Spotify predicts up to 96m subscribers and 208 million users this year

Apple Music might be having a faster growth rate, but Spotify has no intention of being perceived as having lost its puff – especially with its public listing next week.

Overnight it issued its financial outlook for Q1 2018 and the full year which suggested buoyant expectations.

Spotify forecasts subscribers would be up from 70 million to between 92 million and 96 million subscribers by the end of the full financial year. This would be a growth of 30% and 36% year-on-year.

The Swedish streaming company is also forecasting that its monthly active users will reach between 198 million and 208 million.

This would be a rise of between 28% and 32%, and helped by the fact that this month the company went live in a number of new territories.

Spotify also believes it can drive total revenue for 2018 up 30% year on year to €5.3 billion (A$8.5 billion.)

But exchange rate fluctuation could affect that figure by up to €300 million ($482 million).

Through 2018, the company expects an operating loss of €230 million ($369.4 million) to €330 million ($530.1 million), with the cost of the direct listing coming in Q2 being between €35 million ($56.2 million) and €40 million ($64.2 million).

Spotify’s gross margin is forecast to be 23-25% in 2018.

For Q1 2018, monthly active users are expected to hit 171 million ((up 31%) and premium subscribers will be 73 million to 76 million (an increase of between 41%—46%).  

Revenues in the first quarter are placed at between 22% to 27% which translates to between €1.1 billion ($1.76 billion) and €1.5 billion ($2.4 billion).

Operating loss expected to be €50 million ($80.3 billion) to €80 million ($128.5 billion).

One future growth strategy is to put Spotify into cars, on the assumption that most of the current 70 million subs drive cars.

It’s struck a deal to put its streaming in a number of Cadillac models in the United States.

Unlike its presence in other makes, both Spotify and Cadillac engineers worked together to make it part of the car itself.

As a result, the experience is quick and seamless, as the app offers suggested playlists, a history of recently played tracks and full access to the driver’s Spotify library.

It also means consumers can preset specific playlists. They can also continue play when they leave the car and then return.

Analysts also suggest that the massive subscriber figures, present and future, should have Spotify seriously think about whether to expand to being a record label.

They see a parallel between the success of Netflix, which is now generating more content than whole of Hollywood.

It plans to spend $8 billion on 700 new forms of content through 2018.

Similarly, Spotify’s record label could generate more sales and find its own new acts to sign, which in turn would increase subscriber numbers.

It would be able to cut down its licensing royalty payments to existing labels and possibly be in a stronger position to renegotiate more lenient deals with them.