Spotify expects at least €200 million loss in 2021, even as active users grow 27% in 2020

In its Q4 2020 earnings report, Spotify forecasted a net operating loss in 2021 of €200 million to €300 million, even as it recorded an annual user growth of 27 per cent.

On Wednesday, Spotify released its financials report for the final quarter of 2020. It showed that amidst rising expenses, the company has made increased losses in 2020.  

Aside from monthly active users, that numbered 345 million by the end of the year, the number of premium subscribers increased 24 per cent in the year, to reach 155 million.

Spotify’s annual net losses exploded in 2020, but it is worth noting that a significant proportion of these losses were incurred in Q2 of the year, when Spotify recorded an operating loss of €167 million. The company’s annual operating loss was €293 million, as opposed to €73 million in 2019.

Looking to 2021, the company expects to record continued losses, even as paying users are expected to continue to climb, up to 184 million and total active users reaches up to 427 million. 

The company expects a total revenue during the year of €9.01 billion – €9.41 billion. 

It said that in 2020, it’s advertising income was negatively impacted by the pandemic and that it expects this to continue into 2021. 

Investors responded with alarm to the news. Shares in the company dropped 8 per cent in the wake of the news.  

Spotify remains optimistic with regards to its business practices. It celebrated having launched in South Korea, meaning it is now active in 93 markets worldwide, and said that it would continue to invest in its podcast offerings especially.