Spotify saw a surge in users and advertising revenue in the fourth quarter of 2021, the company said on Wednesday, driven by strong promotional campaign performance.
For the fourth quarter, Spotify reported (pdf) 406 million monthly active users, up 18 percent year on year and at the high end of the company’s guidance range.
Premium Subscribers, or those who pay, grew 16 percent year on year to 180 million in the fourth quarter, which the company said was led by “strong promotional campaign performance.”
Revenue from subscriptions grew 22 percent to 2.295 billion euros (roughly $2.6 billion), while Ad-Supported revenue shot up 40 percent to 394 million euros ($445 million). Ad-Supported Revenue reached a record 15 percent of total revenue during the quarter, the company said.
Spotify also said it has 3.6 million podcasts available on its service, up from 3.2 million in the previous quarter.
In all for the quarter ended Dec. 31, revenue rose 24 percent to 2.689 billion euros ($3 billion), beating the company’s expectations.
“We ended 2021 with strong Q4 results, led by outperformance in MAUs [monthly active users], continued momentum in our subscription business, and meaningful advertising results,” a note to shareholders reads.
“Looking back on not just this quarter, but the past few years, we are increasingly excited about the investments we have made and see meaningful progress within a number of our initiatives. As we move into 2022 and beyond, the opportunities in front of us are large and we see a tremendous amount of greenfield on the horizon,” the note said.
However, shares of Spotify tumbled on Wednesday after the company reported weak guidance on monthly active users for the first quarter of 2022.
The company’s shares fell as much as 18 percent in late trading after it forecast 418 million monthly active users for the upcoming quarter—missing estimates of 422 million.
The Swedish streaming service also forecast its first-quarter 2022 gross profit margin would fall to 25 percent from 26.5 percent, with total revenue of 2.60 billion euros ($2.94 billion).
Spotify has been at the center of controversy in recent days after it agreed to remove Neil Young’s music when the singer accused Joe Rogan, 54, of spreading false information about coronavirus vaccines and “potentially causing death.”
Rogan later addressed Young’s claims in a lengthy Instagram video, calling his previous podcast guests including Dr. Peter McCullough and Dr. Robert Malone, “highly credentialed, very intelligent, very highly-accomplished people” who shared opinions about COVID-19 that differed from the “mainstream narrative.”
“These podcasts are very strange because they’re just conversations,” Rogan said. “And oftentimes I have no idea what I’m going to talk about until I sit down and talk to people. And that’s why some of my ideas are not that prepared or fleshed out because I’m literally having them in real time, but I do my best and they’re just conversations, and I think that’s also the appeal of the show. It’s one of the things that makes it interesting.”
Rogan also said he was “very sorry that this is happening” to Spotify and that “they’re taking so much heat from it,” while pledging to bring more balance to his show with opinions from a variety of experts.
Spotify has since announced that it will be adding content advisories to podcast episodes in an effort to combat so-called misinformation about COVID-19.
The company’s chief executive Daniel Ek addressed the Rogan controversy to investors on Wednesday but said it was “too early to know” how it will affect the company.
“In general, what I would say is it’s too early to know what the impact may be. And usually when we’ve had controversy in the past, those are measured in months, and not days,” Ek said. “I feel good about where we are in relation to that, and obviously top line trends look very healthy still.”
“So I think the important part here is that we don’t change our policies based on one creator, nor do we change it based on any media cycle or call from anyone else. Our policies have been carefully written with the input from numbers of internal and external experts in this space. And I do believe they’re right for our platform. And while Joe [Rogan] has a massive audience, and is actually the No. 1 podcast in more than 90 markets, he also has to abide by those policies,” he added.