AUSTIN, TX – MARCH 17: Muna performs at The Spotify House, SXSW 2016 on March 17, 2016 in Austin, Texas. (Photo by Anna Webber/Getty Images for Spotify)
Usually when a company reports record losses, that is not a time for celebration.
Unless you’re Spotify.
The streaming music company’s 2015 financials were released recently thanks to a filing made by its parent company, which is based in Luxembourg.
The bad news is thatSpotify lost $194 million in 2015, the company’s biggest loss yet as it tries to make streaming music into an economically viable business.
The good news is that this is only a bit more than it lost in 2014, while its overall revenue how much money the company brings in rose sharply to $2.18 billion.
That’s a far better result than last year, when the company’s losses skyrocketed while revenue growth was only decent.
The indication that Spotify has been able to slow its losses while boosting its revenue is a positive development, particularly as the company is now competing for streaming music consumers with a growing array of tech giants including Apple’s Beats and Google’s YouTube Red.
“[Spotify] is clearly growing very fast, which we kind of knew already from the periodic subscriber numbers they put out,” said Jan Dawson, chief analyst at Jackdaw Research, in an email to Mashable.“But it grew significantly faster in 2015 than any previous year, which is quite something given the launch of Apple Music during the year. Spotify really seems to be cashing in on the momentum around streaming generally.”
Spotify does have a few tricks up its sleeve. It recently began launching its videos in its mobile app, and the Discover Weekly personalized playlist has become a surprise hit.
The company is also sitting on a mountain of cash. It raised $1 billion in March through debt financing on top of the hundreds of millions of dollars it raised in private venture funding
Things look better, but there’s still cause for concern. Dawson pointed out that content costs are still very high (Spotify sent about 80% of its revenue through to the recording industry) compared to how much money the company is bringing in.
Meanwhile, Spotify is still spending aggressively on other areas like staffing, public relations and consultants, Dawson noted.
“However, they’re still loss making, and there doesn’t seem to be an end in sight there,”Dawson said. “Their operating and net losses were both bigger in 2015 than 2014, and that’s a bad sign for future profitability.”
Reps for Spotify did not immediately respond to our request for comment.
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