€3+ billion in 90 days

Spotify announced its Q1’23 results today. The company grew revenues with 14 % year-over-year to a little more than €3 billion in the quarter, and now has 515 million monthly active users and 210 million premium subscribers.

Spotify has established itself as one of the very large consumer Internet companies, being the number one player pretty much everywhere but in China. This is a major feat, but there are many things on the financial side alone that will be interesting to follow going forward.

  • Can Spotify keep a growth rate at about 20 % going forward? This quarter users grew above 20 % and subscribers and revenue grew below at 14 %.
  • Can advertising, a €1 billion per year business and 11 % of overall revenue, grow faster than 20 % and become a larger part of the revenue mix? Higher advertising sales would help gross margins both on the ad-supported music and podcast sides.
  • How and when will the layoffs and increased efficiency play out in the numbers? Operating costs for Q1 were up 36 % year-over-year (but according to the report underlying growth excluding FX, social charges to share-based compensation and severance was 16 %, which is more in-line with revenue growth). Will Spotify improve margins by keeping operating costs at same or lower level as revenue grows over the next quarters and years?

Author: Henrik Torstensson

Partner at Alliance VC. Investing in Nordic early-stage tech startups.

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