per-user basis. Whether or not the uproar about Rogan’s podcast will hurt Spotify’s advertisers isn’t known yet, said Ek. “Usually, when we’ve had controversies in the past, those are measured in months and not days.” 


Spotify’s Financial Metrics (Q4 2021 vs. Q4 2020)

  • Revenue: 2.3 billion euros ($3.04 billion), up 24% year over year from 2.17 billion euros
  • Gross margin: 26.5%, no change from the prior-year quarter
  • Operating loss: 7 million euros, an improvement from a 69-million euros loss
  • Free cash flow: 103 million euros, up from 74 million euros

Listener Metrics (Q4 2021 vs. Q3 2021)

  • Paid subscribers: 180 million, up 5% from 172 million in Q3 2021
  • Ad-supported listeners: 236 million, up 7% from 220 million in Q3 2021
  • Total monthly active users (MAUs): 406 million, up 7% from 381 million in Q3 2021
  • Average revenue per subscriber: 4.40 euros, up from 4.34 euros in Q3 2021

Q1 2022 guidance

  • Revenue: 2.6 billion euros
  • Subscribers: 183 million
  • MAUs: 418 million