Spotify Subscriber Growth Exceeds Forecast in Q3 Report

Spotify on Monday reported a surprise boost to its third-quarter operating profit and said it grew its user base to 113 million premium, or paid, subscribers and 248 million total active monthly users as of the end of September.

That compared with 108 million premium and 232 million total active monthly users as of the end of June, 100 million premium and 217 million monthly users as of the end of March and 96 million and 75 million, respectively, as of the end of 2018.

The company’s third-quarter user figures exceeded Wall Street estimates and its own forecast for premium users. “Net subscriber growth exceeded our expectations and was led by strong performance in both Family Plan and Student Plan,” leaving premium subs up 31 percent over the year-go period, the firm said. “Total monthly active users grew 30 percent…outperforming the high end of our guidance. Developing regions continue to be a significant driver of this outperformance.”

Spotify also addressed the competitive landscape. “We continue to feel very good about our competitive position in the market,” it said. “Relative to Apple, the publicly available data shows that we are adding roughly twice as many subscribers per month as they are. Additionally, we believe that our monthly engagement is roughly two times as high and our churn is at half the rate. Elsewhere, our estimates imply that we continue to add more users on an absolute basis than Amazon. Our data also suggests that Amazon’s user base skews significantly more to ‘ad-supported’ than ‘premium,’ and that average engagement on our platform is approximately three times [theirs].”

Spotify forecast it would end 2019 with 255 million to 270 million monthly active users, which came in above previous expectations, and 120 million to 125 million premium subscribers.

Spotify CEO Daniel Ek also announced its CFO would exit. “After playing a pivotal role in Spotify’s listing and helping to establish Spotify as a public company, Barry McCarthy will retire from Spotify on January 15, 2020, stepping down as the company’s CFO,” the company said. He will be replaced by Paul Vogel, who is currently Spotify’s vp financial planning and analysis, treasury and investor relations. 

Source: The Hollywood Reporter