In the second quarter of 2023, music streaming service Spotify experienced significant growth, with its monthly active users (MAU) reaching 551 million. This marks a 27 percent increase in MAUs and represents an all-time high for the company. The growth can be attributed to the addition of 36 million new listeners during the quarter, setting a record for Spotify.
While not all new users signed up for a Premium account, Spotify also saw a record-breaking quarter in terms of Premium subscriber numbers. The company welcomed 10 million paying users, surpassing guidance by 3 million. This resulted in a 17 percent year-over-year growth in its subscriber base. Although this isn’t an all-time high, it is the best Q2 performance Spotify has achieved in this regard.
Despite the substantial influx of new users, Spotify reported significant losses. The company’s total revenue for the period was $3.5 billion (€3.2 billion), an 11 percent increase compared to the previous year. However, Spotify also posted an adjusted operating loss of $123.7 million (€112 million). The losses were attributed to the shutdown of podcast shows and the costs associated with excess real estate and severance for employees who were laid off due to company restructuring. Recently, Spotify made significant changes to its podcast strategy, leading to the cancellation of several original productions.
According to The Wall Street Journal, Spotify had previously informed investors that it would be increasing prices in order to turn a profit. Consequently, the company implemented a price hike by adding $1 on top of the old subscription rate, resulting in users in the US now having to pay at least $11 per month. Spotify also plans to raise prices in other markets, including the UK, Canada, Australia, New Zealand, and Hong Kong. The company anticipates a slowdown in premium subscription signups in the third quarter due to the higher prices. While it added 10 million new paying users in the second quarter, it expects to add only 4 million premium subscribers in Q3. Nonetheless, Spotify believes that the price increases will have a minimal impact on total revenue and is confident it will still earn $3.65 billion (€3.3 billion) this quarter.
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In conclusion, Spotify experienced significant growth in the second quarter of 2023, with its monthly active users reaching a record high of 551 million. Despite the increase in users, the company reported losses due to the shutdown of podcast shows and related costs. Spotify plans to raise prices in order to turn a profit, with a recent price hike in the US and planned increases in other markets. The company expects a slowdown in premium subscription signups in the third quarter but remains confident in its total revenue projections.
