During 2011, the music streaming business increased its revenue to €187.8 million (£148.4m) from €73.9 million (£58.4) in 2010, but suffered an overall deficit due to the cost of securing licences from the major record labels.
According to The Wall Street Journal, a slump in advert-generated revenue may also account for the downturn. Spotify recorded an increase of just €6.5 million (£5.1m) from this avenue, a figure that was lower than expected.
However, it was better news for the firm on the premium subscriptions front, with revenue totalling €156.9 million (£124m), a €52.6 million (£120.6) increase compared to 2010.
The financial results have not deterred the company from breaking into new territories, with Canada next on the agenda along with countries in Asia and South America.
Spotify currently has more than 4 million premium subscribers, a number it claims is steadily growing.