Spotify Sees Unexpectedly High Growth Despite Continuing Losses
Spotify experienced a significant surge in its monthly active users (MAU) during the second quarter of 2023, reaching a record high of 551 million after attracting 36 million new listeners. This represents a 27 percent increase in MAUs and marks a milestone for the streaming giant, as stated in its recently published earnings report. Although not all new users opted for a Premium account, Spotify also achieved a remarkable second quarter in terms of Premium subscribers. It gained 10 million paying users, surpassing expectations by 3 million and achieving a 17 percent year-over-year growth in its subscriber base. While this may not be an all-time high, it is the most successful Q2 performance in this aspect for Spotify.
Despite the huge influx of new users, Spotify still lost a significant amount of money. Its total turnover for the period is 3.5 billion dollars (3.2 billion euros), which is 11 percent more than last year. However, it also posted an adjusted operating loss of $123.7 million (€112 million). Spotify blamed these losses on the shutdown of its podcast programs, as well as excess real estate and layoffs due to company restructuring. If you recall, the audio streaming giant recently made major changes to its podcast strategy, cutting several original productions.
According to The Wall Street Journal, Spotify previously told investors that it would raise prices to make a profit. In fact, the company just added $1 on top of the old subscription price, meaning users in the US will now have to pay at least $11 per month. Spotify also plans to implement price increases in various markets, including the UK, Canada, Australia, New Zealand and Hong Kong. The company anticipates that premium subscriptions will slow down in the third quarter of the year due to their higher prices. From the 10 million new paying users in the second quarter, it expects to add 4 million Premium subscribers in the third quarter. Even so, it believes the price increases will have a “minimal impact on total revenue” and still expects to earn $3.65 billion (€3.3 billion) this quarter.
