Spotify today reported a sharp increase in subscribers in the fourth quarter as the pandemic drove demand for music and podcasts, but warned of uncertainty in the year ahead.
The Swedish streaming giant said paid users hit 155m in the final three months of the year, while revenue grew 17 per cent to €2.2bn (£1.9bn).
While the pandemic took its toll on advertising, Spotify said it had little effect on subscriber growth and may have even driven a rise in sign-ups as people were forced to stay at home.
Overall monthly active users grew by more than a quarter to 345m.
However, Spotify reported a widening of operating losses to €69m as a result of higher expenses related to payroll taxes.
It also warned that revenue and paid subscriber numbers would be lower than Wall Street estimates for the first quarter as a result of ongoing uncertainty around the pandemic and its impact on growth.
Shares in Spotify dropped roughly seven per cent in pre-market trading in New York.
Spotify said it had continued to see growth in podcast consumption, which has become a greater focus for the streaming platform in recent years.
The company has made a string of acquisitions of podcast firms, while last year it signed an exclusive deal for the Joe Rogan Experience podcast for a reported $100m.
Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said booming demand for podcasts gave Spotify another potential growth area.
“But it’s a mistake to think this change in demand patterns means profits and cash flow are going to take off — ramping up podcast content is one of the reasons free cash flow deflated in the final quarter,” she added.
“Still, Spotify is in a great position. Crucially, the number of monthly active users is growing at an impressive rate.”