Spotify has published its latest quarterly financial results, for Q3 2024. They reveal that the streaming service ended September with 252 million premium subscribers and 402 million users of its free, ad-supported service.
That’s up 12% and 11% respectively year-on-year, leaving Spotify with 640 million monthly active users overall, up 11% on this time last year.
Spotify’s quarterly revenues were up 19% to €3.99bn ($4.24bn at current exchange rates). The company’s premium (subscription) revenues grew by 21% to €3.52bn as part of that while its ad-supported revenues grew by 6% to €472m.
Spotify reported an operating profit of €454m in Q3, an impressive step on from its €266m operating profit the previous quarter, and €32m a year ago.
In the quarter before this one (Q2 2024) Spotify missed its guidance to analysts on monthly active users growth by five million MAUs, although its premium subscribers that quarter were one million above its guidance.
How about Q3? Well, Spotify surpassed its prediction of 639 million MAUs for its latest quarter (it was 1m above that) while also beating its guidance of 251 million premium subscribers (again, by 1m).
The company’s turnover was in line with its forecast for €4bn of quarterly revenues, meanwhile.
“The business delivered strong Q3 results, as all of our KPIs met or exceeded guidance and profitability reached record levels,” was how Spotify described the figures in its executive summary.
“Overall, we are very pleased with our performance heading into year-end and view the business as well positioned to sustainably grow towards the long-term goals outlined at our 2022 Investor Day.”
Spotify said that an acceleration of its ARPU (average revenue per user) was behind its 21% increase in premium revenues, sparked by increases in the costs of its subscriptions. It described a “softness in pricing” and a “challenging brand environment” in its music and podcast advertising business.
(One talking point around the profits may be Spotify’s current dispute with US publishers over mechanical royalties, with the company’s reclassification of its premium service as a ‘bundle’ leading to it paying less of those. Are songwriters the unwilling reason for Spotify being profitable? Well, they’re a factor, but not the main one. Earlier this year Spotify said that if it loses the lawsuit brought against it by the US Mechanical Licensing Collective over the issue, it would have to pay out around €35m of additional royalties for Q2. A significant sum for publishers, of course, but not the main engine of Spotify’s quarterly operating profits.)
Back to the Q3 financials. Spotify’s largest region remains the ‘Rest of World’ (everywhere except North America, Europe and Latin America) with 33% of its monthly active users. That’s up from 31% last quarter and 26% a year ago.
Latin America also increased its share quarter-on-quarter, from 21% to 22%, with single percentage point drops for Europe (to 27%) and North America (to 18%) in that period.
However, they remain the biggest regions in terms of premium subscribers: Europe accounts for 38% of Spotify’s paid users and North America 27%, with Latin America on 22% and Rest of World on 14%.
Spotify ended Q3 with 7,242 full-time employees globally, down slightly from the 7,372 it had at the end of Q2, and the 7,721 it had at the end of Q1.
In its presentation for investors, Spotify also made its predictions for Q4 2024. It expects to end this year with 665 million monthly active users, adding around 25 million net new MAUs in Q4.
The company is forecasting that 260 million of those will be premium subscribers (so eight million net additions) with Q4 revenues expected to reach €4.1bn, with an operating profit of €481m.
