Swedish music streaming platform Spotify announced impressive fourth quarter (Q4) 2018 financial results on Wednesday, February 6th, including a big boost in subscribers and positive operating income for the first time in the company history.
Spotify's number of paid subscribers rose 11% in Q4, increasing from 87 million to 96 million. And for the first time ever, the firm recorded a positive Operating Income, Net Income and Free Cash Flow. Q4 2018 operating profit was €94 million (roughly $106 million) compared to a €87 million ($99 million) loss during the same quarter a year ago.
The results reflect strong year-over-year growth for the music streaming leader. Active monthly users increased by 29% from 160 million a year ago to 207 million at the end of 2018. Total revenue increased by 30%, driven mostly by rising subscriptions. Subscription revenue increased by more than €170 million ($193 million) in the past year to €1.32 billion ($1.5 billion). At the same time, ad-supported revenue rose by €45 million ($51 million) to €175 million ($198 million).
A key improvement has been Spotify's conversion rate between paid and ad-supported free users. During the past year, paid subscribers rose from 71 million (44.4% of total users) at the end of 2017 to 96 million (46.4%) at the end of 2018.
Q4 of 2018 also witnessed the company expand its global footprint to 13 new countries across the Middle East and North Africa. According to the company's letter to shareholders, the number of new users across these regions "has exceeded our initial expectations, and we hope to build on this momentum in 2019."
Spotify is currently available in 78 countries, with 36% of its current monthly users living in Europe, 30% in North America and 22% in Latin America. The remaining 12% live in other regions around the world.