Spotify has achieved a major milestone in Q1 2023, as it now boasts more than 500 million active users worldwide. The company’s earnings report revealed that Q1 was its second-biggest quarter for user growth ever, with an increase of five percent from the previous quarter and 22 percent year over year. The user base grew by 26 million, which was 15 million more than Spotify had anticipated. The growth was seen across both developed and developing markets, as well as almost every age group.
Most of the growth came from users of the free, ad-supported version of Spotify, with premium subscriptions rising by just two percent from the previous quarter and 15 percent year over year. However, premium subscribers grew by three million more than the company had indicated in its guidance to investors.
While overall revenue was up by 14 percent year over year from €2.66 billion ($2.93 billion) to €3.04 billion ($3.34 billion), it dipped by four percent from the previous quarter. Revenue from paid subscribers remained relatively stable, but revenue from ad-supported users dropped by 27 percent from €449 million ($494 million) to €329 million ($362 million).
Despite the impressive user growth, Spotify posted a net operating loss of €156 million ($172 million) for the quarter. This is a significant increase from the €6 million ($6.6 million) loss it saw in the first quarter of 2022, but it’s still an improvement over the €270 million ($297 million) loss in the previous quarter.
To cut costs, Spotify has laid off around six percent of its workforce, or 600 people. It has also announced plans to shut down both its live audio app, Spotify Live, and Heardle, the Wordle-style song-guessing game it bought last summer.
Despite these challenges, Spotify remains one of the leading audio streaming services in the world, with a user base that continues to grow. The company’s focus on expanding its ad-supported user base could help it to generate more revenue in the future, while its premium subscription service remains an attractive option for users who want to enjoy ad-free listening and other perks.
