Spotify reports strong subscriber growth 2 months after announcing mass layoffs

Spotify on Tuesday reported fourth-quarter monthly active users and subscribers ahead of expectations as it grew in all regions, and said revenue and profitability trends looked favorable this year.

The music streaming company has ventured into podcasts and audiobooks as it seeks to grow its user base to one billion by 2030. It has also raised prices for its subscribers and laid off thousands of employees to boost profits and increase efficiency.

The number of monthly active users rose by 23% to 602 million in the fourth quarter, beating Spotify’s guidance and analysts’ forecasts of 601.33 million.

Premium subscribers, who account for most of the company’s revenue, rose by 15% to 236 million, topping estimates of 235.1 million, according to IBES data from LSEG.

The company expects current-quarter premium subscribers to reach 239 million, above estimates of 238.3 million.

However, the first-quarter forecast was below Wall Street expectations for total users and revenue.

Spotify’s monthly user forecast for the first quarter of 618 million undershot estimates of 618.8 million. It expects revenue to reach 3.6 billion euros ($3.86 billion), missing expectations of 3.64 billion euros.

The company posted a fourth-quarter operating loss of 75 million euros, compared with a loss of 231 million euros in the year-earlier quarter.

After announcing its latest round of layoffs in December, Spotify had forecast a fourth-quarter operating loss of between 93 million euros and 108 million euros due to the charges.

Revenue rose 16% to 3.67 billion euros, but missed estimates of 3.72 billion as it took a hit from foreign exchange losses.

Ad-supported revenue grew by 12% from a year earlier as music advertising revenue reaccelerated, and podcast advertising also grew by double digits.

(Reporting by Supantha Mukherjee in Stockholm; editing by Barbara Lewis)

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