Spotify Reports 19 Percent Jump In Active Users

Spotify Technology SA reported accelerated user growth and a lift in advertising revenue in the most recent quarter as the streaming giant thwarts fears that inflation and subscription fatigue are hitting consumers’ wallets, reports The Wall Street Journal.

For the second quarter, Spotify reported 433 million monthly active users, a 19% lift from a year ago, topping the company’s expectations. In an investor presentation, Spotify pointed to successful marketing campaigns, reactivations in Europe and strength among Gen Z listeners in Latin America. Paying subscribers, its most lucrative type of customer, rose 14% to 188 million, also exceeding the company’s guidance, in part because of promotions and household plans.

Average revenue per user for the subscription business in the quarter climbed 6% to €4.54. The increase marks the fourth consecutive quarter that the metric increased, following years of downward pressure on such revenue as the company attracted new subscribers through discounted plans and lower prices in newer markets. Spotify began raising the price of its family plan over a year ago in dozens of markets, including the U.S., which has helped increase revenue on a per-user basis.

Revenue from subscriptions, which makes up the bulk of Spotify’s top line, increased 22% to €2.5 billion. Advertising revenue rose 31% to €360 million. Ads have become a particular growth area for Spotify as it expands its podcast business. During the quarter advertising made up about 13% of total revenue.

Spotify said it has 4.4 million podcasts available on its service, up from 4 million in the previous quarter, and that the number of users who listened to shows in the period increased in the “substantial double-digits” from a year ago.

In all for the second quarter, revenue rose 23% to €2.86 billion, just topping the company’s guidance.

Spotify reported a loss of €125 million, or 85 European cents a share, compared with a loss of €20 million, or 19 European cents a share, a year earlier.

Last month, Chief Executive Daniel Ek told employees Spotify will slow its hiring by 25%, in a sign the company is bracing for a possible recession amid rising interest rates and inflation.

For the current quarter, the company said it expects monthly active users of 450 million and premium subscribers of 194 million.