Spotify has 381M monthly users as subscribers grow 19% in strong Q3 2021

[UPDATED] Spotify reported 19% year-on-year paid subscriber growth to 172 million in Q3 2021 financial statement shared on Wednesday. Total monthly average users also grew 19% Y/Y to 381 million.

Spotify projects that overall users will pass 400 million by the end of the year.

Podcasts continued to be a growth driver with their share of overall consumption hours reaching an all-time high during the quarter. Podcasts also helped ad revenue jump 75% Y/Y.

Spotify now claims to be the “number one platform for podcasts that US listeners use the most,” citing its own data and data from Edison Research.

“We had a very strong quarter,” said CEO Daniel Ek.” The business is doing really well and I’m pleased that we continue to deliver across the areas that are fundamental to our growth and long-term strategy. Audio is our right to win. While we have been relentless in our pursuit of being the world’s largest audio platform, it’s still early days and we are just getting started.”

Q3 Highlights

• Premium Subscribers grew 19% Y/Y to 172 million in the quarter and towards the midpoint of our guidance range.
• MAUs grew 19% Y/Y to 381 million in the quarter and near the top end of our guidance range. We saw improved momentum across the 86 markets launched earlier this year, with outperformance led by South Korea, Bangladesh, and Pakistan.
• Revenue grew 27% Y/Y to €2,501 million and was at the top end of our guidance range due to significant strength in advertising revenue, which meaningfully outperformed, growing 75% Y/Y to €323 million.
• Gross Margin finished at 26.7%, above the top end of our guidance range and reflecting nearly 200 bps of Y/Y expansion. 
• ARPU of €4.34 was up 4% Y/Y (or up 3% Y/Y constant currency vs. flat Y/Y in Q2). Excluding the impact of FX, we saw a benefit to ARPU primarily from our price increases. 
• Podcast MAU continued to increase, accelerating relative to Q2 trends. Among MAUs that engaged with podcasts in Q3, consumption trends remained strong (up 20% Y/Y on a per user basis) while month-over-month retention rates continued to trend positively. Podcast share of overall consumption hours on our platform also reached an all-time high during the quarter.

Bruce Houghton is Founder and Editor of Hypebot and MusicThinkTank and serves as a Senior Advisor to Bandsintown which acquired both publications in 2019. He is the Founder and President of the Skyline Artists Agency and a professor for the Berklee College Of Music.