Spotify Q2 revenue increases 23% due to strong advertising growth

Audio streaming giant Spotify's total revenue for the second quarter ended June grew 23% to €2.9 billion compared to €2.3 billion in the same quarter last year.

Premium revenue grew 22% to €2.5 billion from €2 billion, reflecting subscriber growth of 14% Y/Y and Premium ARPU growth of 6% Y/Y to €4.54. Excluding the impact of FX, ARPU performance benefited from price increases implemented in the prior year period and was offset by growth in multi-user accounts.

Ad-supported revenue grew 31% to €360 million, reaching an all-time high as a percent of Total Revenue at 13% for Q2. The ad revenue growth reflects growth across all regions and sales channels.

Spotify's music business saw double-digit growth YoY, led by double-digit growth in CPMs and a mid-single-digit increase in impressions sold. Podcast revenue grew in the strong double-digit range Y/Y, led by the Spotify Audience Network (where sold impressions grew triple-digits and CPMs grew healthy double-digits).

Gross profit was up 6% to €704 million from €663 million. The company reported a net loss of €194 million against a net profit of €12 million last year.

The company slipped into a net loss due to higher personnel costs primarily due to headcount growth (global ad sales team expansion + acquisitions) and higher advertising costs for growth initiatives (Emerging Markets, Gen Z), partially offset by lower Social Charges.

Total MAUs grew 19%to 433 million, up from 422 million last quarter and above the guidance by 5 million. Quarterly performance versus our guidance was impacted by outperformance in India, Indonesia, and The Philippines as a result of marketing campaigns and elevated OEM intake, strength in Europe largely due to higher reactivations, and YoY growth in the Gen Z audience in Latin America alongside new music releases.

Spotify noted that excluding the impact of the Russia exit and the service outage benefit we experienced in March (representing a collective 8 million Q1 MAU), it added 19 million MAUs in the quarter, which is the largest Q2 in the company's history.

The platform's premium subscribers grew 14% YoY to 188 million, up from 182 million last quarter. Quarterly performance versus our guidance was impacted by outperformance across all regions led by Europe and Latin America, Q2 promotional campaign extended one week (5 weeks total vs. 4 weeks prior year) contributing to subscriber upside, and multi-user plans continued to exhibit strength.