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Spotify Users Grew 24% To 356M In Q1 But Somehow Missed Wall Street Expectations

Spotify
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(Hypebot) — Total Spotify users grew 24% year on year to 356 million in the first three months of 2021, the music streaming service reported to investors Wednesday.

Spotify paid subscribers grew 21% year on year to 158 million.

That meets Spotify’s own projection, but Wall Street wanted more. Analysts’ believed that Spotify would add 9 million new subscribers in Q1, not the 3 million that it delivered.

Highlights from the quarter include:

  • Key Metrics: 356M MAUs, within our guidance range; Subscribers of 158M, meeting the top end of our guidance range. Gross Margin finished at 25.5%, at the top end of our guidance range; Generated €41M of FCF.
  • Revenue: Towards the top of our guidance range on a reported basis due to subscriber outperformance; FX headwinds, while significant to growth, were slightly better than expected.
  • Advertising: Outperformed our forecast with all regions growing double digits Y/Y excluding the impact of FX; The strength was also led by our podcast and programmatic channels.
  • Podcast Consumption: Strong increase in Q1 podcast consumption hours vs. Q4, with March an all-time high in podcast share of overall platform consumption hours. The percentage of MAUs that engaged with podcast content on our platform was consistent with Q4 levels.
  • Guidance: We have modestly lowered our MAUs range for the FY and increased our outlook for Total Revenue and Gross Margin, as well as decreased Operating Loss expectations. Given the extraordinary operating circumstances we currently face with respect to the impact of COVID-19, there is a greater likelihood of variances with respect to the ranges provided than typical.

Spotify CEO and founder, Daniel Ek:

“I’m pleased with the continuing momentum we are seeing across many aspects of our business this quarter, including our subscriber growth. 2020 was a very strong year for Spotify and we believe Spotify is well positioned to continue to extend our leadership globally as we move forward.”

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