How Spotify delivered a profitable combo despite advertising slowdown
Audio streaming giant Spotify has reported a landmark 252m premium subscribers and a healthy profit margin despite a slowdown in its advertising business.
The Swedish unicorn, now valued higher than compatriot brands Volvo, H&M and Ericsson, reported a 12% increase in premium (paid) subscribers, while free, ad-supported users were up 11% to 402m.
While ad revenue growth slowed to 6% to €472m (down from 13% growth in Q2), the company’s premium revenue grew by 21% to €3.52bn.
That helped deliver an operating profit of €454m in Q3, significantly up from €266m the previous quarter and €32m a year ago. The company’s turnover was in line with its forecast for €4bn of quarterly revenue.
Spotify missed its guidance to analysts last quarter on monthly active user (MAU) growth by 5m, although its premium subscribers that quarter were 1m above guidance. For Q3, the company surpassed its prediction of 639m MAUs (it was 1m above that) while also beating its guidance of 251m premium subscribers (also by 1m).
