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Spotify Reaches 515m Users & 210m Paying Subs

Audio streaming giant Spotify ended March with 210 million paying premium subscribers, up from 205 million as of the end of 2022 and above its forecast of 207 million.

Stockholm-headquartered Spotify, led by CEO Daniel Ek, also reported that it hit 515 million monthly active users (MAUs) as of the end of March, up from 489 million at the end of December. The company had previously estimated it would end the latest quarter with 500 million MAUs.

“We had our strongest first quarter since going public in 2018, with nearly all our (key performance indicators) surpassing expectations,” the company said.

However, first-quarter revenue fell short of expectations as advertising revenue at the firm continued to grow, but was affected, like digital giants, by macroeconomic headwinds. Quarterly revenue grew 14 percent to €3.0 billion ($3.3 billion), below Spotify’s €3.1 billion target, with management citing “macro-related variability in our advertising business.”

Spotify’s quarterly ad-supported revenue rose 17 percent year-over-year, driven by podcasting and the Spotify Audience Network. “Music advertising revenue grew low double-digits year-over-year, reflecting double-digit year-over-year growth in impressions sold, partially offset by softer pricing due to the current macroeconomic environment,” the company said.

The firm, which has been stepping up its focus on profitability, also swung to a first-quarter loss of €225 million ($248 million), compared with year-ago earnings of €131 million. Spotify’s operating loss came in narrower than expected, but widened compared to the year-ago period.

Operating expenses jumped 36 percent, or 34 percent on a constant currency basis, driven by higher personnel costs due “primarily to year-over-year headcount growth,” along with factors such as severance-related charges associated with recent job cuts, partially offset by lower marketing and legal costs.

Spotify’s stock was up more than 6 percent in pre-market trading as of 8 a.m. ET.

Ahead of the company’s latest quarterly earnings update, Macquarie analyst Tim Nollen had in a Monday report highlighted: “2023 is an important year for Spotify: after disappointing investors in ‘22 with further investment spending, it’s important to show a path to profits.” After all, “many questions remain over its ability to generate consistent profitability,” he argued. In his report, titled “Singing new tunes in 2023,” Nollen reiterated his “outperform” rating and $150 price target on Spotify shares though.

“A price increase seems likely,” the analyst also wrote, explaining: “Spotify has not raised price in all these years as it has ferociously competed with Apple Music and Amazon Music, effectively pegging its price to its competitors. Their recent price increases now give Spotify room to raise its price.”

On the earnings call, Ek said the company would like to raise subscription prices in 2023, after doing so in 46 different locations and markets last year, but that involves a larger discussion with Spotify’s partners.

“I feel really good about our ability to raise prices over time, that we have that ability and we have lots of data now that backs that up,” Ek said.


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