Spotify posts €4.3B Q3 revenue as pay users hit 281M
What's the story
Spotify has announced its third-quarter results, beating Wall Street expectations with a 12% year-on-year revenue increase. The company's total revenue for the quarter stood at €4.27 billion, slightly above the expected €4.23 billion. However, despite the strong performance and an increase in paid subscribers by 12% to 281 million, Spotify's shares fell by 2% on Tuesday due to weak guidance for the current quarter.
Financial performance
Earnings per share and premium subscribers
Spotify's Q3 earnings per share stood at €3.28, beating the expected €1.97. The company also saw a 12% increase in premium subscribers, reaching 281 million, just shy of StreetAccount estimates of 281.24 million. However, ad-supported revenue for the quarter was down by 6% year-on-year to €446 million, falling short of the expected €467.7 million for the period under review.
Future outlook
Q4 forecast for revenue and premium subscribers
For the fourth quarter, Spotify has guided a revenue of €4.5 billion, lower than the expected €4.56 billion. The company also expects total premium subscribers to reach 289 million in this period, again falling short of an estimate for 291.1 million. However, Spotify's forecasted operating income and monthly active users (MAU) for Q4 are above expectations at €620 million and 745 million, respectively.
User growth
Growth in total monthly active users
Spotify's total monthly active users for Q3 grew by 11% to 713 million from the same period last year. This growth was attributed to several improvements made to its mobile free tier in September. The company also integrated artificial intelligence into its platform, launching a service on ChatGPT in October that offers personalized music and podcast recommendations based on text prompts.