Spotify Beats Expectations for Quarterly Revenue as Paid Subscribers Climb to 276 Million

Spotify said subscribers rose 12% and total revenue grew by 15% in the second quarter compared to a year ago, as the streaming giant beat its quarterly guidance for subscriber and monthly user growth, executives said Tuesday.

Spotify’s net subscribers rose by 8 million to 276 million total, and monthly average users (MAUs) grew by 18 million to a total of 696 million in total — ahead of the company’s earlier projections for an increase in subscribers of 3 million and an increase in MAUs of 7 million.  

The company reported total revenue rose by 10% to 4.2 billion euros ($4.9 billion) despite 104 million euros ($121 million) headwinds from foreign currency fluctuations. Revenue from premium, or paid, subscribers rose 16%.  

“It was a solid quarter, especially when you look at our strong user growth across both [subscribers] and MAUs,” Spotify CEO Daniel Ek said on a call discussing the company’s earnings. “It was our second highest second quarter for MAU additions, user engagement continues to strengthen, and this clearly demonstrates that the enhancements we made to expand our content and improve our product are having the intended impact on our business.” 

Spotify reported its advertising business delivered currency neutral growth of 5% year on year, with executives saying they expect to growth advertising business revenue, particularly from automated channels, more this year.  

Operating income topped 406 million euros ($473 million). Gross margin rose by 31.5% driven by premium revenue growth outpacing music and audiobook costs, partly offset by the Spotify’s partner program, the company’s chief financial officer said.  

Here are the highlights: