Spotify posts operating income of $286m in Q2 2024

According to the latest financial results released on 23 July, Spotify registered a second consecutive quarterly profit as its gross margin finished at 29.2% in Q2, up from 24.1% in Q2 2023.

Premium subscribers rose by 12% Year-on-Year (YoY), and by 7 million net subscribers from 239 million at the end of the prior quarter (Q1 2024).

“Our business continued to perform well in Q2, led by healthy subscriber gains, improved monetisation and record profitability,” Spotify said in its investor presentation. “Although we did see another quarter of monthly active user (MAU) variability, funnel conversion remained strong, particularly in developed markets where we recently adjusted pricing.”

Spotify reports that it saw YoY growth in subscribers across all regions, with outperformance led by North America and Europe.

Europe accounted for 38% of its total premium subscriber base in Q2, while North America accounted for 27% of the total subscriber base, as Latin America recorded 22%.

Spotify’s total number of MAUs, which combine paying users and ad-supported users, grew by 14% YoY to 626 million. This was up 11 million MAUs from the 615 million reported for the prior quarter but below guidance by 5 million (Spotify forecasted that it would reach 631 million MAUs in Q2).

The company reported that it saw growth across all regions, with its net additions compared with the prior quarter (Q1 2024) led by Rest of the World and Europe.

In terms of finances, Spotify’s Premium subscriber revenues grew by 22% YoY at constant currency to €3.3bn ($3.6bn) in Q2, driven by the platform’s subscriber growth and a Premium ARPU (average revenue per user) increase of 10% YoY at constant currency to €4.62 ($4.97).

Ad-supported revenue in Q2 2024 was €456m ($491m), up 12% YoY at constant currency, reflecting double-digit Y/Y growth across all regions.

Spotify generated €3.8bn ($4.098bn) in total quarterly revenue (including Premium and ad-supported), which was up 21% YoY at constant currency.

The company stated that its music advertising growth was driven “by gains in impressions sold and increased pricing and that its podcast advertising revenue growth was driven by growth in impressions sold across Original and Licensed podcasts and the Spotify Audience Network, partially offset by softer pricing.”

Spotify’s operating expenses saw a decline of 17% YoY at constant currency, from €1bn in Q2 2023 to €846m ($911m) in Q2 2024.

“It’s an exciting time at Spotify. We keep on innovating and showing that we aren’t just a great product, but increasingly also a great business,” Spotify CEO Daniel Ek said. “We are doing so on a timeline that has exceeded even our own expectations. This all bodes very well for the future.”

For Q3, Spotify expects to reach 639 million MAUs, which would be an increase of around 13 million. Additionally, the company predicts that its total number of Premium subscribers will reach 251 million, with approximately 5 million net new subscribers added during the quarter.