Spotify Q4 reports 271M total MAUs on revenues of $2B, podcast listening grows 200%

Streaming music now accounts for more than 80% of all music consumption in key markets like the US, and one of the big leaders in the field is reaping some of the rewards. Spotify reported its Q4 results today, which noted that the company now has 271 million subscribers, up 31% on a year ago, with paying users up 29% to 125 million. Overall revenues for the quarter $2 billion (a1.9 billion), up 24% on a year ago, with a gross margin of 25.6%. The company continues to post big operating losses, however: this quarter's was a77 million ($85 million), with its loss per share now at a1.14 ($1.26) - more on that number below.

Podcasts made an especially good showing, growing about 200% over last year, the company said, with more than 16% of its MAUs now listening to its podcast content. (Perhaps that's one reason we keep seeing rumours about Spotify acquiring more popular podcast brands like The Ringer.)

This falls in line with Spotify's previous forecast, where it said it had expected total MAUs of between 255 million and 270 million; premium subscribers of 120 million and 125 million; and revenues of a1.74 billion and a1.94 billion ($1.9 billion and $2.1 billion), gross margins of 23.7%-25.7%, and an operating loss of between a31 million and a131 million.

Analysts meanwhile on average expected revenues of $2.09 billion on EPS of -$0.25, both of which Spotify missed. Shares are nonetheless up about 1.74% in pre-market trading.

Spotify also posted some forecasts for the current quarter, where it expects total MAUs of 279-289 million; and premium subscribers of 126-131 million. But it notes that revenues will decline to a1.71-a1.91 billion; while gross margins of 23.5-25.5% will be steady with its operating of loss of a(65)-a(115) million to not show much sign of budging soon.

The company is still the biggest of all streaming platforms, but its well-capitalised competition is also growing. Amazon last month announced 55 million users for Amazon Music and Apple reported last summer that it had 60 million paying users. TikTok is also gearing up to launch a music streaming service with hopes of a jump start in the business by tapping the fast-growing, music-focused, mobile-friendly audience it's picked up for its popular, eponymous short-form video app.

Those are the names that are perhaps most meaningful in the US and Europe, but when you look to other markets, the competition gets even bigger. Gaana in India now has 152 million MAUs in that country alone, posing a big competitive threat as Spotify looks to grow in that market.

Spotify noted that its MAUs for the quarter were "the highest net add quarter we've ever experienced, and the fastest we've ever added 10 million subscribers." This was boosted by its free three-month trial offers, which now also apply to Family plans; as well as its six-month trials that it sells via some retailers. Its ongoing partnership with Google Home and the new ability for Alexa owners to stream off Spotify's free tier will also be playing into that growth.

Within its revenue growth, it noted opposite trends in the two main business areas that feed into that. Premium subscribers performed better than Spotify had expected, at a1,638 million, up 24% over a year ago, even with average revenues down 5% (due to free trials getting extended). Advertising was at a217 million, up 23%.

Spotify explained that operating expenses - a551 million in Q4, up 80% on last year - and the subsequent impact on loss per share were due to "higher than expected social charges resulting from an increase in our share price."

Social charges, it noted, are payroll taxes associated with stock-based compensation. "We are subject to social taxes in several countries in which we operate, although Sweden accounts for the bulk of the social costs. We don't forecast stock price changes in our guidance so upward or downward movements will impact our reported operating expenses. In Q4, the increase in our share price resulted in social charges that were more than a20 million higher than planned."

It added that "excluding the higher than planned social charges, Operating Loss would have finished slightly better than forecast as a result of the slight outperformance in Gross Profit."

Podcasts remains a good news story for the company with its strong growth. There are now 700,000 podcast titles on Spotify, with new discovery features getting added to help users manage that catalogue.

The company has long been working on trying to build a two-sided marketplace, providing tools for artists to help monetise and market their content, and that is now also expanding to podcasts, where Spotify is doubling down on original content and services for producers of the shows, with a new wave of these now going up internationally. Titles include Hypnosis Radio in Japan, Fausto in Mexico, an adaptation of Parcast title Cults for German audiences called SEKTEN & KULTE, and its first three original podcasts in India: 22 Yarns, Love Aaj Kal, and Bhaskar Bose.

We'll listen into the earnings call later and update this with any interesting comments from that.