Spotify Packs on More Premium Subs in Q2 Than Expected to Reach 220 Million, Projects Slower Growth After Price Hikes

Todd Spangler
·2 min read

Spotify, the world’s biggest music and audio streaming service, delivered strong numbers for the second quarter of 2023 — beating forecast user growth on paid subscribers and total listeners, while Q2 revenue was in-line with expectations. But with newly announced price increases for Spotify Premium in dozens of markets including the U.S., the company is forecasting a smaller gain in paid subscribers for Q3.

The company netted 10 million new Premium customers in the quarter (over its expectations of 7 million), to stand at 220 million. Spotify said the subscription gains were topped forecasts across all regions, led by Europe and Latin America. Overall, Spotify had 551 million monthly active users for the period, a pickup of 36 million sequentially — an all-time high for the company.

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Spotify’s Q2 revenue of €3.18 billion was up 11% in Q2 reflecting 11% growth in subscription revenue and 12% growth in ad revenue. The company said podcast advertising revenue growth “reaccelerated” in the quarter to hit more than 30% year over year; that’s compared with a “nearly 20%” increase in Q1 and growth in “the strong double-digit range” in Q2 2022. For the most recent quarter, sold ad impressions across original and licensed podcasts and the Spotify Audience Network reached an all-time-high, partially offset by “softer pricing,” the company said.

Adjusted operating loss — excluding charges related to layoffs of 200 employees in the quarter in a reorganization of its podcast division, €30 million related to the write-off of podcast content assets for canceled shows, and other cost-reduction initiatives — was -€112 million (better than it previous guidance of -€129 million).

For Q3, Spotify projected adding 4 million Premium subscribers — slower than recent quarters, coming after price increases in major markets — and a gain of 21 million MAUs overall. The company said it anticipates revenue of €3.3 billion for the September quarter, noting the announced price increases “are expected to have a minimal impact on total revenue in Q3.” Adjusted operating loss is pegged at -€45 million.

Spotify on Monday announced its first price increase in the U.S. — its largest market — with the individual premium plan going up by $1/month, to $10.99 monthly, matching recent price hikes by rivals including Apple Music, Amazon and YouTube. The company also is raising fees in about 50 other countries, including the U.K., Ireland, Australia, New Zealand, Brazil, Spain, France, Hong Kong, Israel, Italy, Mexico, the Netherlands, Sweden and Canada.

“So that we can keep innovating, we are changing our Premium prices across a number of markets around the world. These updates will help us continue to deliver value to fans and artists on our platform,” Spotify said in announcing the price hikes.

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