Spotify Reports Jump in Users

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Spotify Technology added more users and saw a surge in advertising revenue in its recently completed quarter as its podcast strategy takes hold despite backlash to its star host, The Wall Street Journal is reporting.

Neil Young last week removed his music from Spotify in protest to what he says is vaccine misinformation spread by podcaster Joe Rogan on the streaming service. The company has since made public its content policy and said it would begin to tag Covid-19-related content with an advisory prompting users to check out the service’s new hub for data-driven facts and up-to-date information from the health and scientific communities.

On Spotify’s earnings call Wednesday, Chief Executive Daniel Ek called it a very complicated issue and said Rogan, like other creators on the company’s platform, has to abide by its content policies. He added that it was too early to tell if the controversy was having an impact on subscribers.

“There’s no doubt that the last several weeks have presented a number of learning opportunities,” Mr. Ek said on the call. “We believe we have a critical role to play in supporting creator expression while balancing it with the safety of our users.”

For the fourth quarter, Spotify reported 406 million monthly active users, up 18% from a year earlier and at the high end of the company’s guidance. Paying subscribers, its most lucrative type of customer, rose 16% to 180 million, also at the top of the company’s expectations.

Spotify shares—down 44% over the past year to $191.92—fell another 11% in after-hours trading as the company said it wouldn’t provide annual guidance. On the company’s earnings call, Spotify financial chief Paul Vogel said that while the company wasn’t providing such guidance, it didn’t anticipate any material change this year in its user-growth trajectory.

Spotify’s outlook for the current quarter was roughly in line with analysts’ views.

Average revenue per user for the subscription business in the recently completed quarter climbed 3% to €4.40. The increase marks the second quarter of a turnaround for the metric, which had been pressured downward for years as the company attracted new subscribers through discounted plans and lower prices in newer markets. A little over a year ago, Spotify began raising the price of its family plan in dozens of markets, including the U.S., which has helped increase revenue on a per-user basis.

For the current first quarter, the company said it expects monthly active users of 418 million, premium subscribers of 183 million and revenue of €2.6 billion. Analysts, on average, were expecting 418.2 million monthly active users, 184 million premium subscribers and €2.6 billion in revenue, according to FactSet.