Spotify pulled in more than new listeners than it expected for the fourth quarter, as the streamer narrowed its net loss and took a charge related to mass layoffs at the end of 2023 to cut expenses.
For the fourth quarter of 2023, the company reported revenue of €3.67 billion, up 16% and in-line with guidance, and a net loss of €70 million — better than expected due to lower marketing and personnel costs — compared with a net loss €270 million in the year-earlier period.
In Q4, Spotify add 28 million total monthly active users overall, to reach 602 million, and gained 10 million Premium subscribers to stand at 236 million. Previously, Spotify had told investors it expected to add 27 million total monthly active users and 9 million subscribers in Q4.
Spotify’s operating expenses grew 2% year-over-year primarily from €139 million in charges related to its layoffs in December. Gross margin for the quarter was 26.7%, up from 25.3% a year earlier, which the company said reflected improving trends in its podcasting and music businesses partially offset by audiobooks start-up costs and severance-related charges.
Premium revenue grew 17% year over year while ad-Supported revenue grew 12% to an all-time quarterly high of €501 million, according to Spotify. Music advertising revenue grew double-digits while podcast advertising revenue “grew in the healthy double-digit range, driven by significant growth in sold impressions across original and licensed podcasts and the Spotify Audience Network, partially offset by softer pricing,” the company said.
For the first quarter of 2024, Spotify expects to end with 239 million Premium subs (up 3 million sequentially) and total MAUs of 618 million (up 16 million). The company’s anticipates Q1 total revenue of €3.6 billion and gross margin at 26.4%.
In December 2023, Spotify announced that it was slashing 17% of its workforce, a round of layoffs cutting about 1,500 jobs from its global headcount of 9,000. “I decided that a substantial action to rightsize our costs was the best option to accomplish our objectives,” CEO Daniel Ek wrote in a Dec. 4 memo to staffers. The cuts are deeper than Spotify’s two prior waves of layoffs in 2023: In January, Spotify laid off 600 workers eliminating 600 jobs then in June laid off another 200 employees in a reorg related to its podcasting business.
On the podcast front, Spotify has pivoted away from acquiring exclusive platform rights and instead has adopted a strategy of widely distributing shows to maximize audience reach. Last Friday, the company announced a multiyear deal renewal with Joe Rogan — who hosts its No. 1 podcast — worth as much as $250 million. Under the pact, “The Joe Rogan Experience” is ending its three-year exclusive run on Spotify, while Spotify will manage distribution and ad sales for the popular podcast.