Spotify’s second quarter of 2024 was a blockbuster chiefly because profitability and cash generation accelerated at the same time as the service kept adding users. For the quarter ended June 30, Spotify reported €266 million in operating income, a record 29.2% gross margin, €490 million in free cash flow and 246 million Premium subscribers. The important qualification is that total monthly active users (MAUs) reached 626 million, five million below management’s 631 million forecast.
Spotify announced the results on July 23, 2024. The company’s official figures show revenue of €3.807 billion, up 20% year over year—not 5%. The 5% figure cited in some coverage describes sequential growth from the first quarter.
| # | Preview | Product | Price | |
|---|---|---|---|---|
| 1 |
|
Google Play gift code | $15.00 | Buy on Amazon |
| 2 |
|
Google Play gift code | $50.00 | Buy on Amazon |
| 3 |
|
$300 Apple Gift Card—Email Delivery | $300.00 | Buy on Amazon |
| 4 |
|
Visa Virtual eGift Card | $28.95 | Buy on Amazon |
| 5 |
|
Google Play Physical Gift Card | $50.00 | Buy on Amazon |
Q2 2024 results at a glance
The following figures come from Spotify’s Q2 2024 shareholder deck. Year-over-year comparisons use Q2 2023; sequential comparisons use Q1 2024.
| Metric | Q2 2023 | Q1 2024 | Q2 2024 | Change or context |
|---|---|---|---|---|
| Total MAUs | 551 million | 615 million | 626 million | +14% year over year; below 631 million guidance |
| Premium subscribers | 220 million | 239 million | 246 million | +12%; seven million net additions |
| Ad-supported MAUs | 343 million | 388 million | 393 million | +15% |
| Premium revenue | €2.773 billion | €3.247 billion | €3.351 billion | +21% |
| Ad-supported revenue | €404 million | €389 million | €456 million | +13% |
| Total revenue | €3.177 billion | €3.636 billion | €3.807 billion | +20% |
| Gross profit | €766 million | €1.004 billion | €1.112 billion | +45% |
| Gross margin | 24.1% | 27.6% | 29.2% | Record quarterly level |
| Operating income/(loss) | –€247 million | €168 million | €266 million | Record operating income |
| Free cash flow | €9 million | €207 million | €490 million | Record quarter; non-IFRS measure |
Why profitability was the headline
Spotify’s gross margin climbed to 29.2%, from 24.1% a year earlier and 27.6% in Q1. Management attributed the improvement to stronger music and podcast economics, the absence of certain efficiency-related charges recorded in the prior year and favorable other costs of revenue. Audiobook investment costs partly offset those benefits.
What’s actually slowing this PC down?
Pick the symptom - the matching free tool is one click away.
#1 Best Overall
- No returns and no refunds on gift cards. Good for use on the US Google Play Store only. Terms apply - see below.
- Google Play gift codes can be used on the Google Play Store, the official app store for Android, to purchase apps, games, and more.
- New finds, old favorites, one card. Choose a unique gift card design featuring your favorite games or apps. This card can also be used for anything else on Google Play. There’s something for everyone, so find what’s yours. Go Play.
- To redeem, enter code in the Play Store app or play.google.com.
- Easy to use: With a Google Play gift code, you never have to worry about expiration dates or fees.
Operating expenses fell 16% year over year, primarily because of lower personnel and marketing costs. That combination—higher gross profit and a leaner expense base—turned a €247 million operating loss in Q2 2023 into €266 million of operating income. Operating margin was 7.0%.
The quarter included €59 million of social charges, largely payroll-tax obligations connected with the appreciation of Spotify’s share price and share-based compensation. Those charges are a reminder that reported operating expenses can move with the stock price even when the underlying operating trend is improving.
Premium economics were much stronger than advertising economics
Premium generated a 31.4% gross margin, compared with 13.4% for the ad-supported segment. Spotify therefore did not have two equally mature profit engines: Premium supplied the scale and economics that drove the quarter, while advertising remained a smaller, lower-margin opportunity.
Did Spotify beat expectations?
It beat its own guidance on several high-value measures, but not every user metric.
