Spotify, the workd’s largest music streaming service, has officially filed for an initial public offering (IPO) where the company seeks $1 billion. Co-founded by Daniel Ek and Martin Lorentzon, the Sweden-based company boasts more than 71 million paying users as of December 2017.
Besides the paying customers, the company has quite a large overall user based that includes ad-supported free listening of 159 million. Spotify has so far outpaced competition from Apple, Google, Titan, and several others, and continued to show growth. Spotify will trade on the New York Stock Exchange under the symbol “SPOT”.
How Spotify is going about being listed isn’t traditional either. The company will be offering a direct listing, meaning that the company shares can be traded on the open market a lot sooner than the more conventional IPO. The company is also doing this because it doesn’t intend to raise a large amount of capital with its IPO, and seeks $1 billion.
Taking a look at the filing, it gives us insight to the financial health of Spotify, which the company lists at €4,090 million (roughly $4.99 billion) for 2017, but the company still posted €1,235 million (~$1.5 billion) in net losses for the year. In the filing, we learned that Spotify has 159 million total monthly active users and 71 million paid Premium subscribers as of December 31st, 2017. Year-over-year, paid subscriber grew 46 percent for the company, while it saw 29 percent increase in active users. By comparison to Apple Music, the service only has 36 million paid subscribers, but that might not be the case for too long. It’s forecasted that Apple Music could potentially surpass Spotify in paid subscriber count by this summer.
While the ad-supported users and premium subscribers count is impressive, the company still struggles to turn a profit with its razor-thin margins. That’s because most of its revenue is dedicated to paying licensing fees to music publishers.