Spotify has posted double-digit gains for overall monthly users and paid subscribers for the third quarter of 2021, in line with expectations, while its advertising revenue — fuelled by its growing podcast slate — outperformed with a 75% year-over-year increase.
According to a report by Variety, the company’s total monthly active users grew 19% year over year, to 381 million in Q3 (up from 365 million). Spotify Premium subscribers, it added, also climbed 19% to 172 million in the quarter, at the midpoint of the guidance range.
“We had a very strong quarter,” Spotify CEO and founder Daniel Ek said in prepared remarks. “The business is doing really well and I’m pleased that we continue to deliver across the areas that are fundamental to our growth and long-term strategy.”
Spotify’s previous guidance for Q3 was for total monthly users of 377 million-382 million and paid subscribers of 170 million-174 million.
The audio streamer posted revenue of €2,501 million ($2.90 billion), up 27%, at the top end of its guidance range. Subscription revenue grew 22% — while ad sales were particularly strong, growing 75% year-over-year to €323 million ($374 million).
Spotify eked out a net profit of €2 million ($2.3 million), translating to a net loss of -0.41 euros per diluted share. On average, Wall Street analysts had anticipated revenue of $2.84 billion and EPS of -21 cents.
The company’s Q3 gross margin was 26.7% in Q3, above expectations. That reflected a “favorable revenue mix shift” toward podcasts, marketplace activity, improved music advertising operating leverage, and cost efficiencies (like payment fees and streaming delivery costs). The improvement was partially offset by higher non-music and other content costs and publishing rate increases, Spotify said.
At the end of Q3, Spotify had 3.2 million podcasts on the platform (up from 2.9 million at the end of Q2). The company said the percentage of MAUs that engaged with podcast content continued to increase throughout the quarter, accelerating relative to Q2, but didn’t disclose numbers. Among users who engaged with podcasts in Q3, consumption was up 20% year-over-year on a per-user basis. During the quarter, podcast share of overall consumption hours on the platform also reached an all-time high (but Spotify didn’t say what that was).
