While its userbase, including premium subscribers, keeps on growing at a steady rate, Spotify is still seemingly unable to profit off it. Over the last five years, the streaming giant generated a positive net income in just six quarters, two of which were part of this past year. As our chart shows, even when generating a net positive, the figures have been less than stellar with two major exceptions.
In Q4 of 2018 and Q3 of 2019, Spotify managed to generate a net income of 442 million euros and 241 million euros, respectively, making these two periods the most successful in recent company history. Even the comparably large jump in paid subscribers from 144 million to 155 million between October of 2020 and January of 2021, with one likely cause being the ongoing pandemic and stronger restrictions over the winter months, didn’t help the company turn a profit.
In its most recent quarterly report, Spotify gave a comparatively dire outlook on the first quarter of 2022, with an expected increase of paid subscribers by only three million, compared to the seven to eight million each quarter of 2021. One potential reason for these muted expectations is the recent controversy surrounding the Spotify-exclusive podcast by media figure Joe Rogan. After accusing Rogan of spreading Covid-19 misinformation, musicians like Neil Young, Joni Mitchell, Crosby, Stills & Nash or India Arie decided to pull their catalog from Spotify. Although this is most likely only a drop in the bucket in terms of revenue, the example of major figures in the music industry taking concrete action to remove their music from one specific streaming service might make more waves in the weeks and months to come. The stock market, for one, has already reacted to Spotify’s earnings outlook: According to reporting by Reuters, the company’s shares plummeted by 18 percent in late trading after the release of its quarterly results.
This chart shows the profitability development of Spotify.
