Music service Spotify surpasses half a billion monthly active users for first time, but misses revenue targets due to slower ad sales
Spotify said on Tuesday it has surpassed half a billion monthly active users for the first time.
The firm’s monthly active users rose to 515 million in the first quarter, beating its guidance of 500 million.
The increase represented a 22 percent rise year-over-year driven by “strength in both developed and developing markets, and nearly all age groups”, the company said.
Premium subscribers, which are included in overall monthly active users, rose 15 percent or 5 million in the quarter to 210 million, beating its expectations with “outperformance across all regions, led by Europe and Latin America”.
The company projected 217 million premium subscribers and 530 million monthly active users for the current quarter.
Total revenue grew 14 percent year-on-year to 3 billion euros (£2.7bn), short of the company’s projections of 3.1 billion euros due to macroeconomic challenges in its advertising business.
The company reported an operating loss for the quarter of 156m euros, better than the projected 194m euros, boosted by lower marketing spending.
The firm hit a net loss of 225m euros for the quarter, compared to net income of 131m euros a year earlier.
.@Spotify‘s strongest Q1 since going public in 2018 and the second largest quarter of MAU growth in our history. Thank you to our teams worldwide for all you accomplished. More here: https://t.co/rkCQ3HWu43 pic.twitter.com/NC8FWGG4sR
— Daniel Ek (@eldsjal) April 25, 2023
The company has seen sharply elevated spending in areas such as podcasts over the past year as it seeks to create royalty-free original content. Spotify says it pays about 70 percent of its revenues to music rights holders.
The company had its “strongest Q1 since going public in 2018” with the second-largest growth of monthly active users in its history, chief executive Daniel Ek said on Twitter.
In January the firm announced a 6 percent headcout cut, laying off about 600 employees, as a cost-cutting measure and took severance charges of 41 million euuros in the first quarter related to layoffs.
The company is also shutting down its Heardle game on 5 May, less than a year after acquiring the game.