Music streaming giant Spotify has published its financial results and user numbers for the third quarter of 2023 (ended September 30).
The headline stat from the company’s filing today (October 24): Spotify’s global Premium Subscriber base grew to 226 million paying users in Q3.
That was up 16% YoY, and up by 3%, or 6 million net subscribers, on the 220 million that SPOT counted at the end of the prior quarter (Q2 2023).
The music streaming company’s 6 million net subscriber additions in Q3 were 2 million ahead of guidance.
SPOT notes in its investor presentation that it saw “better than expected gross intake in markets that saw price increases” and experienced premium subscriber “outperformance across all regions, led by North America and Latin America” (see below).
Monthly Active Users
Spotify’s total global Monthly Active Users (MAUs), meanwhile, grew 26% YoY to 574 million in Q3 2023 and by 4% (23m) compared to the previous quarter (Q2 2023) when the platform counted 551 million MAUs.
The company notes that those 23 million net MAU additions, also 2 million ahead of guidance, represented SPOT’s second-largest Q3 net addition performance in the platform’s history.
Spotify pins this growth on “Outperformance in Rest of World and Latin America” (see below) and “continued performance marketing efficiencies”.
Premium revenue
In terms of finances, Spotify’s Premium subscriber growth translated into Premium revenue of €2.910 billion ($3.16bn as per the average quarterly exchange rate published by the European Central Bank) in Q3, which was up 16% YoY at constant currency (see below).
Spotify says that its premium subscriber growth was “led by subscriber gains and the early effects of price increases”. (Spotify announced price increases in the US and 52 other markets back in July).
The firm’s ARPU (Average monthly Revenue per Subscriber) landed at €4.34, down 1% YoY at constant currency.
Ad-supported revenue
Meanwhile, Spotify’s ad-supported revenue hit €447 million ($486.5m) in Q3, up 24% YoY at constant currency (see above).
Spotify says that its music advertising revenue “re-accelerated and grew nearly 20% YoY, driven by growth in impressions sold and stable pricing”.
The company’s total revenue (including Premium and ad-supported) reached €3.357 billion ($3.65bn) in Q3, up 17% YoY at constant currency.
Profitability
The company’s Gross Margin finished at 26.4% in Q3, while, in terms of profitability, Spotify posted an operating income of €32 million ($34.82m).
Amongst the factors listed by SPOT for turning a profit in Q3 were an “improvement in podcast trends”, as well as “growth in marketplace activity”, plus “other cost of Revenue favorability”.
“The business delivered strong results in Q3 as all of our key indicators exceeded guidance and we returned to profitability.”
Spotify
Spotify reports that its operating expenses saw a decline of 8% YoY at constant currency, from €978 million in Q3 2022 to €853 million in Q3 2023, driven according to SPOT, “primarily by lower marketing expenses and a decrease in personnel and related costs”.
Spotify cut 200 jobs when it restructured its podcast division in June and also cut more than 500 jobs in January.
In terms of guidance for Q4, Spotify forecasts reaching 601 million MAUs, an addition of around 27 million net new MAUs in the quarter.
The company projects its total Premium Subscriber base to hit 235 million in Q4, an addition of approximately 9 million net new subscribers in the quarter.
Spotify forecasts an operating income of €37 million for Q4, and total revenue of €3.7 billion.
“The business delivered strong results in Q3 as all of our key indicators exceeded guidance and we returned to profitability,” Spotify noted in its investor presentation on Tuesday (October 24).
All EUR-USD conversions made at the average rate of the relevant period according to the European Central BankMusic Business Worldwide
