Spotify announce record quarterly profit after price hikes
After increasing the price of its monthly subscription fee, Spotify has announced record profits for the second quarter of 2024.
The financial period ended on June 30th, and now, the results have been shared on an earnings call helmed by the streaming platform’s CEO, Daniel Ek. In addition to achieving record profitability over the three month period, Spotify have also acquired a further seven million paying subscribers which has been pivotal to the result.
In a message to investors, Spotify said: “Our business continued to perform well in Q2, led by healthy subscriber gains, improved monetisation and record profitability. Although we did see another quarter of MAU (monthly active users) variability, funnel conversion remained strong, particularly in developed markets where we recently adjusted pricing.”
Furthermore, the number of monthly active users rose by 14 per cent year-on-year to reach 626 million. However, despite being an increase, Spotify are not celebrating because it fell short of their expectations of 631 million.
Ek told investors that they are continuing to rely upon advert-supported plans in developing territories, but hope to convert these users into playing subscribers over the coming financial periods. He also noted that “engagement looks different in these markets, as do the channels to acquire them and conversion to pay can be a bit slower.”
In addition to increasing their marketing presence in these areas, they are also plotting to increase the offerings to those on advert-supported plans in the hope of enticing them to the platform in a bid to increase monthly active users.
Advert-supported revenue has grown by 13 per cent, which is also down to podcasts. Notably, The Joe Rogan Experience is no longer exclusive to Spotify but they still have a distribution agreement in place with the comedian which is financially beneficial to both parties and allows Rogan to post episodes elsewhere.
On podcasting, Ek said: “I think, first and foremost, we are seeing very healthy engagement on podcasts. That has not changed me. What we’ve seen where we do have video podcasts is that engagement is even higher than what we’ve seen when it’s audio only. I don’t know where this will end but I think consumers today don’t really care too much about format.”
For the third quarter of 2024, Spotify is aiming to have 639 monthly active users using the platform and also seeks to have 251 million paid subscribers, compared with 246 million currently.
In the summer of 2023, the platform increased premium subscription fees from £9.99 per month to £10.99 in the United Kingdom. This was the first time the company had implemented a hike in its ten-year run. In the US, this equated to an increase from $10 to $11 per month. Then, earlier this year, Spotify announced that it will hike subscription fees in the United States to $11.99.
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