Spotify’s Premium subscriber count crossed the 300 million threshold for the first time in the second quarter, as the company exceeded its own paid-addition forecast and set new records for operating income and free cash flow.
Subscriber and user growth
Premium subscribers reached 300 million, a net increase of 7 million from the previous quarter and 1 million above guidance. The company said year-over-year and sequential gains occurred across all regions, aided by “strong global promotional campaign intake.”
Europe represented 36% of the Premium base, followed by North America (25%), Latin America (24%), and Rest of World (15%).
Monthly Active Users (MAUs) climbed 12% year over year to 777 million, up 16 million quarter over quarter, though the figure came in 1 million below the company’s projection.
Revenue and profitability
Total revenue rose 14% year over year to €4.777 billion ($5.56 billion). Premium revenue, on a constant-currency basis, increased 16% to €4.331 billion ($5.04 billion), driven by subscriber gains and higher average revenue per user (ARPU).
Premium ARPU reached €4.89 ($5.69), up 7.4% year over year in constant currency, reflecting the impact of price increases partially offset by product and market mix. Ad-supported revenue grew 3% year over year in constant currency to €446 million ($519 million), with music advertising benefiting from higher sold impressions despite softer pricing.
Operating income jumped 61% year over year to €655 million ($762 million), exceeding guidance due to higher gross margin and lower-than-expected social charges. Net income was €545 million ($634 million), compared with a loss of €86 million in the same period a year earlier. Free cash flow reached €797 million ($927 million), a second-quarter record.
Third-quarter outlook
Spotify projects Premium subscribers will reach 305 million and MAUs will total 788 million by the end of Q3.
Co-CEO Alex Norström said:
“We have a scale that few companies in history have reached, a business that is healthy and compounding, and opportunities only we are positioned to pursue. Spotify lives across your whole day: the commute, the workout, studying, gaming, the dinner table, and sleep. At our scale, that is rare…Our position gives us an opportunity space as wide as our users want it to be.”
