Spotify crosses the threshold of 600 million users
With a 16% increase in revenue compared to the previous year (reaching 3.67 billion euros in the fourth quarter of 2023), Spotify exceeded expectations thanks to the optimization of its marketing expenses and… layoffs.
Spotify has cut its workforce
The net loss of 70 million euros represents a considerable improvement on the 270 million euros losses recorded the previous year. This performance comes as Spotify added 28 million active monthly users, bringing the total to 602 million, as well as 10 million Premium subscribers, reaching 236 million members.
The company also rationalized its costs, in other words a slew of layoffs: 17% of the workforce was let go, which represents around 1,500 jobs to improve productivity and efficiency, as they say. This decision is part of a strategic readjustment process, in particular by reorganizing its activities around podcasting, and reflects Spotify’s desire to adapt to a very competitive environment while increasingly chasing growth.
The charges related to these layoffs contributed to the increase in operating expenses, but were partially offset by an improvement in gross margin to 26.7%. Spotify continues to focus on expanding its podcast offerings, with initiatives such as the renewal of a multi-year agreement with polemicist Joe Rogan who will be able to sell his salads to other podcast platforms (his show was previously exclusive to Spotify).
Furthermore, Daniel Ek, the boss of Spotify, renewed his criticism of Apple’s App Store policies, including the famous 30% commission which prevents the company from generating additional revenue, in particular in the field of audio books. This confrontation highlights the rivalry and tensions between the two technology giants over market conditions and competition.
European legislation on digital markets (DMA) and the implementation of the provisions of the text by Apple were the occasion for a new skirmish between the two companies. Spotify had planned to take advantage of the new rules to finally be able to sell subscriptions from its iOS application, but this will not be possible as long as Apple maintains the €0.50 fee imposed for each installation of an app (at beyond the first million).
Spotify ended 2023 with results that confirm the platform’s ability to attract new users and improve its profitability in a difficult economic and competitive environment.