Spotify Now Has 456 Million Monthly Average Users

Posted on October 25, 2022 by Paul Thurrott in Spotify with 4 Comments

Spotify subscriber growth exceeded expectations, with the music streaming service announcing it now has over 456 million monthly average users as part of its most recent earnings report. But the firm also reported a lower profit margin than expected, sending its shares tumbling in after-hours trading.

Spotify reported an operating loss of €228 million on revenues of €3 billion for the quarter ending September 30.

“The majority of our key metrics surpassed guidance in Q3 2022, led by [monthly average user] and subscriber outperformance and healthy revenue growth,” Spotify reported in its financial filing for the quarter. “Similar to last quarter, MAU growth saw notable acceleration, with net additions reaching a record Q3 high of 23 million, while subscribers came in 1 million ahead of guidance.”

Spotify’s user base is now made up of 195 million premium (paid) subscribers, up 13 percent year-over-year (YOY), with revenues of €2.65 billion, up 22 percent YOY, and 273 million ad-supported users, up 24 percent YOY, with revenues of €385 million, up 19 percent YOY.

Those seem like solid numbers, but Spotify’s growing losses—it’s experienced two money-losing quarters in a row—is what’s troubling Wall Street. The firm blamed “an unfavorable adjustment to prior period estimates for rights holder liabilities [and] slower than forecast advertising growth” for the shortfall. And while the firm expects its subscriber base to grow in the current quarter, it also said that it expects its losses to widen, to €300 million.