Spotify’s stock dipped 5% in early-morning trading on Wednesday, with the music streaming giant posting strong fourth quarter subscriber growth but leaning heavily on free promotions to pull listeners in — and away from competitors like Apple Music.
For Q4, Spotify’s paid subscribers increased 29% year-over-year, hitting 124 million subscribers overall. After entering Q4 with 113 million paying listeners, Spotify said its 11 million new paying listeners marked its best quarter, in terms of total subscribers added, in its history.
Those gains pushed Spotify well beyond Apple Music, its chief competition, which reported 60 million paying customers last summer. Still, its subscriber boost was assisted by deals like its “3 months on us” trial, which pushed down how much Spotify is making off its customers.
“Our [average revenue per user] was down 5% in Q4 and we expect similar declines for 2020,” CFO Paul Vogel told Reuters on Wednesday morning, signaling Spotify will continue to use promos to grab new listeners.
The company’s stock dropped about 5% after its Q4 results came out, hitting $147 per share. Spotify had been on a strong run of late, however, increasing more than 20% since October.
Spotify’s sales overall hit 1.86 billion euros, or about $2.05 billion, for Q4, slightly falling short of the 1.90 billion euros analysts anticipated. The company reported a loss of 209 million euros, or about $230 million, which came out to 1.14 euros per share.
Ad-supported streaming customers increased 32% year-over-year to 153 million listeners; overall, between paid and ad-supported listeners, Spotify reported it had 271 million monthly active users. About 90% of Spotify’s revenue comes from its paying customers.
Spotify has increasingly been looking towards podcasts to keep listeners entertained, and the company doubled down on that front on Wednesday, announcing a deal to buy The Ringer, home to “The Bill Simmons Podcast” and a myriad of others, including “The Rewatchables.” Terms of the deal were not disclosed.
“What we really did with The Ringer, I think, is we bought the next ESPN,” CEO Daniel Ek said on the company’s earnings call on Wednesday. “We think that’s going to be a tremendously valuable property as we look at the development of sports over the next decade and the billions of people that will start listening to audio, so we’re just very excited about it and yeah, we will invest in that trend.”