Spotify steps up new user acquisition in India on the back of original content in Q3

Total Monthly Active Users (MAUs) grew 19% Y/Y to 381 million in the quarter, up from 365 million last quarter

e4m by exchange4media Staff
Updated: Oct 28, 2021 9:00 AM

Audio streaming giant Spotify has said that the launch of Originals & Exclusives (O&E) have helped it to gain traction in India and Latin America. This, it said, has helped the company in acquiring new users in the two regions. In Q3, Spotify had released 76 new O&E podcasts internationally.

The platform revealed that the top-performing shows in these markets include: Mythpat (India), Mano a Mano (Brazil), Paciente 63 (Caso 63 adaptation in Brazil), and Virus 2062 (Caso 63 adaptation in India).

Total Monthly Active Users (MAUs) grew 19% Y/Y to 381 million in the quarter, up from 365 million last quarter.

Spotify experienced double-digit Y/Y growth in all regions with particular strength in the Rest of World (RoW) where performance was aided by the resumption of marketing activity in India along with above-plan growth in the Philippines and Indonesia. It also also saw improved momentum across the 86 markets launched earlier this year, with outperformance led by South Korea, Bangladesh, and Pakistan.

At the end of Q3, Spotify had 3.2 million podcasts on the platform (up from 2.9 million at the end of Q2). The percentage of MAUs that engaged with podcast content continued to increase throughout the quarter, marking an acceleration 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. During the quarter, podcast share of overall consumption hours on our platform also reached an all-time high.

The platform's Premium Subscribers grew 19% Y/Y to 172 million in the quarter, up from 165 million last quarter. It also tested a Premium promotion in the third quarter, which aided the typical seasonality of our business and also helped offset the tough comp from the successful launch of Russia and surrounding territories in Q3 last year.

During the quarter, Spotify added several major promotional partnerships. In India, it partnered with OnePlus, wherein Spotify preloads on OnePlus mobile devices in India with 3 or 6 month trials and a limited offer of 12 month trials to OnePlus Red Cable Club members.

Its average monthly Premium churn rate for the quarter was down sequentially and up Y/Y against last year’s historic low.

Spotify's Q3 revenue grew 27% Y/Y to €2.5 billion due to significant strength in advertising. Premium Revenue grew 22% Y/Y to €2.1 billion, while Ad-Supported Revenue was particularly strong, growing 75% Y/Y to €323 million (or 75% Y/Y constant currency). Within Premium, average revenue per user (ARPU) of €4.34 in Q3 was up 4% Y/Y.

Ad-Supported Revenue meaningfully outperformed, driven by higher sold impressions, increased CPMs, and accelerated demand within the Spotify Audience Network. The strength in advertising was broad-based across all sales channels, with the United States and United Kingdom meaningfully exceeding expectations. The music business saw growth in impressions, a meaningful improvement in sell-through rate, and double-digit CPM growth.

During Q3, the Spotify Audience Network continued to gain traction in the United States while expanding into the United Kingdom, Canada, and Australia. The Spotify Audience Network continued to outperform in the quarter, driven by higher available inventory and incremental revenue from international sales. Since launch, the number of podcasts in our network has grown by more than 50%, and nearly 1 in 5 Spotify advertisers are already participating.

The Spotify Audience Network will open to top emerging podcast creators from Anchor in the coming weeks, increasing the scale and reach for our advertisers, the company said.

Operating Expenses totalled €593 million in Q3, an increase of 12% Y/Y. Social Charges were below forecast given the decline in our share price during the quarter. Additionally, personnel costs came in lower than expected, as well as certain marketing expenses. Excluding the impact of Social Charge movements, Operating Expenses were better than forecast and contributed to positive Operating Income in the quarter.

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