By
Darya Rudz
September 26th, 2023
Amidst the growth in revenue and user count, the company said it increased its Operating Expense which totaled €677 million in Q1, an increase of 27% when compared to the year-ago period.
Stockholm-based audio streaming and media services provider Spotify Technology SA (NYSE: SPOT) has published its Q1 2022 earnings report in which it beat expectations on both the top and bottom lines. The company reported a revenue of €2.661 billion, printing a 24% growth Year-on-Year (YoY). Spotify said this figure was above its own personal guidance.
“Our business exhibited strength and resiliency in Q1. Nearly all of our key metrics surpassed guidance, led by MAU outperformance, healthy revenue growth, and better Gross Margin. Excluding the impact of our exit from Russia, subscriber growth exceeded expectations as well. Overall, we are very pleased with the performance of the business and remain highly encouraged by the traction we are seeing,” the company said in a statement.
Spotify recorded a €2.379 billion Premium revenue growth, up 23% YoY, while the Ad-Supported Revenue grew 31% YoY to €282 million.
“We achieved our largest Q1 ever for Ad-Supported Revenue (11% of Total Revenue) and saw strong Y/Y growth across all regions and channels. Music Ad-Supported Revenue benefited from a Y/Y increase in impressions and healthy double-digit growth in CPMs,” the company said in a statement.
The impressive revenue hit the firm recorded takes its backing from its Monthly Active Users (MAUs) which came in at 422 million for the quarter, a 19% growth Year-on-Year. As the company highlighted, March saw a network glitch that involuntarily logged users out of its service. This incidence, Spotify believes must have pushed the affected users to create new accounts in order to be able to access the platform again.
This new account opening must have added at least 3 million new Monthly Active Users. The music streaming service provider said the total Monthly Active Users exceeded its expectations by at least 1 million users. The company recorded users from all around the world with its largest userbase coming from Europe at 33% of the entire MAUs.
With its plan to onboard over a Billion users around the world still active, North America accounts for 23% of the total MAUs while Latin America and the rest of the world accounted for 22% and 23% respectively. Spotify’s premium subscribers grew 15% Year-on-Year for the quarter and came in at 182 million in the quarter.
Other Highlights of the Spotify Q1 2022 Earnings Report
Amidst the growth in revenue and user count, the company said it increased its Operating Expense which totaled €677 million in Q1, an increase of 27% when compared to the year-ago period.
In a bid to also increase the quality of its streaming services, Spotify, through the earnings report said it “increased the number of artists and labels who can create Sponsored Recommendations by rolling out our self-serve campaign management tool to all eligible artists in the United States.”
This move helped the company boost its new customer onboard rate with an 85% retention rate. The company’s shares on the NYSE were down 11.08% to $98.33 at the time of writing.