Spotify Q3 details & quotes: Users, Podcasts, Audiobooks

Spotify released Q3 earnings this week. We covered basic money metrics HERE. In this post, we scrutinize information gleaned from the earnings call. Below, three main topics: User growth, podcasting, and the audiobooks initiative.

The User Count

Monthly Active Users (MAU) has been a key metric during Spotify’s public existence. In this report, Spotify noted the second largest MAU net addition ever, adding 23-million new users and bringing the total to 574-million. (That is free and subscription users combined.)

And there is a prediction:


“We’re forecasting to hit another big milestone, reaching more than 600 million monthly active users at the end of the year, and this puts us well on our way to reaching more than 1 billion global users by 2030.” –Daniel Ek, CEO Spotify


In announcing that forecast, Daniel Ek reminisced that it was exactly 15 years ago that Spotify went live in France, Finland, Norway, Spain, Sweden, and the UK. “It’s been a wild ride,” he noted.

As of now, Spotify is predicting a total-2023 MAU addition of “about 112-million.” That would be 60% above a four-year historical trend. Spotify usage appears to be experiencing an explosive spurt.

The Podcast Correction

Spotify swore off podcast buys early this year, after a long period of hungry acquisitions. Daniel Ek promised investors to get the financial house in order, at least in the podcasting department. In this call, Daniel Ek offered a positive progress report:


“We’ve seen the improvements in the podcasting business, and we talked about how that’s been a drag on our gross margins, and we expect it to soon reach breakeven and then become something that’s actually additive to gross profit. So we’re on track on the podcasting side there, and that should continue to be helpful into 2024.”


Ek took the opportunity to brag about Spotify’s influence on the podcast industry, separate from it’s part in company finances.


“When we enter a business, the business becomes bigger, the podcasting business is a much bigger global business because Spotify is a part of that business now.”


As a side note to that remark, Ek speculated that Spotify’s entrance in the audiobook market would have the same industry-lifting effect.

One investor asked for a specific timeline to podcast profitability. Both CEO Daniel Ek and CFO Paul Vogel offered many words and sentences on this subject, but no firm or dated prediction (unsurprisingly). Vogel did refer to a “one to two-year timeline.”

The Audiobook Focus

Audiobooks were mentioned more than podcasting during the earnings call. Spotify’s audiobook catalog numbers about 300k titles (RAIN HERE), in a per-book purchase plan. Earlier this month the platform unlocked 150,000 titles to free listening for Premium subscribers — with a 15-hour monthly limit. (Rather a complicated system which we think inevitably leads to some amount of user frustration.)

The audiobook initiative was characterized as “groundbreaking” by Daniel Ek during the call. For investors, the key benefits are reducing churn of active users, and increasing engagement. The result? Sorry, but–


“It’s still too early to see the impact in our numbers…”


— however:


“initial signs from subscribers in the UK and Australia are incredibly positive as we bring them more content to discover.” –Daniel Ek


One investor asked whether audiobooks will make meaningful financial impact in 2024. Daniel Ek delivered 379 words, not one of which was “audiobooks.” Paul Vogel then likewise expressed non-audiobook information. Perhaps somebody sent an internal text to Ek, because he returned with a hasty, more direct answer:


I forgot to mention, by the way, on the audiobook side, which you asked about as well. So yes, we do think audiobooks will be helpful to the 2024 results as well, but it will be early days, of course. It’s still in early product development — early launch. And the primary focus is to bring it out in more markets.”


Not all investors were satisfied with that. One of them assayed essentially the same question again, whereupon Paul Vogel and Daniel Ek put on a dazzling demonstration of how to say nothing in 367 words. Our take is that 746 words in total were used to say: We launched audiobooks, and we’ll have them in 2024 too.

But when another investor tried yet again to learn about audiobook financials in 2024, Some helpful indicators were voiced by Paul Vogel.


“There’s obviously always an investment when you launch a new product. We don’t think it’s anything that’s going to be a material impact our 2024 gross margin trajectory. And we think […] it’s not a long window until we see audiobooks really being additive to Spotify from a bottom line perspective. And we’ll have more to talk about it moving forward.”


Fair enough. And Vogel also predicted a “small impact” of audiobooks in Q4 financials.

Brad Hill

One Comment

  1. Really interesting insights into Spotify’s growth and future plans. The huge user growth this quarter shows the platform’s momentum. I’m glad to hear podcasting profitability is on track as promised, and that audiobooks, while early, are showing positive signs so far. It makes sense they’re being cautious about predicting the financial impact of audiobooks in 2024 – new initiatives take time to scale. But it seems like Spotify is laying the groundwork in podcasting and audiobooks to diversify revenue streams, boost engagement, and stay competitive. Excited to see how these bets on new content formats will pay off in the long run.

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