Sweden headquartered music streaming app Spotify which released its quarterly results on Thursday announced that its monthly active users (MAU) has grown 22% to reach 515 million in Q1,2023 from 422 million, when compared to the same period in the corresponding year. The music streaming app claimed in terms of user growth the last quarter has recorded the largest and second-largest quarterly net addition performance in its history. “The key is to maintain long-term focus on short-term uncertainties,” Daniel Ek, CEO, Spotify said during the press conference. Moreover, the number of premium subscribers upped 15% to 210 million in Q1,2023 when compared with 182 million in the first quarter of last year.
As per the company total revenue grew 14% to €3.0 billion at the end of Q1,2023 from €2.6 billion during the same period in the previous year. Meanwhile, premium revenue grew 14%
€2.7 billion, while ad-supported revenue grew 17% to €329 million. The company in its report stated that revenue growth was slightly below our expectations due to macro-related variability in advertising business. ““We witnessed revenue growth of 14% which was slightly behind guidance. The operating loss is ahead than guidance by 38%,” said Paul Vogel, CFO, Spotify, added.
Furthermore, the gross profit widened 14% to €766 million in Q1,2023 from €671 million in Q1,2022. According to the data released by Spotify, operating expenses grew 36% year-on-year. The operating expenses were driven due to higher personnel costs in relation to the headcount expansion the company underwent in 2022. “We have outperformed our peers being the low-cost option. However, macroeconomic situations have sort of pushed us down,” added Vogel.
The company expects the addition of approximately 15 million net new monthly active users in the next quarter that is Q2,2023. It further expects to add seven million net new (paid) subscribers in the second quarter. The total revenue is expected to reach €3.2 billion assuming approximately 30 bps headwind to growth year-on-year due to foreign exchange rate movements, Spotify said.
The company assumes approximately 200 bps benefit to operating expense growth year-on-year due to foreign exchange movements while expecting a 25.5% gross margin which would reflect year-on-year improvement in music and podcasting and the lapping of last year’s Car Thing charge and changes in the prior period estimates for rightsholder liabilities.