People are flocking to Spotify as shown by the company's recent financial results, but it continues to bleed over a quarter-billion dollars per quarter — even after its layoffs in January.
Spotify has worked on adding more content to its service in the form of podcasts and audiobooks, and redesigned its app in a bid to keep users engaged with the platform. It had strong user growth in the first quarter of 2023 but posted another financial loss.
The streaming company recorded 515 million active monthly users, a 22% increase from the previous year. That represented Spotify's largest-ever first-quarter increase and outperformed projections by 15 million.
According to the company, growth was seen across almost all age groups and in developed and emerging economies.
The number of people who pay to subscribe to Spotify was up 15% to 210 million, also exceeding Spotify's expectations, according to The Wall Street Journal. But it posted a loss of around $248 million in the first quarter of 2023, more significant than its $231 million revenue drop in the fourth quarter of 2022.
Executives have stated that as the company attempts to expand into new types of audio and draw customers worldwide, investment will take precedence over profit. However, they expect Spotify's profits to improve in 2023.
Approximately 600 people, or about 6% of Spotify's personnel, were let go in January as part of a more extensive cost-cutting effort following a spending binge during the pandemic. The business reported on Tuesday that the layoffs' accompanying severance costs increased operating expenditures for the quarter.
For the current quarter, Spotify forecasts monthly active users to grow to 530 million and premium subscribers to 217 million. Additionally, it expects its revenue to grow to $3.5 billion.