Music-streaming giant Spotify said on Wednesday that it ended the first quarter with 158 million premium, or paid, subscribers, hitting the high end of its forecast range, and 356 million total active monthly users, “within our guidance range but modestly below our internal expectations.”
The figures were up from 155 million premium users as of the end of 2020 and 345 million total users. For the first quarter, Spotify management had predicted monthly active users (MAUs) to grow to 354 million-364 million, with premium subscribers to reach 155 million-158 million.
“We saw greater MAU variability this quarter, but results were within our range of expectations given the outperformance in the fourth quarter and the continued impact from COVID-19,” the company said. “We saw meaningful contributions from markets such as the U.S., Mexico, Russia and India. However, growth was lower than plan in Latin America and Europe. In aggregate, the performance of our newly launched markets was in line with our expectations.”
The gain in paid subs was “fairly broad-based and led by North America, where we saw stronger-than-expected performance of trials and campaigns and faster-than-anticipated growth in our standard product,” Spotify said. “In Latin America, we saw outperformance driven by the continued success of our family plan product. We are pleased with the new market contributions, with South Korea being the biggest driver.”
Stockholm-based Spotify, led by CEO Daniel Ek, said advertising revenue, which had returned to growth in the third quarter following a coronavirus pandemic hit, continued to rise in the most recent quarter, up 46 percent over the year-ago period, or 57 percent when assuming constant currencies.
Podcasting continues to be a focus for the company. Ek on a morning analyst call told investors he was “pleased with the continued momentum” at the legacy music streaming service as it pivots to becoming an audio platform and browser.
The opportunity in audio is “largely untapped,” he added, as Spotify offers a tailwind to a global trend in growing spoken word consumption online. “We’re in the early innings of audio and the key thing right now is moving offline linear audio listening to online, on demand listening,” Ek said.
He pointed to Spotify and around 8 million audio creators and 350 million users fueling an emerging spoken word platform, as opposed to a legacy music streaming service, while still appealing to musicians. “It’s probably going to start out with spoken word content, but as it relates to Spotify, there will be a lot of musicians that want to engage in everything from speaking to their fans to having listening parties and all other things because engagement drives meaningful conversion to monetization opportunities,” Ek told analysts.
That includes Spotify announcing it would add audio subscriptions for podcasters on Tuesday. “What we announced yesterday is a very compelling product for creators, where they have control, in how they message their consumers and how they can monetize their consumers,” Ek told analysts.
At the end of of the first quarter, Spotify had 2.6 million podcasts on its platform, up from more than 2.2 million at the end of 2020. “The percentage of MAUs that engaged with podcast content on our platform was consistent with fourth-quarter levels,” Spotify said. “From a consumption standpoint, we saw a strong increase in first-quarter podcast consumption hours versus the fourth quarter, with March activity driving an all-time high in terms of podcast share of overall platform consumption hours. The Joe Rogan Experience performed above expectations with respect to new user additions and engagement.”