Spotify added more users on its free and paid tiers in the third quarter than expected, as the company indicated strength in Latin America on the premium side of the business.
Total monthly active users (MAUs) grew 20% to 456 million — 6 million above Spotify’s guidance — a net addition of 23 million, the largest growth in the third quarter to date. Spotify Premium has 195 million subscribers, about 1 million more than expected.
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“There is a lot of global uncertainty, but our business continues to perform very well around the world,” CEO Daniel Eck said in prepared notes for the quarter. “With one quarter remaining in a year that has seen war, ongoing pandemic, inflation, supply chain disruption and threats of a global recession, I am really proud of everything we have accomplished and despite all of this, we are exactly where we thought we would be.”
Total revenue exceeded 3.04 billion euros, slightly ahead of guidance, representing 21% year-over-year growth. Premium revenue grew by 22% to €2.7 billion. Ad-supported revenue grew 19% to €385 million, reflecting double-digit growth in all regions except Europe where “we saw the impact of challenging regional economic conditions,” according to Spotify.
However, Spotify’s third-quarter gross margin came in below expectations at 24.7%, which the company said was “affected by a cumulative adjustment from the expected renewal of a large publishing contract outside the US,” along with “some softness in advertising and currency fluctuations…”
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