Spotify reported its Q3 2022 Update on Tuesday and it shows that the streaming company has been receiving new subscribers since last quarter.
NEW YORK, NY - AUGUST 9: Daniel Ek, chief executive officer of Spotify, speaks about a partnership between Samsung and Spotify during a product launch event at the Barclays Center, August 9, 2018 in the Brooklyn borough of New York City. The new Galaxy Note 9 smartphone will go on sale on August 24. Drew Angerer/Getty Images
(Photo : Drew Angerer/Getty Images) NEW YORK, NY - AUGUST 9: Daniel Ek, chief executive officer of Spotify, speaks about a partnership between Samsung and Spotify during a product launch event at the Barclays Center, August 9, 2018 in the Brooklyn borough of New York City. The new Galaxy Note 9 smartphone will go on sale on August 24.
Spotify Gains Subscribers for Q3 2022
A report from The Verge reveals that Spotify gained an additional 7 million subscribers since last quarter and now has 195 million paying subscribers. By adding the 273 million free subscribers, the streaming platform now has a total of 456 monthly active users, which increased up to 20%. This growth is the largest to date that they have experienced.
During the earnings call, Chief Executive Officer Daniel Ek said his remarks regarding these numbers and stated that despite experiencing global uncertainty, the company manages to perform well.
He added, "With one quarter left in a year that has seen war, a lingering pandemic, inflation, supply chain disruption and threats of a global recession, I am really proud of all that we have accomplished and that despite all of this, we are precisely where we thought we'd be."
Price Increase for Subscription Plans
Variety reported that Spotify has been considering following Apple Music and YouTube Premium in raising its prices for subscription plans in the United States. Ek stated that they are currently discussing this matter with the company's label partners. "I feel good about this upcoming year, and what it means about pricing for our service," he added.
This is not surprising knowing that the gross margin (27%) in Q3 came in below expectations amidst the increase in subscribers. These are two points lower than in the same quarter last 2021, based on a report by CNBC. However, Spotify clarified that the reason for this gross margin was because of an adjustment that they have to do before the period estimates for rights holder liabilities.
Adding to this, the streaming company reported an operating loss of $226 Million, and the other factors that made the company increase the payroll costs as Spotify expanded its global ad sales team. This might also be the after-effects of the company's platform investments and recent acquisitions such as Podsights, Findaway, Sonantic, Chartable, Whooshkaa, and Heardle.
Spotify's Q4 Goals
Spotify is expecting a revenue growth worth $3 billion in Q4 2022 update, with an operating loss of $298 million and $93 million of additional expenses due to the increasing currency exchange rates.
Aside from these, the streaming company is also aiming for a total of 202 million paid subscribers by the end of the year, which is not hard to obtain from where they are now. The total goal of Spotify for the monthly active users next quarter will be 479 million.
