Spotify passes 500M users, but its premium subscriber portion falls to 40%

Image credit: Sergi Alexander/Stringer/Getty Images

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

This is the first time Spotify has reached a user base of over 500 million, with 210 million premium subscribers and 317 million ad-supported plans.

This represents a 40% ratio of paid to unpaid listeners, and this ratio appears to be declining. For comparison, Spotify’s premium subscribers accounted for 46% of his total user base in 2019, 45% in 2020, 44% in 2021, and last year he dropped to 43%. bottom.

It’s not clear how many premium subscribers will switch to the free ad-supported tier due to the economic downturn, but it’s clear that Spotify’s ad-supported user base outnumbers premium subscribers.

However, this has not been converted into advertising revenue. Spotify’s figures show ad revenue was up 17% year-over-year, but it was actually down 27% from the previous quarter, with total revenue down 4% (but up 14% year-over-year). but). year basis).

The company admitted that revenue growth was lower than expected due to “macro-related volatility in its advertising business.”

Spotify Q1 2023 Earnings image credit: spotify

However, Spotify emphasized that MAU increased by 26 million users overall versus guidance of 15 million, and the company’s first-quarter net growth rate was the highest in the company’s history, and quarterly growth rate is the second largest ever. If only more people could be converted to premium subscribers.

Another notable takeaway from the Q1 2023 shareholder report relates to the operating loss. Although the loss was an improvement from the previous quarter (€156 million compared to €231 million in Q4 2022), the company expects this trend to continue, with a second quarter 2023 loss of The operating loss for the quarter is expected to be €129 million.