Spotify subscriber base grew by 3m to 239m in Q1, as company posts biggest ever quarterly profit
Spotify saw its global Premium Subscriber base grow to 239 million paying users in Q1 – and achieve its biggest ever quarterly profit in the three months to the end of March.
That's according to the company's latest financial results (for Q1 2024), filed today (April 23), in which SPOT reported that its number of Paid Subscribers increased. 14% YoYand increased by 3 million network subscribers above 236 million That SPOT was calculated at the end of the previous quarter (Q4 2023).
Spotify reports that Premium Subscriber growth was led by “continuous double-digit YoY growth across all regions” as well as growth in Family and Duo.
Spotify breaks down its Premium Subscriber base by region in its investor presentation, reporting that Europe accounts for 38% total number of paid subscribers in Q1 (see below).
North America occupied 27% of SPOT's total subscribers in Q1, while Latin America accounted for 22%.
Spotify noted in its investor presentation that “its business performed well in Q1, led by strong subscriber growth, improved monetization and record profit strength.”
“We talked about 2024 being the year of monetization and we are delivering on that ambition.”
Daniel EkSpotify
“While we saw a larger MAU change in the quarter amid moderated marketing activity and organizational changes, the 3 million net subscriber additions were consistent,” the company added. in line with guidance while year-over-year growth in premium ARPU and advertising revenue both improved.”
Monthly active users:
Spotify's total Monthly active usersPaid users and ad-supported users combined, grew 19% YoY ARRIVE 615 million.
That happened 13 million QUICKLY from 602 million reported for the previous quarter (Q4 2023), but below guidance 3 million (Spotify predicts it will hit 618 million MAU in Q1).
The company reported that Q1 MAU performance reflected “healthy growth across all regions,” led by Latin America and the Rest of the World, as well as “controlled marketing activity.” approval, leading to more normal growth following record 2023 performance.”
PREMIUM REVENUE
Financially, in Q1, Spotify's Premium/subscription revenue grew 21% YoY at constant currency levels to 3.247 billion euros (3.525 billion USD) and was driven, according to SPOT, by subscriber growth and increased premium ARPU €4.55 ($4.94) – increase 7% YoY fixed currency.
Spotify noted in its investor presentation that “excluding FX impact, ARPU performance was driven by price gains, partially offset by product and market mix ”.
July 2023 marks for the first time in its 15-year history that Spotify has increased its top subscription price in several territories, including the US and UK. Same goes for Spotify plans to increase subscription prices again this year in many markets, including the US.
ADVERTISING SUPPORTED REVENUE
Spotify's ad-supported revenue in Q1 2024 was 389 million euros ($422.37), upward 19% YoY Currencies were flat, reflecting double-digit Y/Y growth across all regions.
SPOT reported that its “music advertising revenue grew by double digits year-on-year thanks to growth in impressions sold and price increases.”
However, the company's podcast advertising revenue grew faster than music, driven by what SPOT said was “significant growth in impressions sold on original and licensed podcasts as well as Spotify's audience network, partially offset by its softer pricing.”
Spotify is created €3,636 Billion (3.947 billion USD) IN total Quarterly revenue (including Premium and ad-supported), increased 21% YoY in fixed currency.
PROFITABILITY
The company's gross margin ended at 27.6% in Q1 2024, up from 25.2% in Q1 2023.
Terms profitSpotify announced operating income of 168 million euros (182.41 million USD), which it noted in its investor presentation was a “new quarterly high” and reflected “lower staffing, related costs and marketing spend.”
Spotify cut around 17% its global workforce in December, the streaming company's third round of job cuts last year.
According to the latest investor filing, at the end of the first quarter, Spotify's workforce consisted of 7,721 full-time employees globally, recorded on Tuesday (April 23), “includes employees affected by workforce reductions in December 2023 who remain on gardening leave.”
SPOT also reported that its Operating Income was impacted by 82 million euros ($89.03 million) in Social Charge, which is a payroll tax related to employee wages and benefits in certain countries where the company operates.
Spotify's operating costs are reduced 9% YoY in constant currency, from 922 million euros in Q1 2023 to €836 million ($907.72 million) in Q1 2024 (see below).
Spotify also reported that its Gross Profit reached 1.004 billion euros ($1.090 billion) in the first quarter, surpassing 1 billion euros for the first time in its history.
Regarding guidance for the second quarter, Spotify forecasts a hit 631 million MAU, an addition of approx 16 million Net new MAUs for the quarter.
The company expects the total number of Premium subscribers to reach 245 million in the second quarter, the addition of approx 6 million net new subscribers during the quarter.
Spotify forecasts operating income of 250 million euros for Q2 and total revenue of 3.8 billion euros.
“We talked about 2024 being the year to make money, and we're delivering on that ambition,” said Daniel Ek, co-founder and CEO of Spotify.
“Now, as we shift our focus to strong revenue growth and margin expansion, we see a clear opportunity to ensure that we are also continuing to grow at the top of your channel.
“I feel good about the changes we are making and remain very confident in our ability to achieve the ambitious plans we have outlined.”
All EUR-USD conversions are carried out at the average rate of the relevant period according to the European Central BankMusic business worldwide
