Spotify published its financial results for Q2 2021 today (July 28), revealing that its global Premium Subscriber base grew to 165 million in the quarter (ended June 30).
That was up 20% year-on-year, and up by 4%, or 7 million subscribers, on the 158m that SPOT counted at the end of the prior quarter (Q1 2021).
The company’s total global Monthly Active Users, (MAUs), meanwhile, grew 22% year-on-year to 365m in Q2 2021 and by 3% compared to the previous quarter (Q1 2021) when the platform counted 356m MAUs.
Spotify’s Premium subscriber growth translated into Premium revenue of €2.056 billion ($2.43bn at current exchange rates) in Q2, which was slightly up (6%) on the €1.931bn generated in the prior quarter (Q1 2021).
The firm’s Average monthly Revenue per Subscriber landed at €4.29 in Q2, down 3% year-on-year, but flat at constant currency. “Excluding the impact of FX, we saw a benefit to ARPU from our Q1 price increases along with a marginal initial impact from Q2 price increases, offset by the impact of product mix shift,” said Spotify.
Meanwhile, Spotify’s ad-supported revenue hit €275m ($325m) in Q2, up 28% on the €216m generated in the prior quarter (Q1 2021), and up by 110% year-on-year (see below).
Spotify’s Ad-Supported MAUs grew by just 2m – from 208m in the prior quarter (Q1 2021) to 210m in Q2.
While SPOT’s YoY Premium Subscriber growth of 20% in Q2 was towards the upper end of the company’s guidance range, MAU performance was slower than expected. Spotify blamed this slow MAU growth on “primarily to lighter user intake during the first half of the quarter”.
In a letter sent to shareholders today, Spotify stated that “COVID-19 continued to weigh on our performance in several markets” and that, in some instances, the platform has recently “paused marketing campaigns due to the severity of the pandemic”.
In addition, Spotify cites a user sign-up issue associated with a global third party platform as a reason for slower MAU growth in Q2.
This issue, which the platform says has now been resolved, “created unexpected intake friction, which also impacted MAU growth”.
Added Spotify: “Overall, we saw a return to better growth patterns in the back half of [Q2]. Although we continue to face near-term uncertainty with respect to COVID-19, we remain confident in the underlying health of our user funnel, and our existing user retention activity remains consistent with historical trends.”
Spotify’s Ad-Supported Revenue outperformed its forecast, which it says was “driven by strong underlying demand (benefiting sellout and pricing) and aided by favorable comps vs. last year’s COVID-19 lows”.
Added Spotify: “The strength in Ad-Supported Revenue was led by our Direct and Podcast sales channels, with the latter benefiting from a triple-digit Y/Y gain at existing Spotify studios (The Ringer, Parcast, Spotify Studios, and Gimlet) along with contributions from the Megaphone acquisition, the exclusive licensing of the Joe Rogan Experience, and Higher Ground”.
“We are very pleased with the initial performance of the Spotify Audience Network which launched in the US in April. The rollout allowed us to increase our monetizable podcast inventory in the US by nearly 3x.
“Additionally, for opted-in podcast publishers we’ve seen a double digit increase in fill rates, a meaningful increase in unique advertisers, and a double digit lift in CPMs. On July 1, we expanded the Spotify Audience Network to include Australia, Canada, and the United Kingdom.”
Spotify’s guidance for Q3 2021 includes total MAUs of between 377-382 million, total Premium subscribers of between 170-174 million and total Revenue of €2.31-€2.51 billion.
The company’s guidance for Q4 2021 includes total MAUs of between 400-407 million, total Premium subscribers of between 177-181 million and total Revenue of €2.48-€2.68 billion.
“While MAU growth was softer than expected in the first half of the year, we are seeing that trendline reverse and all the leading indicators show that we are back on track.”
Daniel Ek, Spotify
Spotify CEO and founder, Daniel Ek, said: “Q2 was a strong quarter for Spotify overall, with the majority of our major metrics performing better than expected.
“While MAU growth was softer than expected in the first half of the year, we are seeing that trendline reverse and all the leading indicators show that we are back on track.
“By accelerating our pace of innovation and investing for the long term, we continue to cement our standing as the preferred audio platform around the world.”Music Business Worldwide