With a private listing, there is no price given before, as shares simply start trading on day one. The company did give trading ranges for some private transactions that took place in recent months, saying some shares sold for USD 37.50, 90.0, 125.0 and as much as USD 132.50; the latter would give the company a market capitalisation of around USD 23 billion. Spotify added that these prices may have little or no relation to the share’s final price when it starts trading.
The company's filing with the SEC shows high growth in revenues and subscriber additions at the digital music service, though equally high and growing losses. The company outlined its future goals and then listed risks, ranging from high share volatility to litigation potential. It also gave a few more details about the share swap that took place in December with Tencent.
The document explains that founders Daniel Ek and Martin Lorentzon have majority control of the company. Ek has a total of 37.3 percent of the voting rights and Lorentzon 43.1 percent. Sonu Music Entertainment also holds 1.7 percent of the voting rights and Tencent 2.4 percent.
The company said it had a total of 177 million shares outstanding at 22 February, excluding over 14 million shares issuable upon exercise of stock options and 192,000 issuable upon settlement of restricted stocks units, plus 6.7 million in share warrants with a weighted average exercise price of USD 59.92 per share. Spotify added that it held a 40-to-one split of its shares and beneficiary certificates before filing the prospectus, in order to reduce the price per share.
Regarding its operations, the company said it was present in 61 countries and that it had 159 million monthly active users (MAUs) and 71 million Premium subscribers at end December. Numbers grew 46 percent year-on-year for Premium users, and 29 percent for MAUs. In the fourth quarter, active users listened to an average of 25 hours of content per month, up 13 percent from the year before and 26 percent from 2015. Historically, Premium subscribers have streamed more than three times the amount of content per month than ad-supported users, the company said
The Premium service and ad-supported service live independently, with the latter serving as a funnel, driving more than 60 percent of total gross added Premium subscribers since tracking of this data began in 2014. Revenue from the ad-supported service rose 14 percent in 2017 compared to the year before, and 51 percent in 2016 from 2015.
Total revenues for 2017 increased to EUR 4.090 billion, from 2.952 billion in 2016 and 1.940 billion in 2015, representing a CAGR of 45 percent. Net losses in these years also continued to grow, widening to EUR 1.235 billion in 2017 from EUR 539 million in 2016 and EUR 230 million in 2015. The EBITDA loss also went higher, amounting to EUR 324 million in 2017, from 311 million in 2016 and 205 million in 2015. Net cash flow from operating activities advanced to EUR 179 million last year, from 101 million the year before and a loss of 38 million in 2015, with the company’s free cash flow also going higher, to EUR 109 million last year from 73 million the year earlier and a negative 92 million in 2015.
Geographically, Europe is the largest region for Spotify, with 58 million MAUs and 37 percent of its total user base at end December, an increase of 26 percent from the year earlier. In North America, MAUs rose 23 percent and now account for 32 percent of the total. The two fastest growing regions are Latin America, with 21 percent of total MAUs, up 37 percent year-on-year, and the rest of the world with 10 percent of total MAUs, 51 percent higher than the year before.
Looking ahead, the company said it continue to enhance its platform in order to retain and grow its user base and that it will look to further penetrate existing markets, plus enter new ones. It will also continue to invest in its advertising business and expand its 'Spotify for Artists' initiatives.
