Spotify added 3m subscribers in the three months to the end of March but warned that uncertainty surrounding the pandemic continued to weigh on growth.
The music streaming service now counts 158m paying subscribers and 356m users globally, and its revenue increased 16 per cent from a year ago to €2.1bn. The company made a €23m profit, up from €1m a year ago.
Spotify, like Netflix, enjoyed record subscriber growth last year as the pandemic left people searching for at-home entertainment. However, the company has issued conservative guidance for 2021, warning that it faced “substantial uncertainty” surrounding Covid-19.
In a letter to shareholders, Spotify said it was pleased with the results. Shares dropped more than 8 per cent in pre-market trade.
Average revenue per user in the quarter slipped to €4.12, down 7 per cent from a year ago. Spotify’s average revenue it makes from subscribers, an important metric watched by investors, has been declining steadily as it has offered promotional discounts and expanded into countries such as India, where it charges subscribers a lower price.
The company this week said it would raise prices for family and student plans in the UK and some other markets, following similar increases in countries such as Australia.
However, Spotify has resisted raising the price of its basic $10 subscription in the US, the largest music market. Chief executive Daniel Ek told the Financial Times in February that he would “play it very carefully” regarding prices in the US.
The group touted the 2.6m podcasts available on its app, up from 2.2m in the previous quarter. Spotify has invested almost $1bn in podcasting, buying start-ups and striking splashy content deals with stars such as Joe Rogan.
The group this week unveiled an option for podcasters to charge listeners on the Spotify platform. Spotify will not make money from this until 2023, when it plans to take a 5 per cent cut of the fees.
Spotify shares have lost about 5 per cent this year, underperforming the broader market.