Skip to main content

Spotify Reports 165 Million Paid Users as Q2 Revenue Climbs 23%

Spotify's user base grew to 165 million paid subscribers and 210 million free users during the second quarter of 2021

Spotify’s user base grew to 165 million paid subscribers and 210 million free users during the second quarter of 2021, with total monthly active users now hitting the 365 million mark, the company announced Wednesday morning in its latest earnings release.

That’s a net increase of 7 million paid users and 2 million free users compared to the first quarter. Both of those metrics were on target with guidance, though Spotify conceded MAU growth (+9 million) was slightly underwhelming due to a softer first half of the quarter. Accordingly, Spotify lowered its guidance for MAUs at the end of 2021 from 402-422 million to 400-407 million. At the same time, it increased guidance on 2021 revenue and gross margin.

“The strategy for us is really all focused on increasing engagement,” said CEO Daniel Ek during the earnings call. “If we increase engagement, the value per hour increase of our customers. As we see that, we’ll be proactive in raising our prices when we believe that ability exists.”


Investors reacted negatively — most likely to lower guidance on MAUs — by sending Spotify’s share price down 10% to $213.15, barely above the stock’s lowest point in the last 12 months, $211.10 reached on May 19, 2021.

Total revenue in the second quarter was 2.33 billion euros ($2.75 billion), up 23% year over year and 9% higher than Q1’s 2.15 billion euro ($2.6 billion) tally. Most of Q2 revenue came from subscriber income, which grew 17% y/y to 2.05 billion euros ($2.42 billion), which was at the top of the company’s earlier guidance. Ad-supported revenue outperformed, especially compared to a year ago during pandemic-fueled lows, increasing 110% y/y to 275 million euros ($324 million).

The closely-watched average revenue per user (ARPU) metric for premium subscribers was down 3% y/y to 4.29 euros ($5), which the company said was aided by price increases in both Q1 and Q2. Average monthly churn for premium subscriptions was down 23 bps y/y, aided by higher retention-focused efforts like family plans.


Spotify said MAU performance was slow during the first half of the quarter, and pointed to the pandemic-related factors as continuing to weigh down growth in several markets. The company also pointed to a since-resolved issue with a third party platform that led to “unexpected intake friction” regarding user signups.

Gross margin, the remainder after royalties and other content associated, was 28.4% of total revenue compared to 25.5% in Q1. The company said the improvement was driven by the release of accruals for earlier publishing royalty estimates — meaning money set aside for royalties were reclassified as revenue — and aided by a revenue shift towards podcasts across the platform and the positive impact of its two-sided marketplace.

Spotify reported operating profit of 12 million euros, down slightly from 14 million in Q1. Operating expenses totaled 651 million euros ($768 million) for the quarter. Spotify currently has 7,085 full time employees globally, up from 6,049 a year ago.

Spotify said that its business has more than 3.1 billion euros ($3.6 billion) in liquidity — 2.4 billion euros from cash — and that its free cash flow for the quarter was 34 million euros ($40 million).


Financial metrics (Q2 2021 vs. Q2 2020)

  • Revenue: €2.331 billion up 23% from €1.89 billion
  • Gross margin: 28.4% vs. 25.4%
  • Operating profit (loss): €12 million vs -€167 million
  • Free cash flow: €34 million vs €27 million

Listener metrics

  • Subscribers: 165 million up 20% from 138 million
  • Ad-supported listeners: 210 million up 24% from 170 million
  • Total listeners (MAUs): 365 million up 22% from 299 million

Q3 guidance

  • Revenue: €2.31 billion to €2.51 billion
  • Subscribers: 170 million to 174 million
  • MAUs: 377 to 382 million

This article will be updated.