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Spotify reported a 14% year-over-year jump in its paid subscribers to now at 188 million. By Q3 2022, the company expects to take its monthly active users to more than 450 million.
On Wednesday, July 27, Spotify (NYSE: SPOT) reported its Q2 earnings beating analysts’ expectations on revenue. The company’s revenue for Q2 2022 stood at 2.86 billion euros against the expected $2.81 billion euros.
Spotify Q2 2022 Earnings Results
As the music streaming landscape expands, Spotify is doubling down on its podcasting services. As a result, Spotify reported its total monthly active users at 433 million against the expected 428 million. There was a 19% jump in monthly active users year-over-year. By Q3 2022, the company is expecting its total monthly users to reach 450 million.
The net addition of 19 million users also turns out to be the company’s largest-ever Q2 growth. This jump happens despite the company exiting Russia. Spotify attributes this growth to account reactivations in Europe and the Gen Z strength in Latin America.
Spotify’s paid subscribers also grew by a million users. The company reported a 14% year-over-year jump in its paid subscribers to now at 188 million. In the earnings release on Wednesday, Spotify users noted:
“While we continue to monitor the uncertain macro environment, we are very pleased with the resilience of the business, particularly our strength in MAUs and Subscribers”.
Preparing for the Macro Headwinds
During the earnings call, Spotify announced its decision to reduce the hiring growth by 25% for the rest of 2022. Spotify CEO Daniel Ek said that the company is preparing itself for the macro headwinds ahead. He added:
“We’re seeing several markets trending ahead of our forecasts”. The company is “preparing as if things can get worse, but hard to be anything but optimistic” given the current data.
Ek further added that there’s “no material impact” on users. Besides, he added that the company has long-term pricing power. For the third quarter, Spotify is looking to add new 17 million monthly active users. By the end of Q3, the company is expecting its paid subscribers base to be more than 194 million. Besides, the company also estimates its revenue to increase to 3 billion euros. Spotify CFO Paul Vogel said:
“We continue to monitor the global macro outlook, but to date, have seen no real impact on our user or subscriber outlook. Specifically, we expect to see another quarter of accelerating MAU net adds and expect subscriber net additions similar to Q3 of last year”.
The SPOT stock shot up 12% on Wednesday after the company released its results. However, the stock is down by more than 52% year-to-date.