Spotify misses Q2 overall user target, ad revenue up 110%

Spotifyciting ongoing headwinds from the COVID pandemic, fell short of the overall monthly user growth target in the second quarter of 2021.

The audio streaming giant gained 7 million paid subscribers in the second quarter, driving Premium customers up 20% year over year to 165 million, in line with expectations. Total monthly active users grew 22% to 365 million in the quarter, just below forecast.

On the bright side, Spotify’s ad revenue has more than doubled, which the company says was helped by sales of podcast ads, including for “The Joe Rogan Experience” and Obama’s Higher Ground podcasts.

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The company’s previous Q2 guidance was a total monthly user base of 366 million-373 million and 162 million-166 million paying subscribers.

“While MAU growth was softer than expected in the first half of the year, we are seeing that trend line reverse and all leading indicators show we are back on track,” Spotify CEO and founder Daniel Ek said at the announcement. of the results. “By accelerating our pace of innovation and investing for the long term, we continue to cement our position as the preferred audio platform around the world.”

Discussing the lighter user additions in the quarter, Spotify said in its letter to shareholders: “COVID-19 continued to weigh on our performance in several markets, and in some cases we interrupted marketing campaigns due to the severity of the pandemic. ”

Revenue of €2,331 million grew 23% year over year, driven by “significant advertising power and subscriber outperformance”. Spotify Premium revenues were up 17% to €2,056 million and ad-supported revenues were up 110% to €275 million.

At the end of the second quarter, Spotify had 2.9 million podcasts on the platform, up from 2.6 million at the end of the first quarter. The percentage of monthly active users listening to podcasts improved “modestly” from the first quarter, when about 25% of total users listened to podcasts, the company said.

Of the MAUs that engaged in podcasts in the second quarter, listening was more than 30% year-over-year per user. During the quarter, podcasts’ share of total hours of consumption on Spotify also hit an all-time high, with total time spent listening to podcasts increasing by a total of 95%, the company said.

The growth of Spotify ads in its podcast sales channel benefited from a triple-digit year-over-year gain at existing Spotify studios (The Ringer, Parcast, Spotify Studios and Gimlet), along with contributions from the Megaphone acquisition, Joe Rogan’s exclusive license controversial and popular podcast, and projects from the Obamas’ Higher Ground.

During the quarter, the company announced exclusive licensing deals for: Alex Cooper’s Sex Positive Podcast “Call Her Daddy” — which sources said was worth more than $60 million over three years — and Dax Shepard’s “armchair expert,” both are now exclusively on Spotify. The company said “The Joe Rogan Experience” continues to perform above expectations, and The Ringer shows such as “The Bill Simmons Podcast” consumption grew “significantly” as the NBA entered the playoffs.

Spotify also announced Olivia Rodrigo’s new album, “Sour,” which in May set the record for the largest streaming debut for any album on Spotify to date in 2021 with more than 63 million worldwide streams on its first day.