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Spotify (SPOT) kicks off 2023 strong with a first quarter report that beats expectations on multiple metrics. Solid growth and improving profit margins, balanced by continued losses and uncertain economic forecasts, seem likely to increase pressure on streamers to follow competitors and raise subscription prices.
Spotify added 26 million monthly active users in the first three months of 2023, beating guidance by 15 million and accelerating Y/Y growth for the fifth consecutive quarter. Paid subscribers increased by 5 million to 210 million in all regions, mainly in Europe and Latin America.
Total revenue was $3.35 billion, up 14% year over year and slightly below expectations. Advertising revenue was weak as increased paying subscribers boosted revenue.
Gross margin exceeded guidance at 25.2%, reflecting “improving profitability in music and podcasts.”
Operating losses totaled $172 million in the first quarter, exceeding guidance by $41.9 million, despite headcount reductions and promises to investors to reduce operating costs and make new investments.
Bruce Horton Founder and Editor of Hypebot and MusicThinkTank, Senior Advisor to Bandsintown, President of Skyline Artists Agency, and Professor at Berklee College of Music.
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