Spotify Beats Forecast for Paid Subscribers but Falls Short on Revenue

Spotify has announced stronger-than-expected audience growth for Q1 of 2023, adding 5 million paid subscribers to bring their total paid audience to 210 million globally, while total monthly active users (MAU) cracked 515 million.

Why it matters: The new additions beat Spotify's forecasts. Analysts had expected a paid-sub increase of 2.23 million and a MAU uptick of 502 million. The company also generated €3.04 billion in quarterly revenue in Q1 – which was up 13% YoY – but that fell short of predictions, which Spotify blamed on a still-weak ad market. Overall it’s still not profitable, posting an operating loss of €156 million, but Spotify’s stock price surged 4.9% on the news.

How'd they do it? Spotify says that its paid subscriber growth was driven by “outperformance across all regions,” especially in Europe and Latin America. They also cited the popularity of multi-user premium plans, and better brand awareness as streaming continues to become normalized around the world.

What's next? For Q2, the streamer expects to add 7 million more users to its paid sub total, and 15 million more MAU. Revenue is forecast to hit €3.2 billion, which would mean an operating loss of €129 million. So, they think they’re heading in the right direction.

What they're saying: CEO Daniel Ek tweeted it was Spotify’s “strongest Q1 since going public in 2018.” The investor presentation was more subdued, concluding “Overall, we are encouraged by the strong start to 2023.”