Spotify hits record half a billion monthly users and forecasts future revenue to soar

The number of monthly active users on Spotify passed the half a billion milestone for the first time, the music streaming platform reported today.

The number of monthly active users rose 27 per cent to 515 million in the first quarter of this year, 15 million more than the company’s estimates. 

Premium subscribers also grew by 15 per cent year-on-year to 210 million, also beating estimates. 

“We were able to accomplish this level of user growth with lower marketing spend,” Daniel Ek, Spotify’s chief executive, said on an analyst call today. “We look at this as a promising sign but it’s too early to draw any conclusions yet.” 

He added: “When we successfully attract new users, it’s only a matter of time before the conversion rate to subscribers increases, which then of course drives our revenue upwards over the long term. This is a formula that has worked for us exceptionally well and one I fully expect to play out again.”

The Stockholm-headquartered company reported quarterly revenue growth of 14 per cent year-on-year to €3bn, but this was slightly below forecasts.

The company also reported an operating loss of €156 million, down from a loss of €6 million in the same period last year. 

Operating costs rose due to higher staff costs and severance packages paid to laid-off employees, the firm said.

Earlier this year, Spotify announced plans to reduce its global workforce by 6 per cent, with some 600 people set to lose their jobs,

At the time, Spotify’s chief executive, Daniel Ek, said he had been too ambitious in investing ahead of the company’s revenue growth before the streaming platform was hit by a slump in advertising revenue and other economic headwinds. 

“There’s really no question that we’ve become leaner in the last six months but this progress is still early on its reflection on our financials,” Ek added today.

Spotify said it expects monthly active users to hit 530 million and subscribers to reach 217 million next quarter, forecasting revenue of €3.2bn.

Spotify is not the first company, however, to pass the impressive half a billion monthly user mark.

Chinese rival Tencent Music reported in November that it had 587 million monthly active users for the quarter, which was down from 636 million on the same quarter in 2021.