Spotify subscriber growth exceeds expectations in Q2

The subscriber growth surpassed the company’s anticipated increase of 5 million paying users in Q2. Spotify added 2 million paid users in Q1, which means the platform added a total of 8 million premium subscribers in the first half of the year.

Spotify monthly active users (MAUs) grew by 11 million, bringing its total user base up to 433 million. The company said the growth in users would’ve have reached 19 million if it did not exit the Russian market or experience a “brief service outage benefit we experienced in March.”

Spotify returned €2.86bn (about $3.05bn) in revenues, a 23% climb year-on-year at a constant currency. The company posted a gross profit of €704m, which represented a slight decline in gross margin from 25.2% in the previous quarter to 24.6%. Operating losses recorded were €194m, less than the forecasted $197m.

Going forward, Spotify expects to add another 6 million paying users by the end of September, taking its total to 194 million. It also expects to grow MAUs by 17 million in the quarter, which will bring its total user base to 450 million.

“Nearly all of our key metrics surpassed guidance in Q2 2022, led by MAU and subscriber outperformance, healthy revenue growth and a modestly better operating loss. Most notably, MAU performance accelerated this quarter, with net additions reaching a record Q2 high of 19 million,” Spotify told investors.

“Reported gross margin was negatively impacted by our decision to stop manufacturing Car Thing, partially offset by a positive change in prior period estimates for rights holder liabilities. Excluding the one-time charge and change in accruals, gross margin of 25.3% was modestly ahead of guidance. Free cash flow was a positive €37m. While we continue to monitor the uncertain macro environment, we are very pleased with the resilience of the business, particularly our strength in MAUs and subscribers.”

Spotify made several new acquisitions in the three months, including music trivia game Heardle, audiobook platform Findaway and AI voice platform Sonantic, to provide “new unique experiences for our users and engage users.”

View Spotify's full quarter two earnings report here.