The news about the deletion of around six percent of the last 9800 jobs was around a week ago.

Music streaming market leader Spotify has now presented the figures for the fourth quarter of 2022 - and exceeded its own forecast in many respects.

Benjamin Fisher

Editor in Business.

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The number of subscribers grew by 10 million compared to the third quarter to 205 million, while the number of monthly active users reached 489 million.

This is 33 million more than in the previous quarter, as the Swedish company announced on Tuesday before the start of trading in the USA.

At the end of 2021, Spotify had 180 million subscribers and 406 million monthly active users.

With an increase of 18 percent compared to the previous year to around 3.2 billion euros, the increase in sales was in line with the forecast.

The subscription business contributed EUR 2.72 billion to this (up 18 percent), while advertising revenue stood at EUR 449 million (up 14 percent).

According to the company, after the advertising business accounted for 13 percent of total sales in the third quarter, it accounted for 14 percent at the end of the year.

Due to the global economic situation, the advertising market is currently weakening, which YouTube, for example, has recently felt.

According to Spotify, this effect was partly offset by cheaper prices.

The bottom line was a loss of 270 million euros, after a minus of 39 million euros in 2021. For the year as a whole, there was a minus of 430 million euros after 34 million in 2021, with a total turnover of 11.7 Billion euro.

The stock was up around 7.5 percent pre-market.

430 million euros loss in 2022

Meanwhile, operating costs rose by 44 percent year-on-year, again significantly faster than sales.

They amounted to around one billion euros in the fourth quarter.

Spotify cites new hires for the advertising team, acquisitions and marketing expenses as the reason for this.

Many of these “growth initiatives” were launched at the end of 2021.

Boss Daniel Ek had already emphasized to investors after the figures were presented in October that 2022 was an investment year.

In the course of the job cuts at the beginning of last week, after rapid growth during the pandemic, he referred to a stronger focus on efficiency in 2023.

Sales are expected to grow faster than operating expenses over the course of this year, it is said.

In the first quarter, however, the costs for severance payments, which are estimated at 35 to 45 million euros, will also be included, as the forecast states.

With an expected plus of 2 million subscribers, this is rather cautious, as in the previous year.

The average revenue per subscriber (ARPU, "premium average revenue per user") was EUR 4.55, slightly below the value from the third quarter (EUR 4.63). In contrast to the two previous quarters, this time with 25.3 percent above the forecast.

Savings measures introduced earlier have evidently had an impact here.

For example, Spotify refers to "lower investments in new podcast content than planned."

When will Spotify raise prices?

The announcement of the job cuts was accompanied by a reorganization at the top of Spotify, which affects the podcasts area in particular.

With Dawn Ostroff, the manager responsible for the podcast strategy left the company.

Spotify has recently invested several hundred million euros in podcasts and, closely linked to them, in the advertising business.

Studios were taken over as well as marketing service providers.

There were also various expensive exclusive agreements with prominent podcast hosts, from the Obamas to Harry and Meghan to Joe Rogan.

This "audio first" strategy is intended to make Spotify more independent of the music industry in the future.

All services pay around two-thirds of their income to the rights holders of the songs represented on their platforms.

More podcast consumption and more advertising revenue generated from it means more money that stays with Spotify.

But this is still a very small part of the income compared to that generated through music.

After Apple increased the standard price for its service in October from 9.99 euros or pounds or dollars to 10.99 in large markets, industry observers also expect a similar increase from Spotify.

Daniel Ek had already indicated his willingness to investors at the end of October, but such a step has not yet taken place.

Spotify had implemented various price increases in the past, but always left the price of 9.99, which has been established in the major markets for more than 10 years, untouched.

In mid-January this year, Amazon also announced price increases for Germany, Great Britain, the USA, Japan and Canada.

The family tariff for up to six users increased in price from 14.99 euros to just under 17 euros, as was the case with Apple.

In addition, the services of the tech giants offer hi-fi quality and other sound improvements, while Spotify's hi-fi offering is still a long way off.