Spotify’s total advertising revenue rose 110% year-over-year during this year’s second quarter, driven in part by a 627% leap in podcast advertising, the Stockholm-based audio streaming services company reported in its earnings call on Wednesday.
Ad revenue totaled $275 million — up from $131 million in Q2 2020 and $216 million in Q1 2021.
Total Q2 revenue, including $2 billion-plus from paid/premium subscriptions, was $2.3 billion.
The company said its podcast advertising gains resulted from a triple-digit gain at its in-house studios, exclusives with the Obamas’ studio and “The Joe Rogan Experience,” and its November acquisition of podcast hosting and advertising company Megaphone.
Spotify also reported that since its launch in April, its Audience Network audio ad marketplace has tripled its monetizable podcast inventory, seen unique advertisers increase, and enjoyed a double-digit gain in CPMs.
CEO Daniel Ek said that advertising is rapidly emerging as Spotify’s second biggest revenue driver, after paid subscriptions, adding that it’s clear that the days of advertising accounting for less than 10% of its total revenue “are behind us.”
Advertising’s momentum “is currently limited only by the availability of our inventory, which is something we’re actively solving for,” he said.
Spotify ended June with 2.9 million podcasts on its platform — up from 2.6 million at the end of Q1 — and said listening among existing podcast users increased 30% YoY, and total hours consumed jumped 95%.
Spotify, which launched podcast subscriptions in April and Clubhouse competitor Greenroom in June, saw premium/paid subscribers rise to 165 million from 138 million in Q2 2020 and158 million in Q1 2021. That dwarfs the 60 million paid subscribers last reported by Apple Music, in 2019.
Paid subs now account for nearly 43% of Spotify’s total monthly active users (MAUs), which rose to 365 million, from 299 million in Q2 2020 and 356 million in Q1 2021.
However, that missed its guidance of hitting 366 to 373 million in Q2. Spotify attributed the slower growth to lingering impacts from COVID in many markets, and an estimated negative impact of 1 million to 2 million resulting from a problem with its third-party email verification service. That issue, which originated with Spotify, has been fixed and should not affect Q3 numbers, the company reported.
Ad-supported MAUs rose 24% YoY in Q2, to 210 million, from170 million in Q2 2020.
Spotify is now forecasting that it will have 400 to 407 million MAUs and 177 million to 181 million premium subscribers by year-end 2021.
Ek said the slowed user growth looks more significant because of 2020’s strength, and said he believes the company has a good chance eventually to reach 1 billion users.
Q2 was “a strong quarter for Spotify overall, with the majority of our major metrics performing better than expected,” Ek said.
Indeed, in addition to the strong advertising performance, the results beat analysts’ expectations on both the top and bottom lines,
However, the weakness in MAU growth caused Spotify’s stock to dip more than 7% on Wednesday.