Spotify crosses 500 million active users in Q1, paid subscribers rise 14%

Paying subscribers grew by 15 percent to 210 million, with outperformance results across all regions, led by Europe and Latin America.

Audio streaming service Spotify added 26 million monthly active users (MAUs) for the quarter ended March 31, 2022, posting its largest-ever user growth in the first quarter.

The increase in users, which is Spotify's second largest quarterly net addition in its history, takes the company's overall user base to 515 million for the quarter.

Spotify, which counts India among its top five markets in terms of the user base, didn't disclose specific information on its performance in the country in Q1 2023.

The company said the growth came from nearly all age groups across both developed and developing markets and was driven by higher reactivations, improved retention and marketing efficiencies.

Paying subscribers grew by 15 percent to 210 million, with outperformance results across all regions, led by Europe and Latin America.

During the quarter, Spotify cut 600 jobs, or 6 percent of its workforce globally, to rein in costs amid a challenging macroeconomic environment.

The company also restructured how its operates, bringing the majority of its engineering and product work under Gustav Söderström as Chief Product Officer and the business areas under Alex Norström as Chief Business Officer.

Apart from this, Spotify also announced plans to shut down its Clubhouse-style service Spotify Live and the Wordle-inspired music guessing game.

In March 2023, the audio streaming service announced the biggest app overhaul in the company's history with a new TikTok-style video feed on iOS and Android to boost app engagement, along with several other new features and product enhancements.

Financial performance
Spotify's operating losses shot up to €156 million (around $172.05 million) in the quarter from a net loss of €6 million (around $6.62 million) in the year-ago period. This was due to higher personnel costs driven by headcount growth over the past year partially offset by lower marketing and legal costs.

Severance-related charges associated with the Q1 workforce reduction also increased the operating expenses for the quarter, which grew by 36 percent YoY, the company said in a shareholder presentation. The company, however, anticipates a meaningful improvement in its operating income in 2023 and beyond.

Total revenue was at €3.04 billion (around $3.35 billion) for the quarter, up 14 percent year-on-year from €2.66 billion ($2.93 billion)
Revenue from subscriptions, which account for the bulk of the company's revenue, grew by 14 percent YoY to €2.71 billion (about $3 billion) for the quarter. The average revenue per user from the subscription business dipped by 1% to €4.32 ($4.76) for the quarter.

The company's advertising business grew 17 percent to €329 million (around $362.9 million). The segment contributed about 10.8 percent of Spotify's revenues for the quarter. Podcast revenue grew by nearly 20 percent YoY, driven by original and exclusive podcasts.

For the ongoing quarter, Spotify expects to grow its paid subscriber base to 217 million and overall base to 530 million. It expects to post revenues of €3.2 billion ($3.5 billion) and an operating loss of €129 million ($142.3 million).