The Tool Desk
Outbyte Driver Updater FREEFix the driver behind crashes, sound loss and screen glitchesFind Drivers →Outbyte PC Repair FREERepair Windows errors before they cause bigger problemsFix Now →Rank #2
- No returns and no refunds on gift cards. Good for use on the US Google Play Store only. Terms apply - see below.
- Google Play gift codes can be used on the Google Play Store, the official app store for Android, to purchase apps, games, and more.
- New finds, old favorites, one card. Choose a unique gift card design featuring your favorite games or apps. This card can also be used for anything else on Google Play. There’s something for everyone, so find what’s yours. Go Play.
- Easy to use: With a Google Play gift code, you never have to worry about expiration dates or fees.
- Endless games to explore: Find and play old and new favorites – from mind-bending puzzles to epic quests and more.
- Premium net additions were seven million, one million above guidance.
- Premium subscribers ended at 246 million, versus 245 million guided.
- Gross margin was 29.2%, above the 28.1% forecast.
- Operating income was €266 million, above the €250 million forecast.
- Free cash flow reached a record €490 million.
- Total MAUs were 626 million, below the 631 million forecast.
That distinction matters. “Spotify beat expectations” is accurate for Premium additions, margin and operating income; it is not accurate if it implies that total audience growth also exceeded guidance.
How pricing lifted Premium revenue
Premium revenue grew 21%, considerably faster than the 12% increase in Premium subscribers. Premium average revenue per user (ARPU) was €4.62, up 8% on a reported basis and approximately 10% in constant currency. Spotify said pricing actions were a major contributor, with foreign-exchange movements and product mix partly offsetting the increase.
The business implication is significant: Spotify was beginning to monetize its existing scale more effectively rather than depending only on adding accounts. Price increases were not the sole source of subscriber growth. The company also cited stronger funnel conversion, promotional intake and regional growth, so the quarter does not establish that higher prices alone caused the additions.
Advertising grew, but Premium still dominated
Ad-supported revenue reached €456 million, up 13% year over year. Music advertising benefited from more impressions sold and higher pricing. Podcast advertising gained impressions across original and licensed shows and through the Spotify Audience Network, although softer podcast pricing reduced the benefit.
Rank #3
- For all things Apple - products, accessories, apps, games, music, movies, TV shows, iCloud+, and more.
- Perfect for App Store purchases and subscriptions—get apps, games, music, movies, TV shows, and more.
- The perfect gift to say happy birthday, thank you, congratulations, and more.
- Available in $15 - 500, Card delivered via email or SMS
- Use it for purchases at any Apple Store location, on the Apple Store app, apple.com, the App Store, iTunes, Apple Music, Apple TV, Apple News+, Apple Books, Apple Arcade, iCloud+, Fitness+, Apple One, and other Apple properties in US only
Premium revenue of €3.351 billion was more than seven times ad-supported revenue of €456 million and represented roughly 88% of total revenue. Advertising was strategically important for diversification and future upside, but it was not yet comparable with Premium in financial scale or margin.
Why the cash flow was unusually strong
Free cash flow rose to €490 million from €207 million in Q1 and €9 million in Q2 2023. Spotify ended the quarter with €5.4 billion in cash, cash equivalents, restricted cash and short-term investments.
This supports the blockbuster description because the quarter produced cash as well as accounting profit. Free cash flow is a non-IFRS measure, however, and quarterly results can move with seasonality and working-capital timing. It should not be treated as net income or assumed to repeat at the same level every quarter.
Product moves behind the growth strategy
Spotify’s product announcements were tied to engagement and monetization rather than being an unrelated feature list.
Rank #4
- Visa Virtual eGift Cards are designed for online use only. Gift Cards are subject to Terms and Conditions: a.co/5bw3qXJ
- When you access your Visa Virtual eGift Card for the first time, you’ll need to register your name, address, phone number, and email address via activationspot.com. These details should also be used as your billing address for online purchases, as many merchants require address verification for purchase authorization.
- This Visa Virtual eGift Card is non-reloadable. No cash or ATM access. Visa Virtual eGift Cards are emailed active.
