+ 3Q22 revenue beat due to outperformance in volume and price growth. 3Q22 revenue of EUR3.0bn beat guidance marginally by EUR36mn, representing a 21% YoY increase, largely due to the outperformance in Premium Subscriber growth, and some FX tailwinds. Premium Subscribers grew 13% YoY to 195mn, beating guidance by 1mn, with Premium ARPU also increasing about 7% YoY (2% QoQ). Premium ARPU continued its uptrend with its 5th consecutive quarter of YoY growth to EUR4.64, showing strong momentum in pricing. Both Subcriber and ARPU growth led to a 22% YoY increase in Premium revenue for 3Q22.
+ MAU growth re-accelerating. SPOT ended 3Q22 with Total MAUs of 456mn, beating guidance by 6mn, representing a 20% YoY increase (5% QoQ). MAU growth saw a re-acceleration, mainly attributed to strength across LATAM and Rest of World regions as a result of successful marketing campaigns.
– Gross margins missed guidance by 0.5%. Gross margin for 3Q22 came in at 24.7%, missing guidance by 0.5% as a result of 3 main factors: 1)accrual adjustment due to renewal of publishing contracts; 2)macroeconomic slowdown; 3)FX headwinds affecting cost of revenue. Premium gross margin was 28.0%, down 1% YoY, with Ad-Supported Gross Margin at 1.8% for 3Q22, down 9% YoY due to slower-than-expected ad revenue growth and increasing non-music content spend.
– Higher-than-expected expenses leading to greater net losses. Operating expenses for 3Q22 grew 65% YoY, led by higher headcount growth due to expansion, higher advertising costs, and 14% negative FX movements. Net loss for 3Q22 was EUR166mn, with YTD net loss at EUR160mn.
MAU (Monthly Average User): average number of users during a given period.
ARPU (Average Revenue per User): premium revenue for period divided by average number of premium subscribers for same period.