Music streaming service Spotify filed for a direct listing of up to $1 billion with the U.S. Securities and Exchange Commission on Wednesday, becoming the first major company in the recent past to do so.
According to Reuters, a direct listing is an unconventional way to pursue an IPO and will help Spotify list without the need to raise new capital or hire a Wall Street bank or broker to underwrite the offering.
Launched in 2008, Sweden’s Spotify is the biggest global music streaming company and counts tech giants Apple and Amazon as its main rivals.
In its filing, the company said it has 71 million premium subscribers and about 159 million monthly average users. By comparison, Apple Music, which was launched in 2015, has 36 million paying subscribers.
Spotify’s premium subscription costs $9.99 a month. Apple Music too charges the same but offers a three-month free trial to its users. Unlike Spotify, Apple does not have an advertising-based free service.
“With our ad-supported service, we believe there is a large opportunity to grow users and gain market share from traditional terrestrial radio,” Spotify said.
In is prospectus, Spotify says it generated $4.6B in revenues in calendar 2017 - but posted a whopping $1.4B pre-tax loss in the year.
In 2017 the Sweden-based company took in five-billion dollars in top-line revenue, against an operating loss of 461-million dollars.
Spotify says in the document that it finished 2017 with 159M monthly active users and 71M Premium Subscribers.
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