Spotify had a good second quarter, with strong subscriber growth alongside record-setting profits. The company now has 246 million paying subscribers, up 7 million from the previous quarter and 12% higher than the same period last year.
Chief executive Daniel Ek said the results showed Spotify’s potential stretched beyond simply being an innovative service. “Our business continued to perform well in Q2, led by healthy subscriber gains, improved monetization and record profitability,” he said. Across the board, metrics surprised to the upside, which is an indication that Spotify’s formula of quality content and competitive pricing is really clicking with music lovers the world over.
Subscriptions continued to march higher globally. Gains were led by North America, as the US market remains a sweet spot. Yet robust growth also emerged from Europe and beyond, with Latin American users tuning in as well. Higher subscriptions translated directly to the bottom line. Premium revenue rose 22% to over $3.6 billion, boosted by a 10% increase in the average amount subscribers paid.
On the advertising front, Spotify played the right tune for marketers. Ad sales jumped 12% to top $490 million thanks to strong demand. With more than 626 million total users flocking to the platform each month, Spotify gives brands unmatched reach for touting. Expenses dropped amid job cuts, allowing more funds to flow to the balance sheet instead of overhead.
All told, operating income soared to a record $286 million. Just two years after first breaking even, Spotify proved it can generate substantial profits from the music streaming business.
With Spotify being the leading streamer, the company is always looking to improve the experience in order to stay at the top of the charts. New tools help artists connect with fans; new podcasts bring in listeners. Upgrades underpin expectations for ongoing growth; management guidance calls for another 5 million subscribers next quarter alone.
