UPDATED with CEO comments: Spotify saw revenue grow 16% last quarter to €2.147 billion ($2.59 billion) fueled by a 46% jump in ad sales as podcast listening hit a high and monthly active users grew 24% to 356 million, including both free and paid.
Premium subscribers increased 21%, as the company added nearly 4 million net new members to end the first three months of the year at 158 million — at the top end of forecasts.
Total MAUs however fell short of forecasts. It said “meaningful contributions” from markets like the U.S., Mexico, Russia, and India was partly offset by lower than expected growth in Latin America and Europe. And it cited pandemic-related subscriber “pull forward” — a term Netflix has also used to explain that hefty subscribers gains last year with the world in full lockdown mode aren’t necessarily sustainable quarter after quarter.
The shares were down nearly 8% in early trading as Wall Street shrugged of the company’s expansion into 80 new countries, its foray into the automobile with the release of a new consumer device called Car Thing, and and a new way for Spotify users to share and listen to music and podcasts via Facebook. It is pushing into live audio, popularized by Discord and Clubhouse, that let users participate.
This stream of new initiatives and acquisition, Spotify CEO and founder Daniel Ek said during a conference call, are geared towards the greater goal of Spotify’s transition from music to audio — from a music service to a audio platform that runs from creating content to distribution, engagement and monetization — “So we are investing massively in all four of these.”
Spotify net income was €23 million versus €1 million the year earlier.
The global music streaming giant headquartered in Sweden and founded and run by CEO Daniel Ek, anticipates between 366 million to 373 million total monthly users, including and 162 million-166 million premium subs for the current second quarter. Spotify expanded in more than 80 countries and raised price in some key markets.
Advertising grew in the double-digits across regions (excluding the impact of foreign exchange). Strength was led by Podcast and Programmatic channels. Podcasting benefiting from the acquisitions of Megaphone and The Ringer and the exclusive licensing deal for the Joe Rogan Experience.
Other U.S. launches included Renegades: Born in the USA (Higher Ground), Unlocking Us with Brene Brown (Parcast), Ringer Dish Feed – Taylor Swift (The Ringer) and Welcome To Your Fantasy (Gimlet).
Renegades, with former President Barack Obama and Bruce Springsteen, was the second largest podcast on Spotify in March. International releases include Japanese original Juju Talk, a first daily new original in Germany, FOMO – was hab ich heute verpasst (what did I miss today?) and a slate in the Philippines.
Key music releases included Olivia Rodrigo’s single, drivers license, Arlo Parks’ album, Collapsed in Sunbeams, and Selena Gomez’s EP, Revelación. Daft Punk and Spotify partnered to celebrate the 20th anniversary of their 2001 opus Discovery.
Spotify Ad Studio grew substantially, continuing to expand its self-serve offering to more markets (France, Germany, and Italy) and began beta testing podcast inventory ad buying in the U.S.
The company announced the Spotify Audience Network, a first-of-its-kind audio advertising marketplace which connects advertisers to listeners across Spotify Owned & Exclusive podcasts, podcasts from enterprise publishers via Megaphone, podcasts from emerging creators via Anchor, and ad-supported music.
Spotify began testing Podcast Topic Search in the U.S., which enables listeners to search for podcasts by theme and topic and announced a new partnership between Anchor and WordPress to help content creators reach new audiences.
At the end of the quarter, users in 10 additional markets, including Sweden, Australia, and Chile, can now ask Alexa to play podcasts from Spotify. PlayStation’s PS4 and PS5 consoles support Spotify in new markets Russia, Ukraine, Croatia, Slovenia, and Israel.