Spotify reaches more than half a billion users for the first time

Spotify has released its earnings report for the first quarter of 2023 and the headline figure is the number of users the company has. As of March 31st, 515 million people were using the audio streaming service. That's the first time Spotify has had more than half a billion users. Q1 was also Spotify's second-biggest quarter for user growth to date — its audience increased by five percent from the previous quarter and 22 percent year over year. The user base grew by 26 million, which is 15 million more than Spotify had expected. The company said it saw growth in both developed and developing markets, as well as almost every age group.

Most of that growth is based on folks who use the free, ad-supported version of the Spotify service. Premium subscriptions didn't keep pace with the overall growth, as they rose by two percent from the previous quarter and 15 percent year over year from 205 million to 210 million. Still, premium subscribers grew by 3 million more than Spotify had indicated in its guidance to investors.

Overall, Spotify posted a net operating loss of €156 million ($172 million) for the quarter. That's far more than the €6 million ($6.6 million) loss it saw in the first quarter of 2022, though it's an improvement over the €270 million ($297 million) Spotify lost the previous quarter.

While overall revenue was up by 14 percent year over year from €2.66 billion ($2.93 billion) to €3.04 billion ($3.34 billion), it dipped by four percent from the previous quarter. Revenue from paid subscribers didn't change significantly from Q4 2022, but it dropped by 27 percent on the ad-supported side from €449 million ($494 million) to €329 million ($362 million) — though revenue from free users rose by 17 percent year over year. The quarter-to-quarter drop is perhaps a result of advertisers tightening their belts somewhat, leading to lower ad spend.

Advertisers aren't the only businesses trying to rein in costs. Spotify, like many other major tech companies in recent months, has laid off a sizable proportion of its staff. In January, the company laid off six percent of workers, which equates to around 600 people based on the 9,800 that Spotify employed as of the end of 2022.

Additionally, Spotify seems to be placing a bigger focus on the core parts of its business. It recently announced plans to shut down both its live audio app, Spotify Live, and Heardle, the Wordle-style song-guessing game it bought last summer.