Spotify added more users on both its free and paid tiers in the third quarter than expected, with the company citing particular strength in Latin America for the outperformance. Total monthly activ…
“There is a lot of global uncertainty, but our business continues to perform very nicely around the world,” CEO Daniel Ek said in prepared remarks about the quarter. “With one quarter left in a year that has seen war, a lingering pandemic, inflation, supply chain disruption and threats of a global recession, I am really proud of all that we have accomplished and that despite all of this, we are precisely where we thought we’d be.
Total revenue was over €3.04 billion, slightly ahead of guidance, representing 21% year-over-year growth. Premium revenue grew 22% to €2.7 billion. Ad-supported revenue grew 19% to €385 million, reflecting double-digit growth across all regions with the exception of Europe where “we saw the impact of challenging regional economic conditions,” Spotify said.
However, Spotify’s gross margin in Q3 came in below expectations at 24.7%, which the company said was “affected by an accrual adjustment from an anticipated renewal of a large publishing contract outside the U.S.,” along with “some softness in advertising and currency fluctuations.” Spotify reported an operating loss of €228 million, which the company attributed in part to higher payroll costs with expansion of its global ad sales team, platform investments and the effect of recent acquisitions including Podsights, Findaway, Sonantic, Chartable, Whooshkaa and Heardle.
At the end of Q3, Spotify had 4.7 million podcasts on the platform, up from 4.4 million the previous quarter. The audio streamer said the number of users who listened to podcasts grew in the “substantial double-digits” year over year, but didn’t quantify the increase. In the earnings report, Spotify called out Meghan Markle’s “Archetypes” as a notable exclusive podcast premiere in Q3, hit No. 1 on its trending charts in six countries.
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