Spotify Technology SA (NYSE:SPOT) shares had jumped about 8% on Wednesday morning as the Swedish audio streaming service provider posted impressive user growth during the fourth quarter while its economic performance for the period was largely in line with expectations.
The company posted a 20% year-over-year growth in monthly active users (MAUs) up from 406 million to 489 million, 10 million MAUs above the company’s guidance and a quarterly record of 33 million new MAUs.
It also achieved a 14% increase in subscribers at 205 million compared to 180 million in the year-ago quarter.
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Revenue increased 18% or 12% in constant currency at €3.17 billion compared to €2.69 billion in 4Q 2021.
However, it posted a net loss for the quarter of €270 million or US$1.40 per diluted share, compared with a loss of €39 million or US$0.99 per diluted share in 4Q 2021.
Spotify reported a gross margin of 25.3%, down from 26.5% in the year-ago quarter, which it attributed to continued growth in marketplace activity offset by new podcast content and product investments.
It posted an increased operating loss of $231 million, compared to a loss of $7 million in the year-ago quarter which it attributed to higher personnel costs due to headcount growth and higher advertising costs.
The company also noted the negative impact of currency movements of €54 million given the unfavorable geographic mix of employee costs relative to revenue.
“Looking back on 2022 in its entirety, we are pleased with our overall results,” the company said.
“Each year presents certain challenges and opportunities, and, over the past 12 months, we largely delivered on our internal goals and we are excited about the momentum we are building heading into 2023.”
500 million monthly users expected in first quarter of 2023
Looking ahead to 2023, Spotify said it expects to add approximately 11 million new MAUs in 1Q 2023 bringing total MAUs to 500 million.
It also forecast the addition of approximately 2 million new subscribers in the quarter bringing total subscribers to 207 million, and revenue of €3.1 billion assuming a 100 basis points tailwind to its year-over-year growth due to favourability in foreign exchange rates.
Spotify shares were up 8.1% at US$108.12 at mid-morning on Tuesday.
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