Swedish music streaming giant Spotify achieved a record number of users last quarter. This growth was driven by its popular year-end “Wrapped” campaign, which provides users with personalized listening statistics, and by new features on its free service tier.
The company added 38 million new users in the fourth quarter, bringing its total to 751 million monthly active users. This represents an 11 percent increase from the previous year. The number of paying subscribers also grew by 10 percent, reaching 290 million.
Spotify reported that the “Wrapped” campaign engaged over 300 million users and generated 630 million shares on social media across 56 languages.
Revenue for the quarter was €4.53 billion, a 7 percent year-over-year increase, largely due to an 8 percent rise in subscription revenue. However, revenue from its ad-supported business declined by 4 percent to €518 million.
The company’s gross margin, a key indicator of profitability, improved to a record high of 33.1 percent. This improvement was attributed to increased advertising sales for podcasts and music.
This strong performance coincides with a leadership transition. New co-CEOs Gustav Söderström and Alex Norström have taken over from co-founder Daniel Ek, now overseeing a business that has expanded far beyond its original scope.
Starting as a music streaming service, Spotify has broadened its offerings to include podcasts, audiobooks, and even physical bookstores. The platform has introduced music videos and video podcasts within the app.
To improve user retention, Spotify has added social features like group chats and the ability to share what you are listening to in real time. Users can also book concert tickets and explore the stories behind songs directly through Spotify.
The company has integrated several AI features, including an AI DJ, AI-generated playlists, and the ability for users to exclude specific tracks from their recommendations to better tailor their listening experience.
Improving profitability has been a major focus. Spotify has raised subscription prices in the U.S. and Europe. It has also enhanced its free, ad-supported tier with new features, such as allowing users to search for and select specific songs, to better compete with rivals like YouTube Music and Amazon Music.
Looking ahead, Spotify expects to reach 759 million total users and 293 million paying subscribers in the current quarter.