The earnings release comes a week after Spotify announced layoffs that would affect six percent of the company, or just under 600 employees. But like other tech companies facing the same economic downturn, Spotify’s latest release suggests its financial situation hasn’t deteriorated significantly in recent months. But as my colleague Elizabeth Lopatto recently wrote, the reasoning behind these industry layoffs may have more to do with investors than raw profitability.
Spotify did post an operating loss of €231 million (about $250 million) in the quarter. But that’s not a huge departure from the company’s past performance, as it tends to prioritize growth over earnings on a quarterly basis. The figure is below previous expectations of a €300 million (approximately $325 million) loss this quarter. Average revenue per premium subscriber is now €4.55 (about $4.93), up 3 percent year-over-year, but slightly down from €4.63 (about $5.01) last quarter.
Today’s earnings release has arrived with no more news about Spotify HiFi, a new subscription tier that promises CD-quality lossless audio streaming and was announced at a major Spotify launch event almost two years ago. At this point, there are suspicions that Spotify has had to rethink the feature in light of competitors Apple Music and Amazon Music now offering lossless streaming at no additional cost to subscribers.
Spotify is widely regarded as the largest music streaming service in the world, although comparative subscriber numbers are not readily available to rivals Apple Music and Amazon Music. The latest numbers compiled by Music ally suggest Apple Music had about 60 million paying subscribers as of 2019 and Amazon Music had 55 million in 2020.