Spotify grew to 248 million monthly average users in the last three months and beat analysts' expectations on paid Premium subscribers, reaching 113 million, the company reported in a Q3 letter to shareholders Monday.
That's a growth of 5 million subscribers in 3 months.
Podcast listening was also up 39% since last quarter and that podcast engagement is driving user engagement and conversion, according to Spotify.
A New CFO
Following last quarter's announcement that Barry McCarthy will be retiring as CFO, effective January 15, 2020, at Spotify announced that Paul Vogel, the current head of FP&A, Treasury and Investor Relations, will step into the role. McCarthy will rejoin Spotify’s board of directors and remain involved with Spotify’s future growth and development.
Total revenue of $2220 million grew 28% Year over Year in Q3. Consolidated revenue modestly beat our expectations with Premium outperforming and Ad-Supported weaker than forecast. Premium revenue was up 29% Y/Y, while Ad-Supported revenue was 20% Y/Y.
Declining Average Revenue Per User
The average revenue per user (ARPU), a number watched closely by labels and artists, continued to decline. On the paid Premium side, average revenue per user Q3 was down 1% year on year. 75% of ARPU decline continues to be product mix, according to Spotify, although geographic mix also plays a role.
On the Ad-Supported side, revenue growth of 20% Y/Y underperformed expectations in Q3. Roughly 80% of the miss was related to self-inflicted implementation and integration of new sales software, according to the streamer.
Spotify posted an operating profit in Q3 of $69.26 million USD.
“For the 8th consecutive quarter, free cash flow was positive. We continue to see exponential growth in podcast hours streamed (up approximately 39% Q/Q) and early indications that podcast engagement is driving a virtuous cycle of increased overall engagement and significantly increased conversion of free to paid users.