- Spotify beat investor estimates on paid user growth in Q3, adding 6 million premium subscribers versus guidance and consensus that was about 1 million lower. The paid user base reached 306 million, up 9% year over year.
- Premium subscriber revenue rose 17% year over year on subscriber growth and price increases. Free, ad-supported monthly active users grew 12% to 499 million globally.
- Q3 revenue of €4.97 billion came in roughly in line with €5 billion guidance. The 33% gross margin slightly beat guidance.
- Spotify returned excess cash to shareholders through buybacks in Q3, a commitment made at its May investor day. Previously most cash flow offset dilution from employee stock compensation.
- Co-CEO Gustav Söderström said the company's AI taste model and related features are improving engagement, with double-digit growth in discovery. He said the company is still in the early stages of using the model to drive growth.
- Ad revenue rose 10% year over year in Q3, which is slower than premium revenue growth and remains the weak spot in the quarter.
- Spotify launched a paid memberships program for podcast creators earlier in the week and expanded audiobook access from 22 markets to more than 180.
Quotes
“We're seeing double-digit increase in discovery specifically”
“We think this game is going to be decided based on who compensates the most”