Despite outperforming its guidance in almost every segment and gaining seven million new paid subscribers, Spotify still ended its third quarter on a negative note in financial terms. The music streaming giant saw a net loss of 166 million Euros, which was contrasted by a year-over-year revenue increase of 21 percent. Since the beginning of 2017, the streaming service generated a positive net income in just six quarters, two of which were in 2021.
In Q4 of 2018 and Q3 of 2019, Spotify managed to generate incomes of 442 million euros and 241 million euros, respectively, making these two periods the most successful in recent company history. Even the comparably large jump in paid subscribers from 144 million to 155 million between October 2020 and January 2021, with one likely cause being the ongoing pandemic and stronger restrictions over the winter months, didn't help the company turn a profit. Nevertheless, the company continued investing in other business avenues in the past months, releasing its Audiobooks project in the United States in September, acquiring music trivia game Heardle in July, and launching an official partnership with FC Barcelona.
In its most recent earnings call, CEO Daniel Ek underlined that Spotify is determined to stick to its long-term investment plans and not focus on profitability by the quarter, even when it hurts its current margins. Ek expects the company's significant investments to pay off and gross margins to improve by 2023. The streaming service's end goal, for the time being, is to reach one billion subscribers by 2030. Until now, Spotify has been growing by an average of 5.7 million subscribers per year. With huge markets like China unlikely to adopt the platform, TikTok aiming to launch its own streaming service, and the world economy likely not improving until 2023 at the earliest, achieving this landmark number seems improbable at this point.
