Spotify’s Q3 earnings report gave the investor audience upbeat news and validation that the strategic adjustment made earlier in the fiscal year are working as hoped.
Those adjustments included reigning in the ambitious podcast acquisitions earlier in the year, and two layoff rounds — six percent of workforce in January (RAIN HERE) and more layoffs in June plus a reorg of its podcast properties (RAIN HERE). These actions resulted in a notable reduction of operating expenses in Q3, as illustrated below:
The year-over-year economizing is even more dramatically illustrated:
Usage growth
Total monthly active users (MAUs) reached 574-million, a 26% yearly increase.
Premium subscriber growth (the paying subscribers) continued in Q3, following a remarkably steep and steady year-over-year trajectory:
CEO Daniel Ek called out the subscriber growth particularly: “We walked into 2023 thinking we would do just over 20 million in net subscriber adds for the full year, but we’re actually on track to deliver 30 million, which is a significant beat from where we thought we would be. In fact, this will be the second biggest full year gain in net subs additions since going public.”
The profit/loss story
It’s really a profit story, as Spotify can call itself a profitable public company for the first time. After withstanding operating losses between 156M Euro and 247M Euro over the preceding four quarter, Spotify posted a positive operating income of 32-million Euros.
“We believe this is an important inflection point for the business as we start to see the benefits of our focus on speed and efficiency.” –Daniel Ek, CEO Spotify
