Gen Z listeners help Spotify exceed expectations

Spotify Technology SA, the audio streaming platform from Sweden, exceeded analyst predictions in its second-quarter performance as the number of its active users surged by 27% to reach 551 million.

• The company cited strong growth across all regions and among younger Gen Z listeners.
• The number of premium subscribers increased by 17 percent to 220 million, the company said in a statement on Tuesday. That beat the 217.1 million average of analyst estimates compiled by Bloomberg. Turnover, EUR 3.18 billion, fell slightly short of expectations.
• The company’s adjusted operating loss was 112 million euros, which exceeded analysts’ loss of 127.4 million euros.
• The company predicts 572 million active users for the third quarter, of which 224 million are premium subscribers. It estimates turnover for the season at 3.3 billion euros.

Key insights

• On Monday, the streaming service raised prices in the US for the first time since its launch. A regular premium plan now costs $10.99, the same price as Spotify’s primary competitors Amazon Music and Apple Music.
• In June, Spotify cut 2% of its staff, mainly in its podcasting division, and shifted its strategy away from exclusive releases to broad distribution. The company did so to focus on growing its advertising business and reach more listeners.
• In addition, the company has tried to cut costs by planning the introduction of more expensive subscription levels and reducing its real estate footprint.

Market reaction

• The stock rose 3.7% in trading before the market opened in New York. They were down 4.7% on Monday, although they have more than doubled over the year.

Spotify increases the prices of premium packages in several countries

(Reuters) – Spotify Technology on Monday raised the prices of its premium plans in several countries, including the United States and Britain, as the music streaming company seeks to boost profitability in an uncertain economy.

The move results in a $1 price increase for Spotify’s US plans, with the premium single now costing $10.99, the duo costing $14.99, the family plan $16.99 and the student plan $5.99.

In recent months, Spotify has moved to increase margins with hundreds of layoffs and restructuring of the podcast unit, which it had built with billions of dollars in investments.

The price increases come at a time when streaming services, both audio and video, are under increasing pressure from investors to improve profitability after years of prioritizing user growth.

Rivals Apple and Amazon.com and Tidal have raised their prices this year, while YouTube last week raised the prices of monthly and annual subscriptions in the US for the first time since the subscription service launched in 2018.

Spotify, which had announced in April that it would raise prices in 2023, had also raised prices in 46 countries last year.