After a month of controversy involving podcast host Joe Rogan, Spotify Technology SA disclosed a more immediate business problem: a slowdown in its growth to start the year.

The company said it would end the first quarter with 418 million total users and 183 million paid subscribers, shy of Wall Street forecasts on both numbers. Spotify shares slipped as much as 23 per cent in after-hours trading, erasing much of the gains made over the past two years.

Spotify blamed the forecast on its strong end to 2021. The company had its biggest quarter yet in the final three months of the year, adding 25 million users and 8 million paid subscribers. Spotify’s business has boomed during the pandemic, with 135 million users added since 2019. Almost half now pay for the service. But the uneven return to business as usual has made it hard for companies to predict their growth. Netflix Inc. also forecast a slow start to 2022, blaming a pandemic hangover.

The first quarter is becoming “a smaller part of overall subscriber picture,” Chief Financial Officer Paul Vogel said on a call with analysts Wednesday. “It has become less important for growth.” Vogel said the company also shifted some of its promotional plans so that more growth happens in other quarters. Its biggest campaign, Spotify Wrapped, occurred in early December.

Spotify Chief Executive Officer Daniel Ek said it’s too soon to know whether a recent artist boycott is impacting its business. This week David Crosby and Stephen Stills joined fellow musicians Neil Young and Joni Mitchell in pulling their music from Spotify to protest Rogan, whom they say is peddling misleading information about the pandemic and COVID-19 vaccines. 

Spotify has pledged to put advisories on podcasts that discuss COVID-19. But now podcast hosts have joined the boycott and social media users have said they are deleting the app.

“Usually when we have controversies in the past, they are measured in months not days,” Ek said. “But I feel good about where we are.”

Podcasting boosted the company’s advertising business. Advertising sales accounted for 15 per cent of revenue in the final quarter of 2021, a new high for the company. Spotify said advertising rates were going up and that its growing audience has created more ad inventory.

The company’s results for 2021 also exceeded analysts’ forecasts. It closed the year with 406 million users, and delivered positive operating income last year for the first time. Spotify credited India, Indonesia and Latin America with driving a lot of the growth in the most-recent quarter.

Ek urged investors and analysts to adopt a long-term view for the company, which is seeking to become the dominant service for people who make and listen to audio. He estimated Spotify would one day serve 50 million different people who create audio, and would sign up 1 billion users.