Music streaming giant Spotify Tuesday shared its Q3 2022 earnings report, revealing that it is exceeding its own expectations, at least in terms of subscriber count. The company has amassed 195 million paid subscribers globally as of September this year, a million more than it anticipated. The Swedish firm is aiming to hit the 200 million subscriber milestone before the end of the year.
According to Spotify’s earnings report, the company witnessed strong growth in subscribers across all regions this past quarter (via). Promotional campaigns had better than expected results globally, helping it add seven million net new subscribers. Latin America saw the biggest growth and accounts for 21 percent of all paid subscribers. Europe leads the chart with a 39 percent share, followed by North America with 28 percent. The rest of the world makes up the remaining 12 percent of Spotify Premium subscribers. Multi-user plans are attracting people, Spotify said.
Taking into account non-paying users, more than 456 people around the world use Spotify to stream music every month. The service gained 23 million net new users during the third quarter this year, which marks its largest-ever Q3 growth. While Europe and America still make up the bulk of this number, Spotify is rapidly growing in popularity in other parts of the world as well. India, which is the world’s second most populous country after China, massively contributed to this growth. The service had more intake from the country than expected.
Spotify’s profit took a hit despite almost 200 million subscribers
Despite adding millions of new users and subscribers, Spotify’s profit wasn’t up to the mark in Q3 2022. The company reported a 21 percent YoY (year-on-year) growth in revenue, reaching €3.04 billion (equivalent to USD 3.04 billion currently). 13 percent of that was ad revenue, thanks to the popularity of podcasts. The rest came from Premium subscriptions.
However, increased operating expenses (65 percent more than the same period last year) mean Spotify’s profit took a huge hit this past quarter. While its gross profit was €750 million, the company reported an operating loss of €228 million in Q3 2022. As Spotify itself said, increased operating expenses are because of its investment this year. It recently launched an audiobook service and also bought a company to protect its online content and communities. The company is also readying a Hi-Fi streaming tier, which could come rather costly a $19.99 per month.
“2022 continues to be an investment year for Spotify, as we build out the resources and infrastructure necessary to drive our multi-modal, multi-vertical strategy forward. We continue to re-evaluate our spending with an eye toward increasing return efficiency and enhancing productivity across the organization,” Spotify said.