In the third quarter of 2023, Spotify's advertising division experienced a 16% increase, reaching €447 million in revenue. This segment accounted for approximately 13.3% of Spotify's total earnings during the quarter.
The growth was primarily fueled by a nearly 20% year-on-year surge in music advertising revenue, driven by an increase in impressions sold and consistent pricing.
Additionally, podcast advertising revenue exhibited robust double-digit growth, supported by the expansion in impressions sold across both original and licensed podcasts, as well as the performance of the Spotify Audience Network, the company stated.
Spotify recorded an operating profit of €32 million in the third quarter of 2023, marking the company's first quarter of profitability in two years.
The last time the company reported an operating profit was €75 million in the third quarter of 2021.
The company’s quarter saw total revenue increase by 11% year-on-year (YoY), reaching €3.4 billion. On a constant currency basis, the company reported a more significant 17% YoY growth in total revenue. Additionally, the gross margin for the quarter stood at 26.4%, marking a noteworthy improvement of 166 basis points compared to the same period last year.
In Q3 2023, Spotify saw a noteworthy increase of 23 million monthly active users (MAUs), marking its second-largest net addition for a Q3 in the company's history.
The company's overall user base experienced a substantial 26% year-on-year (YoY) growth, reaching 574 million for the quarter. This expansion was driven by double-digit annual growth across all regions, with particularly impressive results in Latin America and the Rest of the World, which includes India.
Looking ahead to Q4 2023, the company now anticipates reaching 235 million subscribers and a total of 601 million monthly active users.
The company's primary revenue source, stemming from subscriptions, increased by 10% year-on-year (YoY) to reach €2.91 billion in the quarter. This growth was primarily driven by the expansion of its subscriber base and the initial impacts of recent price adjustments.
However, the average revenue per user within the subscription business saw a 6% YoY decline, falling to €4.34 for the quarter. This decrease was influenced by product and market mix, although it was somewhat mitigated by the effect of the price increases, as stated by the company.
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