By Dipo Olowookere
In the fourth quarter of 2021, one of the audio streaming platforms, Spotify, posted strong numbers, sustaining its momentum in subscriber growth and others.
According to the financial statements analysed by Business Post, the firm improved its monthly active users (MAUs) by 18 per cent year-on-year to 406 million from 381 million in the last quarter.
This was buoyed by gains from the 7th annual year-end Spotify Wrapped campaign launched on December 1, 2021, to users in 103 markets.
Collectively, 120 million MAUs engaged with Wrapped content in Q4 (up 29% Y/Y) as the campaign trended worldwide with nearly 60 million shares of Wrapped stories and cards, triggering significant levels of consumption across our two personalized playlists (Your Top Songs and Your Artists Revealed) which were responsible for almost 8 per cent of total on-platform consumption hours within 48 hours of launch.
It was observed that premium subscribers grew in the period under consideration by 16 per cent to 180 million in the quarter as a result of the strong promotional campaign performance.
This supported the 24 per cent growth in the revenue generated in the quarter to €2,689 million and was above the top end of its guidance range due to significant strength in advertising and favourable FX movements.
Within premium, the average revenue per user (ARPU) of €4.40 in Q4 was up 3 per cent and excluding the impact of FX, the company saw a benefit to ARPU primarily from its price increases.
As for the gross margin, it finished at 26.5 per cent in Q4, above the top end of its guidance range and flat versus the prior-year period. The gross margin trend reflected a favourable revenue mix shift towards podcasts, marketplace activity, and Other Cost of Revenue efficiencies (e.g. payment fees, streaming delivery costs), which were offset by higher non-music and other content costs and publishing rate increases.
According to the results, Spotify witnessed a 12 per cent increase in operating expenses at €719 million in Q4, though better than forecast and contributed to positive operating income in the quarter.
However, the firm posted a net loss of €39 million in the period under review compared with the net profit of €2 million in the preceding quarter.
