Helped by cost-cutting measures include a mass layoff, Spotify posted a record profit in the second quarter of 2024 that topped expectations. The music and audio streaming giant gained 7 million paid subscribers in the period, slightly ahead of guidance, while total monthly users fell short of its target.
Spotify reported Q2 revenue of €3.81 billion, up 20%, and a net profit of €274 million, versus a net loss of -€302 million in the year-earlier period. The company’s operating costs declined 16% in Q2 due mostly to “a decrease in personnel and related costs and lower marketing spend.” Gross margin for the period was 29.2% (ahead of guidance), compared with 24.1% in the year-earlier period.
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The record profits come after significant layoffs at Spotify. At the end of Q2, Spotify’s workforce stood at 7,372 full-time employees globally — down from 9,123 at the end of 2023.
Shares of Spotify popped more than 12% on the Q2 earnings announcement Tuesday.
Spotify’s ad-supported revenue in Q2 grew 13%, reflecting double-digit growth across all regions. Music advertising growth was driven by gains in impressions sold and increased pricing; podcast ad revenue growth was driven by growth in impressions sold across original and licensed podcasts and the Spotify Audience Network, partially offset by softer pricing, the company said.
As of the end of Q2, the company had 626 million total monthly active users, a sequential gain of 11 million (short of its 16 million projection). It reported 246 million Premium subscribers, adding 7 million (versus 6 million expected).
“Our business continued to perform well in Q2, led by healthy subscriber gains, improved monetization and record profitability,” Spotify said in its quarterly letter to shareholders. “Although we did see another quarter of MAU variability, funnel conversion remained strong, particularly in developed markets where we recently adjusted pricing.”
In early June, Spotify raised prices for most of its existing plans in the U.S. The Individual plan increased by $1, from $10.99 to $11.99 per month, while the Family plan, which provides access for up to six members a household, went up by $3, from $16.99 to $19.99 per month.
For the third quarter of 2024, Spotify expects:
- Total monthly active users of 639 million (gain of 13 million)
- Total Premium subscribers of 251 million (gain of 5 million)
- Total revenue of €4.0 billion (up 19% year over year)
- Operating income of €405 million and gross margin of 30.2%
