Spotify’s subscriber growth is slowing, according to the company’s latest results for Q1.
The streaming giant added just two million premium users in the first three months of the year.
The figure now stands at 182 million, which means Spotify is comfortably the market leader.
However, the subscription base was up by just 1% on the prior quarter. Spotify flagged that its year-on-year growth was still robust at 15%.
In Q4 of 2021, Spotify added eight million subscribers in three months, while in Q3 it signed up seven million.
In its previous results, Spotify had predicted slower subscriber growth than forecast by analysts.
The streaming giant was positive about the results in Q1 taking into consideration the withdrawal from Russia. However, that would only add 1.5 million subscribers to the Q1 total - still around half the total of recent quarters.
“While this is slightly below our guidance, after excluding the involuntary churn of approximately 1.5 million subscribers as a result of our exit from Russia, growth was above expectations and aided by outperformance in Latin America and Europe,” said the company of its subscriber performance.
Spotify added just 2 million subscribers in Q1 22 (including losing 1.5 million Russian subscribers). The Attention Recession in full effect. @midiaresearch— Mark_Mulligan (@Mark_Mulligan) April 27, 2022
"While Spotify did well to not suffer the same fate as Netflix, it was not able to buck the broader trend affecting the entertainment market: the attention recession." - https://t.co/vwqew8t4rM— MIDiA Research (@midiaresearch) April 27, 2022
Nevertheless, the results are positive overall, particularly considering the controversy surrounding Spotify's podcast star Joe Rogan in 2021. The paid subscribers were slightly below analyst expectations, but the company exceeded most external financial forecasts. Shares increased by 2.3% in pre-market trading. It follows a fall in the share price of more than 50% during 2022.
(Updated): Spotify's share price fell by more than 10% and hit a new low - below $100 - following the results and 2022 financial forecast.
Spotify is forecasting a return to stronger growth with an extra five million subscribers in Q2 (187 million total), which takes into account a further impact from the Russia wind-down.
Total monthly active users increased 19% year-on-year to 422 million. The business benefited from outperformance in Latin America and the Rest of World category, led by Indonesia, Brazil and Mexico.
“MAU growth was particularly strong in our Gen Z audience, fuelled by successful product feature launches such as our Lyrics experience, as well as marketing and content initiatives,” said Spotify.
Revenue of €2.7 billion represented year-on-year growth of 19% on a constant currency basis and was above guidance. Premium revenue grew 18%, while ad-supported revenue grew 22%.
Within premium, average revenue per user (ARPU) of €4.38 in Q1 was up 3% on a constant currency basis. It follows price increases in 2021.