Spotify on Wednesday reported it finished the second quarter with 365 million monthly users — including 165 million customers who pay for the music streaming service each month — while posting a much smaller loss than Wall Street analysts had anticipated.
The Stockholm-based company reported a loss of 19 cents per share, compared to the loss of 42 cents per share analysts projected. Spotify’s Q2 sales hit $2.75 billion, which was up 23% year-over-year; that narrowly beat analyst revenue projections by about $50 million for the quarter. One area that was “particularly strong” for Spotify during the quarter, according to the company’s letter to shareholders: ad-supported revenue, which increased 110% from the same time last year to $325 million.
In terms of subscribers, Spotify’s 165 million premium customers represented a 20% year-over-year increase; the company had entered Q2 with 158 million paying customers, after projecting it would finish the second quarter with around 162 million-166 million premium subscribers. Spotify, in its letter to shareholders, said its monthly churn rate for premium subscribers was “down modestly” from the previous quarter. The company’s 365 million monthly users — which includes both ad-supported and ad-free listeners — was up 9 million from the previous quarter, but fell short of Spotify’s goal of 372 million users.
Spotify said its monthly user growth was “slower than expected due primarily to lighter user intake during the first half of the quarter. COVID-19 continued to weigh on our performance in several markets, and, in some instances, we paused marketing campaigns due to the severity of the pandemic.”
On the content side, Spotify said it now has 2.6 million podcasts available. Overall, podcast consumption was “consistent with Q4 levels,” Spotify said in its shareholder letter, before adding: “We saw a strong increase in Q1 podcast consumption hours vs. Q4, with March activity driving an all-time high in terms of podcast share of overall platform consumption hours.”
Spotify didn’t share specific stats on how “The Joe Rogan Experience” is performing, but the company said it had “performed above expectations with respect to new user additions and engagement.” Spotify also gave a shout-out to the “Call Her Daddy” podcast — which the company recently paid $60 million to acquire — and Dax Shepard’s “Armchair Expert” podcast, without offering more details on how the exclusive podcasts have performed.
Looking ahead, Spotify said it expects to finish the third quarter with between 170-174 million premium customers and 377 million-382 million monthly users; Q3 revenue will fall between $2.72 billion-$2.96 billion, the company projected.