HITS Daily Double


Spotify topped expectations in user growth in the second quarter of 2023. The streamer is up to 551m Monthly Active Users and 220m subscribers.

Revenue of €3.2b was 11% higher than 2022, while Adjusted Gross Margin finished in-line with guidance at 25.5%.

MAUs rose 27% in the quarter. Net additions of 36m surpassed the guidance of 21m, an all-time high for the company.

The net addition of 10m subscribers—3m ahead of guidance—set a record for growth in Q2. Subscriber growth was 17% over 2022. All regions outperformed, led by Europe and Latin America.

Ad-Supported revenue grew 12% year over year (or 15% in constant currency), reflecting double-digit Y/Y growth across nearly all regions. Music advertising revenue grew mid single-digits, reflecting double-digit growth in impressions sold.

Chief Financial Officer Paul Vogel addressed the price increases announced Monday (7/24), noting that growth predictions for the third quarter are on the conservative side: 572m MAUs, 224m subscribers. The impact in terms of revenue will not be fully felt until the fourth quarter.

CEO Daniel Ek told investors the price increase “is the biggest one we have done to date” and that it is a tool for growth in the toolbox.

“When user growth slows down,” Ek said, using Sweden as example, “price becomes even more important tool.”

“We’re constantly thinking about increasing value to users, increasing the value to price ratio," he added. "We should have the ability to raise prices [because] we always focus on over-delivery. I feel real good about our innovation—we had an all-time high number of experiments and improvements” this year.

Ek also spoke at length about the Spotify’s intentions regarding Artificial Intelligence, noting “we’re in the early innings of seeing potential.”

Spotify will focus on using AI for music and podcast discover, making the company more efficient overall and reducing the cost in producing advertisements.

He singled out Spotify’s AI DJ, a personal favorite of Ek’s. AI Dj has “the ability to contextualize the content we have. You’ll see a lot more of that.”

During the 4/1-6/30 period, Spotify’s stock price rose to $160.55 from $133.62; year to date, the company is up 100% while its market cap has grown to $31.7b.