Spotify gains subscribers but is still in the red

Online music platform Spotify saw its growth accelerate in the third quarter and approach 500 million users, but its margins have eroded and its losses have widened.

From juillet to septembre, the number of a world of music in ligne to gagné, in net, 23 million d’utilisateurs actifs mensuels pour attendeindre 456 million au total, dont 195 million d’abonnés payants, le subtracte utilisant gratuitement le service avec de advertising.

The Swedish platform thus registered a higher growth rate (20%) than that of the previous three months (19%), the highest since the second quarter of 2021.

It is driven in particular by world regions excluding the Americas and Europe, which now account for 26% of users, compared to 11% four years ago.

However, these are essentially users of the free, ad-supported service. The paying subscriber base has changed relatively little, with 88% coming from the Americas and Europe, compared to 91% four years ago.

Spotify even sees the pace pick up in Q4 and expects 24% growth, with 479 million monthly active users by the end of 2022, including 202 million paying subscribers.

“There’s a lot of uncertainty in the world” right now, but “outside of advertising, we don’t see any impact,” founder and CEO Daniel Ek commented on a conference call, admitting, hollowly, that ad revenue took a hit. . because of the economic situation.

The turnover of the free part of the platform, which depends on advertising, thus registered its weakest growth in the recent period, with 19% in one year, compared to 75% in the same period of 2021.

Another example of the group’s dynamism, turnover exceeded expectations, with 3,030 million euros, 21% more in one year.

The group extended its losses

On the other hand, costs are increasing faster than revenues (+25%) due to hiring, investments, acquisitions and advertising expenses, which put pressure on margins. Spotify still sees them fall apart in the fourth quarter.

The group expanded its net loss to 166 million euros compared to 160 a year ago.

“We have been transparent that 2022 will be a year of investments, which will put pressure on our margins in the short term,” said Daniel Ek.

“We expect our profitability to improve (in 2023) compared to 2022,” added Paul Vogel, CFO.

In after-hours trading on Wall Street on Tuesday, Spotify shares lost nearly 7%.