Spotify reeled in fewer new users overall than it expected in the first quarter of 2024, but the audio-streaming giant touted “record strength” in profitability.
Total monthly active users (free and paid) grew 19% year over year to 615 million, a gain of 13 million from the previous quarter — which missed its guidance by 3 million. Spotify said “moderated marketing activity” led to “more normalized growth” following 2023’s record performance (when it added 26 millionnew MAUs). The company said the lower-than-expected MAU growth came amid “organizational change,” a reference to Spotify’s December 2023 layoffs cutting 17% of its workforce.
On the paid-subscriber front, Spotify Premium subscribers grew 14% year over year to 239 million, a gain of 3 million in the period (in line with guidance).
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Revenue in the quarter increased 19.5%, to €3.64 billion, and gross margin topped guidance by 121 basis points, reaching 27.6%. Operating income improved to a new quarterly high of €168 million. Net income for the quarter came in at €197 million, compared with a loss of €225 million in the year-earlier period.
“We’ve talked about 2024 as the year of monetization, and we’re delivering on that ambition,” Spotify CEO Daniel Ek said in prepared remarks. “Now as we’ve shifted to focus on strong revenue growth and margin expansion, we see a clear opportunity to ensure we are also continuing to grow the top of our funnel. I feel good about the changes we are implementing and remain very confident in our ability to reach the ambitious plans we’ve outlined.”
Spotify said that average revenue per subscriber increased 5% year over year to €4.55, driven by price increases and partially offset by “product and market mix.” Ad-supported revenue grew 18%, reflecting double-digit annual growth across all regions, according to the company.
The company’s podcast ad revenue grew faster than music, driven by “significant growth in impressions sold” across original and licensed podcasts and the Spotify Audience Network, which was partially offset by softer pricing, the company said. The Spotify Audience Network saw “high single-digit” quarter-over-quarter growth among participating publishers and shows.
In March, Spotify released its 4th annual “Loud & Clear” report, which claimed the company in 2023 paid out more than $9 billion to the music industry — a record for the highest annual payment to the music biz from any single retailer.