- Funds do not expire but your Visa Virtual eGift Card has a ‘valid thru’ date (9 years from date of purchase). If funds remain after this date has passed, please call the Toll Free number found on your Visa Virtual eGift Card for a replacement card. A one-time purchase fee applies at the time of checkout.
- This item is not eligible for refund, resale, or return. Available for sale within the United States only. Not available to residents of Puerto Rico, Hawaii, New Mexico, South Dakota, West Virginia and the US Virgin Islands.
Video podcasts
More than 250,000 video podcast shows were available, and more than 170 million users had watched a video podcast on Spotify. Video increases time spent in the app and creates additional advertising inventory.
Audiobooks and the Basic plan
Audiobook access expanded to more than 250,000 titles in Canada, Ireland and New Zealand. Spotify also introduced a Basic plan in Australia, the United Kingdom and the United States for eligible users seeking ad-free music without audiobook listening time. Audiobooks broaden the Premium proposition, but their investment costs were a near-term pressure on margins.
Discovery and advertising tools
AI Playlist entered beta in the United Kingdom and Australia, while Live Listening Parties added a shared-listening format. Spotify announced advertising products including Creative Lab and Quick Audio, intended to give marketers more ways to buy and produce campaigns.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What Spotify forecast for Q3 2024
These were management’s forecasts issued on July 23, 2024, not subsequent results:
Best Value
- No returns and no refunds on gift cards. Good for use on the US Google Play Store only. Terms apply - see below.
- Google Play gift cards can be used on the Google Play Store, the official app store for Android, to purchase apps, games, and more.
- To redeem, peel or gently scratch label and enter code in the Play Store app or play.google.com.
- Easy to use: With a Google Play gift card, you never have to worry about expiration dates or fees.
- Endless games to explore: Find and play old and new favorites – from mind-bending puzzles to epic quests and more.
| Q3 2024 guidance | Forecast |
|---|---|
| Monthly active users | 639 million |
| Premium subscribers | 251 million |
| Revenue | €4.0 billion |
| Gross margin | 30.2% |
| Operating income | €405 million |
Relative to Q2, that outlook implied approximately 13 million additional MAUs and five million additional Premium subscribers in one quarter. Delivering it would require continued conversion, regional growth and pricing discipline while absorbing audiobook and licensing costs.
What could undermine the momentum?
- Audience execution: The five-million MAU miss shows that broad reach did not keep pace with the company’s forecast, even as Premium additions beat it.
- Price elasticity: Higher ARPU improves revenue per subscriber but can affect conversion, retention and regional affordability.
- Advertising maturity: Ad revenue grew 13%, yet podcast pricing was softer and the segment’s 13.4% gross margin remained far below Premium’s.
- Content costs: Audiobook investment and music and podcast licensing economics can restrain future margin expansion.
- Currency: Reported revenue grew 20%, while constant-currency growth was 21%; exchange rates therefore affected the headline result.
- Cash-flow volatility: Working-capital timing and seasonality can make one quarter’s free-cash-flow result an unreliable run rate.
Bottom line: why “blockbuster” is fair, with a qualification
Spotify’s Q2 2024 was a genuine blockbuster quarter in profitability and monetization: record gross margin, record operating income, record free cash flow, double-digit user growth and Premium additions above guidance. The deeper business-model signal was that scale, price increases and cost discipline were translating into much more cash and profit.
It was not a clean sweep. MAUs missed guidance, advertising remained much smaller and less profitable than Premium, and some of the cost improvements may not repeat. The most accurate verdict is that Spotify showed scale becoming economically durable—especially in Premium—without proving that every growth metric had turned equally strong.
Quick Recap
Product prices and availability are accurate as of the date/time indicated and are subject to change. Any price and availability information displayed on Amazon at the time of purchase will apply.
Quick wins for a faster PC:
Fix the driver behind crashes, sound loss and screen glitchesFind Drivers →Clear out junk files and repair common Windows errorsFree Scan →Scan for outdated or missing drivers - takes under a minuteDriver Scan →
