Spotify passes 500 million users, but premium subscriber portion drops to 40%

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Spotify now has 515 million monthly active users (MAUs), up 5% from the previous quarter and up 22% from the corresponding period last year.

This is the first time Spotify has claimed a user base of more than half a billion users, with 210 million premium subscribers and 317 million on the ad-supported plan.

This represents a 40% paid-to-free listener ratio, a ratio that appears to be declining. By comparison, Spotify’s premium subscribers made up 46% of the total user base in 2019, down to 45% in 2020, 44% in 2021, and 43% last year.

It’s not clear how many premium subscribers might move to the free ad-supported tier due to the economic downturn, but it’s clear that Spotify’s ad-supported user base is moving faster than its premium subscribers.

However, this does not translate into ad-supported revenue. Spotify’s numbers show that while ad revenue was up 17% year-over-year, it was actually down 27% from the previous quarter, with total revenue down 4% (though down 14% year-on-year increases). year basis).

The company acknowledged that revenue growth was below expectations due to “macro-related variability in our advertising business.”

Spotify Q1 2023 earnings

Spotify Q1 2023 earnings Image credits: Spotify

However, Spotify is keen to highlight that its MAUs grew by a total of 26 million users versus an expectation of 15 million, making it the largest net growth in the first quarter and the second largest quarterly growth in its history. If only it could convert more of them into premium subscribers.

Another notable conclusion from the shareholder report for the first quarter of 2023 relates to the operating losses. While losses this time around were an improvement over the last quarter (€156 million versus €231 million in Q4 2022), the company forecasts this trend to continue, forecasting €129 million in operating losses for Q2 2023.

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