Spotify recently announced its second-quarter earnings report, revealing impressive growth in its user base. As of June 30th, the company has reached 220 million Premium subscribers and 551 million monthly active users. This represents a 27 percent increase in Premium subscribers and a 17 percent increase in monthly active users compared to the same period last year. These numbers also exceed Spotify’s previous outlook released in the last quarter.
However, the earnings report also reveals that Spotify is making less revenue per user on average. The company’s average revenue per user currently sits at €4.27 (around $4.72), which is a 6 percent decline year-on-year and a slight fall compared to €4.32 (around $4.79) in the previous quarter.
The announcement of Spotify’s second-quarter earnings comes shortly after the company revealed plans to raise its prices in the US and other markets worldwide. This move mirrors similar price increases seen in other music streaming apps like Apple Music, Amazon Music, Tidal, and YouTube Music Premium. Spotify hopes that these price adjustments will help reverse the declining revenues per user, although the actual impact won’t be visible until the next quarter.
Despite its growing user base, Spotify reported a net loss of €302 million (around $333 million) in the second quarter, compared to a loss of €125 million (around $138.5 million) in the same quarter last year. This loss is not unexpected, as the company has focused on prioritizing growth over quarterly profits. However, Spotify is actively working to reduce these losses in the future.
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One notable omission from Spotify’s earnings release is any mention of its long-delayed HiFi streaming option. The company announced this product over two years ago, promising to bring CD-quality lossless streams to its service. Recent reports suggest that lossless streaming may be included as part of a more expensive subscription tier codenamed “Supremium,” which could initially be released in non-US markets later this year. Last year, Spotify sent out a survey to at least one user, indicating that the company was considering charging $19.99 a month for a new streaming tier called “Platinum” that would include HiFi and other features.
In summary, while Spotify continues to experience significant growth in its user base, it is facing challenges in generating more revenue per user. The company’s recent decision to increase prices may help address this issue, but its impact will only become clear in the next quarter. Additionally, Spotify’s long-awaited HiFi streaming option remains unspecified and leaves users eagerly awaiting its arrival.
