Swedish music streaming giant Spotify saw its user numbers peak last quarter, driven by its year-end “Wrapped” campaign, which rounds up stats and listening highlights for users, and new features on its free tier.
The company said it saw a record 38 million new users in the fourth quarter, taking its total to 751 million monthly active users, up 11% from a year earlier. Paying subscribers increased by 10% to 290 million in the quarter.
Spotify said the “Wrapped” campaign resulted in more than 300 million engaged users and 630 million shares on social media in 56 languages.
Revenue came in at €4.53 billion ($5.39 billion), about 7% more than a year earlier, thanks to an 8% increase in subscription revenue. However, the company’s ad-supported business saw revenue dip by 4% to €518 million ($616.6 million). Gross margin, an important metric investors watch for indications of improvements to Spotify’s profitability, improved by 83 basis points to a record high of 33.1% as the company sold more ads for podcasts and music.
The solid performance comes as Spotify’s new co-CEOs Gustav Söderström and Alex Norström take over the reins from co-founder Daniel Ek, and they will now oversee a business that has far outgrown what it initially set out to do.
After launching as a music streaming pure-play, Spotify has expanded its remit to include podcasts, audiobooks, and even physical bookstores. It’s launched music videos within the app as well as video podcasts, and has doubled down on its retention strategy by adding social features like group chats and letting users share what they’re listening to. You can even use Spotify to book tickets to concerts, or explore the story behind songs.
The company has also added AI features like an AI DJ, AI-generated playlists, and now lets users exclude tracks from being recommended to help them better tailor what they listen to.
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Profitability has been a big focus for Spotify in recent years, and the company has tried to achieve that by increasing subscription prices in the U.S. and Europe. It’s also added new features to its free, ad-supported tier to attract more people away from rivals like YouTube Music and Amazon Music, letting users search for and choose songs they want to listen to.
The company expects to reach 759 million users, and 293 million paying subscribers in the current quarter.
