Spotify's net loss grows... so do its active users

Spotify's net loss grows... so do its active users

Streaming giant Spotify has published its financial results for 2016, and they reveal that the company’s net loss increased from €231.4m in 2015 to €539.2m ($601.4m) last year. The company’s revenues, indeed, grew from €1.93bn in 2015 to €2.93bn ($3.27bn) in 2016. So, Spotify’s income grew by just under 52% year-on-year, but its losses increased by 133%.

Spotify’s operating loss increased from €236.3m in 2015 to €349.4m in 2016, with the company citing “the cost of debt and the impact of foreign exchange rates on our debt and investments” as the reason for the disparity with its net loss. As for costs, in the financial filing, Spotify cited “product development, international expansion, and a general increase in personnel” as the key elements in its operating loss for 2016.

The financials reveal that Spotify spent €206.9m on product development in 2016; €417.9m on sales and marketing; and €175.2m on general and administrating costs. The company’s average headcount grew from 1,581 in 2015 to 2,162 in 2016, with wages and salaries expenses of €231m that year: an average salary of €106.8k.

On the other hand, Spotify has confirmed that its platform's audience is now made up of more than 140mactive users. The figure represents a 40m climb on the figure Daniel Ek announced this time last year - and is up by a very impressive 100m people compared to May 2014.

Spotify confirmed that it had surpassed 50m paying subscribers in March this year. Three months on, at its typical rate of growth, you'd expect this figure to have hit somewhere close to 55m. The 50m we know about would represent a conversion rate from 140m active users of 35.7% - while 55m subs total would equate to 39.3%.

Meanwhile, Spotify has also confirmed that its advertising revenue grew by 50% in 2016 - which according to MBW's calculations would total around €294m. In 2015, this ad revenue figure grew by 98% year-on-year to €195.8m.