• Home
  • Apps
  • Apps News
  • Spotify Active Users Rose to 465 Million in Q3 2022, Says Profit Margins Squeezed by Slow Advertising Growth

Spotify Active Users Rose to 465 Million in Q3 2022, Says Profit Margins Squeezed by Slow Advertising Growth

Spotify Premium subscribers, who account for most of the company's revenue, grew 13 percent to 195 million, topping analyst estimates.

Spotify Active Users Rose to 465 Million in Q3 2022, Says Profit Margins Squeezed by Slow Advertising Growth

Photo Credit: Reuters

Spotify posed a quarterly operating loss of EUR 228 million this quarter

Highlights
  • Spotify Premium subscribers grew 13 percent to 195 million
  • Its ad-supported income grew 19 percent to EUR 385 million
  • Spotify's stock has fallen 58.5 percent this year
Advertisement

Spotify on Tuesday said third-quarter profit margins were squeezed by slow advertising growth, fanning concerns about the weak global economy's effect on digital advertising. Spotify shares slid 4 percent in after-hours trading, stung by sector-wide weakness after Google parent Alphabet missed market estimates for quarterly revenue as advertisers cut spending.

Spotify, whose stock has fallen 58.5 perent this year, said third-quarter margins were less than it had expected, blaming "some softness in advertising," currency fluctuations and retroactive royalty payments to songwriters and music publishers.

"This is an early indicator of the concerns businesses are having about the economy," Spotify CEO Daniel Ek told Reuters. "We're not concerned long term, but it's definitely impacting us in short term, and it contributed to the gross margin hit that we had this quarter, too."

The number of monthly active users rose to 456 million in the third quarter, an addition of 23 million users in three months that beat Spotify's guidance and analysts' forecasts of 448.6 million.

Premium subscribers, who account for most of the company's revenue, grew 13 percent to 195 million, topping analyst estimates of 194 million.

Spotify's ad-supported income grew 19 percent in the quarter to EUR 385 million (roughly Rs. 3,200 crore), with double-digit growth across all regions except Europe, where Spotify said it saw the impact of challenging economic conditions in the region.

Investors have worried that consumer spending on entertainment would suffer as the global economy reels from the lingering effects of the pandemic, Russia's invasion of Ukraine, rising interest rates and recession fears.

Spotify revenue for the third quarter reached EUR 3 billion (roughly Rs. 25,000 crore), up 21 percent from the same time last year and consistent with analyst estimates of EUR 3 billion, according to IBES data from Refinitiv.

The company said gross margins dropped to 24.7 percent, below expectations, citing softness in the ad market and a large publishing contract outside of the United States.

Spotify posed a quarterly operating loss of EUR 228 million (roughly Rs. 1,900 crore) in the quarter, higher than analyst projections of EUR 168.6 million (roughly Rs. 1,400 crore).

For the fourth quarter, the company estimated it would reach 479 million monthly active users, up 23 million over the last three months of the year. It predicted it would add 7 million premium subscribers, bringing the total number to 202 million.

Revenue for the fourth quarter would reach EUR 3.2 billion (roughly Rs. 26,300 crore) with an operating loss of EUR 300 million (roughly Rs. 2,500 crore).

© Thomson Reuters 2022


Apple launched the iPad Pro (2022) and the iPad (2022) alongside the new Apple TV this week. We discuss the company's latest products, along with our review of the iPhone 14 Pro on Orbital, the Gadgets 360 podcast. Orbital is available on Spotify, Gaana, JioSaavn, Google Podcasts, Apple Podcasts, Amazon Music and wherever you get your podcasts.
Affiliate links may be automatically generated - see our ethics statement for details.
Comments

For the latest tech news and reviews, follow Gadgets 360 on X, Facebook, WhatsApp, Threads and Google News. For the latest videos on gadgets and tech, subscribe to our YouTube channel. If you want to know everything about top influencers, follow our in-house Who'sThat360 on Instagram and YouTube.

Further reading: Spotify
Google Ordered by CCI to Allow Third-Party Payments, Adopt 8 Remedies in 3 Months
Google Pixel G10 Display Details Tipped, Hints at Similar Features as Pixel 7 Pro
Share on Facebook Gadgets360 Twitter Share Tweet Snapchat Share Reddit Comment google-newsGoogle News
 
 

Advertisement

Follow Us

Advertisement

© Copyright Red Pixels Ventures Limited 2024. All rights reserved.
Trending Products »
Latest Tech News »