Spotify Files For Direct Listing, Reveals Key Stats About The Streaming Giant

Spotify, a unicorn streaming music service reportedly dipping its toes into the public markets. According to today’s news, those reports come with a lot more numbers, revealing that how hard to make money streaming music. Here are the details.

Spotify has already signaled its intention to become a publicly traded company last year, even though several lawsuits over licensing were looming. As per the company’s F-1 document, the firm had filed for a $1 billion IPO, although that is a common placeholder. Now the streaming service has filed for a direct listing on the New York Stock Exchange, an alternative to the more typical initial public offering that offers the music firm savings on underwriting fees and a dilution of existing shares.

While the company still remains unprofitable, it generated $4.09 billion in 2017 versus nearly$3 billion in revenue generated in 2016. The prospectus document provides quite a bit of information on the company’s financials, which helps make a more informed decision when purchasing stock. While the company, Spotify remains the largest streaming service in terms of users with “159 million MAUs and 71 million Premium Subscribers as of December 31, 2017.” This is double the scale of our coolest competitor, Apple Music.

When compared, the company appears to be able to hold on to its customers. Spotify’s premium churn rate has steadily declined since Q1 2016 at 6.9% to 5.1% in Q4 2017. However, the data speaks to how hard it is to make money as a streaming services provider.

For example, the company’s losses are increasingly rapidly:

In 2015, 2016, and 2017, the company incurred net losses of €230 million, €539 million, and €1,235 million, respectively. That’s despite revenues of €1,940 million, €2,952 million, and €4,090 million in the same years. Plus, their closest competitor, Apple Music, claims a 45 million song base, while Spotify has 35 million.”

However, the reduction in churn has come somewhat at the expense revenue per user, as lower-tired plans such as student and family plans are the main reasons for churn decline…

How investors will respond to this too early to tell. Due to its unique listing choice, the firm is still silently unprofitable, and competition on multiple fronts. it’s really difficult to determine how investors will respond once Spotify goes to market.

Finally, only 13 percent of the payment-enabled smartphone users in Spotify’s 61 countries and territories use the platform as of the end of last year. Of course, this is all just basic facts. We’ll see if the streaming giant can figure out how to turn this all into a profitable company in the months to come. Stay tuned for more updates!

(Source: Bloomberg)

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