Swedish headquartered music streaming app Spotify which released its quarterly results on Tuesday announced that its monthly active users has grown 27% to reach 551 million in Q2, 2023 when compared to the same period in the corresponding year. The music streaming app claimed in terms of user growth the last quarter recorded was its highest quarterly net addition in history. “We recorded the highest ever monthly active users growth ever. The growth was 36 million. The biggest driver growth of user growth base comes from our ad-supported model that further transition to paid subscribers,” Daniel Ek, CEO, Spotify, said during the press conference.
As per the company, the total revenue grew by 11% to €3.2 billion at the end of Q2,2023 from €2.86 billion during the same period in the previous year. Meanwhile, premium grew by 11% to €2.77 billion, while ad-supported revenue grew by 12% to €404 million. The company in its report stated that the revenue growth was in-line with its expectations.
Furthermore, gross profit widened 9% to €766 million in Q2, 2023 from €704 million in Q2, 2022. According to the data released by Spotify, operating expenses grew 13% to 1.01 billion from 898 million in the same period in the corresponding year. The company stated that the expenses were driven by charges related to efficiency efforts. “We have underspent in marketing as compared to last year. However, user growth and subscriber growth have grown. Marketing is always going to be a part of how we are going to grow,” Paul Vogel, CFO, Spotify, added.
The company expects the addition of 21 million net new monthly active users in the next quarter that is Q3, 2023. It further expects to add four million net new (paid) subscribers in the third quarter. The total revenue is expected to reach €3.3 billion assuming approximately 600 bps headwind to growth year-on-year due to foreign exchange rate movements. However, announced price increases would have a minimal impact on total revenue in Q3, 2023.
The company also assumes 600 bps growth benefit in operating expense year-on-year due to foreign exchange movements while expecting 26% gross margin primarily driven by year-on-year improvement in podcasting and other cost of revenue.