Spotify subscription numbers grew almost 4m in Q1, free users now 356m

The number of Spotify’s premium subscribers grew by almost 4 million around the world to 158 million in Q1 2021.

This took the company’s revenue from its premium services to €1.931 billion (AUD$3 billion), up 14% year-on-year.

In the same financial results in the quarter ending on March 31, the streaming service’s monthly active users (MAUs) reached a total of 356 million, up from 345 million in Q4 2020.

Revenue increased 16% to €2.15 billion ($3. 34 billion) from €1.85 billion ($2.87 billion) in the same period last year.

Q1 is usually a quieter period, so unsurprisingly Spotify’s revenue actually dropped 1% from Q4 2020 when it was €2.17 billion ($3.37 billion).

Spotify shares dropped 8% after the financials were released.

Operating profit showed a loss of €17 million ($26.45 million).

Average revenue per user in the quarter slipped to €4.12 ($6.41), down 7% from a year ago, as it offered promotional discounts and less subscriber fees as it expanded into 86 new territories during Q1.

Spotify said Q1 growth in the US, Mexico, Russia and India was offset by lower-than-expected growth in Latin America and Europe.

“Some markets are more advanced in recovering, some are still very much in the sort of pandemic landscape and I think that’s going to play out over the course of the year,” chief executive Daniel Ek said in an earnings call.

The 38-year old was encouraged by strong consumer demand for his company in new markets.

“This is the sort of next billion user opportunity that we are seeing the early inklings of,” he said.

The positive for Spotify is that its plan to expand from just music to podcasts and live audio is moving ahead.

“We believe we have at least five to seven-times growth left in the businesses we are in today – music, podcasting, and paid audio – and we intend to win in those businesses,” Ek said on the potential of the audio market.

As for future growth in live audio he surmised: “I think it really just comes down to creating compelling content.

“As an example, you may have an artist that has an upcoming album and you as the fan may be able to experience that earlier than other consumers can.

“Or you can have an artist explain the thinking around writing a certain song was.”

In terms of subscriber base, Europe is Spotify’s largest market with 40%, followed by North America (29%), Latin America (20%) and Rest of World (11%).

In its forecast for Q2 2021, Spotify expects subscribers to rise to between 162 million and 166 million and revenue to be at between €366 billion ($569.44 billion) and €373 billion ($580.33 billion).

The long-term prediction for the calendar 2021 was subscribers to be 172 million to 184 million and revenues to be €9.11 billion ($14.17 billion) to €9.51 billion ($14.79 billion).