Spotify exits short-lived Car Thing hardware game, as reports Q2 MAUs from 433M, offsetting Russia exit and service outages – TBEN


Spotify’s drive to supplement its music streaming with a major step into podcasting and related content appears to be paying off, despite the ups and downs of operating in an uncertain economic and political climate and abandoning Spotify from its foray into hardware. Today, the company announced quarterly results in which it grew monthly active users by 19%, or 19 million, to 433 million – 5 million more than its own forecast. The company had originally predicted that leaving Russia and the service outage in the quarter would mean just 14 million new users this quarter. Paid users are now at 188 million, up 14%.

But it lacked gross margins, which it said was “negatively impacted by our decision to stop producing Car Thing,” the company’s vehicle device for controlling music. Spotify is charging €31 million ($31.4 million) for that business line because it’s shutting it down.

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“The purpose of SpotifyThe exploration of Car Thing was to better understand in-car listening and bring audio to a wider range of users and vehicles,” a spokesperson told TBEN. “Based on several factors, including product demand and supply chain issues, we have decided to discontinue further production of Car Thing units. Existing devices work as intended. This initiative has provided useful lessons and we remain focused on the car as an important place for audio.”

The device wasn’t actually launched until earlier this year, and it’s still going on sale as of the time this story comes out, but at huge discounts, and it will support those that have been sold. But it looks like this will be the end of Spotify’s much-discussed switch to hardware. Spotify noted that the costs associated with Car Thing were partially offset by a positive change in prior-period estimates for rightsholders’ liabilities. Gross margin fell to 24.6% from 28.4% a year ago, missing Spotify’s own estimates of 25.2% before that.

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Spotify generally beat its own revenue and profit estimates, but remains unprofitable. Net loss in the quarter was $197 million (€194 million), on revenue of $2.9 billion (€2.864 billion).

Podcasts remain a bright spot for the company. Spotify noted that it now has 4.4 million podcasts on the platform, and that “the number of MAUs dealing with podcasts grew by significant double digits year over year and consumption per user continued to rise.”

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The company took a closer look at advertising for its free user base, noting that its ad-supported percentage of total revenue hit an all-time high. However, if you look at the table from previous quarters, you can see that total revenue is still growing much faster than advertising. Premium ARPU, the top image, similarly sees growing margin, though Spotify noted some of that was offset by subscription price increases: