Spotify Reports Record 293M Premium Subscribers in Q1, Shares Drop on Weak Outlook

Spotify announced its Q1 2024 financial results, reporting revenue of €4.53 billion and earnings of €3.45 per share. Analysts had projected revenue of €4.52 billion and earnings of €2.95 per share, according to estimates compiled by Yahoo Finance.

Despite strong financial performance, shares of the music streaming giant fell 11.4% in pre-market trading on May 7, 2024, following a weaker-than-expected outlook for the coming quarter.

Premium Subscribers and User Growth

Spotify added 3 million premium subscribers in Q1, bringing the global total to 293 million. Total monthly active users (MAUs) grew 9% year over year to 761 million, while ad-supported MAUs increased 14% to 483 million.

The growth was driven by broad-based regional expansion, particularly in Latin America, Europe, and the Rest of World segment. Premium subscriber gains were further supported by a strong global promotional campaign intake, while MAU growth benefited from the global launch of mobile free tier enhancements.

Revenue Breakdown and Financial Performance

• Premium revenue grew 10% to €4.15 billion, driven by subscriber gains and price increases.
• Ad-supported revenue declined 5% to €385 million, with music advertising growth offset by softness in pricing.
• Automated sales channels remained the largest contributors to overall advertising growth.

Content Expansion and New Features

Spotify’s platform now features:

• 7 million podcast titles
• Over 590,000 video podcast shows
• More than 700,000 audiobooks in English-language markets

Podcasting growth was led by sponsorship gains within Spotify’s Owned Licensed portfolio.

New Beta Features

• Taste Profile Beta: Launched in New Zealand, this feature allows Premium users to customize their homepage recommendations. Expansion to additional markets is planned.
• Prompted Playlist Beta: Now available to Premium listeners in the U.S. and Canada, this feature lets users describe their desired music or podcasts in their own words, giving them more control over the algorithm.
• SongDNA Beta: A global launch introduces an immersive feature that provides fans with detailed insights into the creators, producers, samples, and covers behind their favorite songs.

Leadership Commentary and Future Outlook

“We’re well positioned because of our large, engaged user base, deep creator relationships, and years of investment in personalization and infrastructure at scale. Together, these create a platform that can take advantage of this moment and unlock entirely new growth vectors that will enable us to climb new mountains previously unimaginable. We see significant room to grow across users, formats and engagement and to expand what Spotify is and can become over time.”

— Gustav Söderström, Spotify Co-CEO

Q2 2024 Forecast

Spotify provided the following outlook for Q2 2024:

• Premium subscribers: 299 million (6 million net additions)
• Total MAUs: 778 million (17 million net additions)
• Total revenue: €4.8 billion (14.5% increase)
• Operating income: €630 million
• Operating margin: 33.1%