Public Markets Startups

Spotify Files For Direct Listing IPO

It’s been reported for months that unicorn streaming music service Spotify would dip its toes into the public markets. Today, those reports come with a lot more numbers.

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According to the company’s F-1 document, the firm has filed for a $1 billion IPO—although that is a common placeholder. Spotify has also confirmed that it would be forgoing the traditional IPO process in favor of a direct listing, of which Crunchbase News has covered in the past.

While the company still remains unprofitable, it generated $4.09 billion in 2017 versus nearly $3 billion in revenue generated in 2016.

According to the company, Spotify remains the largest streaming service in terms of users with “159 million MAUs and 71 million Premium Subscribers as of December 31, 2017, which we believe is nearly double the scale of our closest competitor, Apple Music.”

The company also appears to be able to hold on to its customers. Spotify’spremium churn rate has steadily declined since Q1 2016 at 6.9 percent to 5.1 percent in Q4 2017.

However, the reduce in churn has come somewhat at the expense of average revenue per user, as lower-tiered plans such as student and family plans are the main reasons for churn decline.

How investors will respond to this is too early to tell. Due to its unique listing choice, the firm being still quite unprofitable, and competition on multiple fronts, it’s difficult to determine how investors will respond once Spotify goes to market.

At the end of the day, however, it’s yet another unicorn going public—potentially a good sign for investors looking for more exits as they sit on a glut of highly-valued unicorns.

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