Spotify has released its Q4’23 results. To me the most noteworthy datapoint is that Spotify now has more than 600 million monthly active users, with Latin America and Rest of World (non-Europe and non-North America) being the driving forces for user growth.
Revenue is growing about 20 % year-over-year (when adjusting for headwinds from currency exchange rates) and closing in on €4 billion per quarter and the net result was weighted down by the layoffs in Q4’23, even if underlying result seems to have improved year-over-year.
Do you have any details of their ad revenue vs cost? Traditionally their ads offer has been very costly and only used to convert to premium. Still true?
The gross margin for ad-supported (where COGS is for ad-supported music + podcast + possibly some other things) is 11.2 % (compared to 29.1 % gross margin for premium). Not sure if costs for selling the ads are included, I would guess not. I would guess licensing costs + podcast advances + ad sales team would be higher at current scale than 89 % of revenue. So roughly break-even at best, and likely negative but probably on path to be breakeven from higher scale and efficiency in ad sales, slightly better music economics and better podcast economics (less fixed fees/advances, less internal production and better ad sales).