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Spotify Reaches 100 Million Paid User Milestone, But Total Revenue Lands Flat

Spotify has reached that magical number of 100 million paid subscribers.

Spotify reached that magical number of 100 million paid subscribers during the first fiscal quarter, the company confirmed on Monday.

The music streaming leader added four million premium users in the three months ending March 31, a 4 percent spike quarterly and 32 percent over the previous year’s quarter. Ad-supported monthly active users now total 123 million, an increase of 6 percent on the quarter and 21 percent year over year. Overall, total monthly active users rose to 217 million in Q1, up 5 percent from the previous quarter and 26 percent year over year.

During the course of the quarter, the company expanded its popular Google Home tie-in to the UK and France, as well as a bundling offer with Hulu. A deal with Samsung also saw Spotify’s app pre-loaded onto the mobile phone giant’s flagship Galaxy S10 device. Spotify also launched in India to much fanfare (and controversy) and now has more than 2 million users there.

By comparison, Apple Music had about 50 million paying subscribers at the end of 2018. Apple is expected to release new figures with its earnings report on Tuesday.

Total revenue for the quarter was €1.511 billion ($1.69 billion in current exchange rate), an increase of one percent compared to last quarter and 33 percent year-over-year. Of that revenue tally, the vast majority (€1.385 billion / $1.55 billion) came from premium subscribers, an increase of 5 percent quarterly; ad-supported revenue totaled €126 million ($140.5 million), an increase of 24 percent y/y but a notable 28 percent drop compared to Q4 2018. The company noted that the under-performance of the ad-supported product was primarily in the U.S. and tied its sponsored sessions videos.

“The performance shortfall was pricing related,” Spotify said of its freemium offering. “We have course corrected and are seeing strong growth across the ads business in Q2.”


Operating expenses totaled €420 million ($468.5 million) in Q1, up from €305 in Q4, resulting in an operating loss of €47 million ($52.4 million). That puts an end to Spotify’s one-quarter stint of profitability — last quarter saw an operating profit of €94 million. During the quarter, the company generated €209 million ($233 million) in net cash flows from operating activities and €173 million ($193 million) in free cash flow, up 12 percent y/y. It is reporting €1.7 billion ($1.9 billion) in cash and cash equivalents, restricted cash, and short term investments, a slightly smaller figure as the previous quarter (€1.8 billion).

Spotify slowed the erosion of its average revenue per user (ARPU) during the quarter to €4.71 ($5.25), down from €4.89 ($5.46) last quarter. “Downward pressure on ARPU has moderated, and we expect that ARPU declines through the remainder of the year will be in the low single digits,” the company said.