Spotify now has 515 millions monthly active users (MAUs), which represents a 5% growth over the previous quarter, and a 22% growth over the corresponding period of last year.
Spotify has now claimed to have a user-base of over half a billion, with 210 millions premium subscribers and 317,000,000 on the adsupported plan. It represents a ratio between paid and free listeners of 40%, which is a ratio in free fall.
For comparison, Spotify’s premium subscribers constituted 46% of its overall user base in Q1 2019, falling to 45% in Q1 2020, 44% in Q1 2021 and 43% in Q1 last year, before dropping to just under 42% for the previous quarter.
The drop of two percentage points in the ratio of premium to free listeners from quarter to quarter is significant. It’s unclear how many premium subscribers are switching to the free, ad supported tier. However, it’s clear that Spotify’s user base of ad supported users is outpacing the premium subscriber base, possibly due to consumers cutting costs due to the economic recession.
However, this doesn’t translate into ad supported revenues. Spotify’s figures reveal that, while its advertising revenue grew by 17% on an annual basis, it actually dropped by 27% in the previous quarter. Its total revenue also decreased by 4%.
The company admitted that its revenue growth was below expectations because of “macro-related volatility in our advertising business.”
Spotify, however, is keen to point out that its MAUs increased by 26 millions users overall, compared with a guidance for 15 million. This was the company’s largest net growth in Q1, and second-largest quarterly growth in its entire history. If only it could convert them into premium subscribers.
Another notable takeaway from its Q1 2023 shareholder report relates to its operating losses. While its losses this time around were an improvement on the last quarter (€156 million versus €231 million on Q4 2022), the company is forecasting this trend to continue, with a projection of €129 million in operating losses for Q2 2023.