Mumbai: Spotify has announced its Q3 2021 results. The Monthly Active Users (MAUs), Revenue, Gross Margin and Operating Income performed better than expected. Total MAUs grew 19% YoY to 381 million in the quarter, up from 365 million last quarter and near the top end of the guidance range. The company experienced double digit YOY growth in all regions with particular strength in rest of world where performance was aided by the resumption of marketing activity in India along with above-plan growth in the Philippines and Indonesia.
The premium subscribers grew 19% YoY to 172 million in the quarter and towards the midpoint of the guidance range. Spotify witnessed improved momentum across the 86 markets launched earlier this year, with outperformance led by South Korea, Bangladesh, and Pakistan. The Revenue grew 27% YoY to €2,501 million and was at the top end of the guidance range due to significant strength in advertising revenue, which meaningfully outperformed, growing 75% YoY 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% YoY (or up 3% YoY constant currency vs. flat YoY 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.
In Q3, Spotify added several major promotional partnerships, including OnePlus (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). At the end of Q3, Spotify had 3.2 million podcasts on the platform (up from 2.9 million at the end of Q2). Internationally, the company released 76 new O&E podcasts, with notable traction in India and Latin America where Originals have been helpful in stimulating new user acquisition. 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).
Commenting on the Q3 results, Daniel Ek, CEO & founder, Spotify, said, “We had a very strong quarter. 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.”
