Spotify Added 36M Users In Q2 As MAUs Hit A Record 552M
Spotify (SPOT), the biggest audio company in the world, published encouraging financial results. The company’s total revenue rose by 11% in the second quarter to over €3.17 billion (USD 3.5 billion +). This growth happened as the number of monthly active users rose from 433 million to 551 million.
Premium users rose by 175 to 220 million users while the ad-supported ones rose to 404 million. As a result, ad revenue jumped to €404 million (USD 446 million) YoY. It dropped from €329 million (USD 363.5 million) from the first quarter.
Most importantly, Spotify’s gross margins dropped gradually as the cost of doing business rose. Gross margins fell from 25.2% in Q1 to 24.1% in the second quarter. Free cash flows also dropped to just €9 million (USD 9.94 million).
These results came at a difficult time for Spotify. The company’s growth is clearly slowing as the number of potential users drops. At the same time, Spotify is seeing strong competition from the likes of Apple and Amazon Music. The most recent competitor is TikTok, which unveiled plans to enter the streaming business.
Spotify’s podcasting ambitions have also gone through challenges. For example, the company recently ended its partnership with Harry and Meghan due to poor ratings. Therefore, Spotify is aiming to boost its financial results by raising prices in key countries like the United States.
Spotify expects its total monthly active users will be 572 million in Q3 while its total revenue will be €3 billion (USD 3.314 billion). Its operating loss for the period will come in at €45 million (USD 49.7 million). Spotify stock price dropped gradually in the pre-market session.
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