Spotify exits short-lived Car Thing hardware game, reports Q2 MAUs of 433 million, offsetting Russia exit and service outage – TechCrunch

Spotify’s efforts to supplement its music streaming with a big leap into podcasting and related content appear to be paying off, despite the ups and downs of operating in an uncertain economic and political climate and Spotify’s exit from its foray. in the material. Today, the company announced quarterly results in which its monthly active users grew by 19%, or 19 million, to 433 million, 5 million more than its own forecast. The company originally projected that its exit from Russia and the service outage it suffered in the quarter would only mean 14 million new users this quarter. Paid users now stand at 188 million, up 14%.

But it missed its gross margins, which it said were “negatively impacted by our decision to stop manufacturing Car Thing,” the company’s in-car music control device. Spotify is taking a 31 million euro ($31.4 million) charge on the line of business as it shuts it down.

“The objective of SpotifyCar Thing’s exploration was aimed at better understanding in-car listening and bringing audio to a wider range of users and vehicles,” a spokesperson told TechCrunch. “Based on several factors, including product demand and supply chain issues, we have decided to discontinue production of Car Thing units. Existing devices will operate as intended. This initiative has unlocked some useful learnings , and we remain focused on the car as an important place for audio.

The device wasn’t really launched until early this year, and it’s still being sold as of this story’s release, albeit at big discounts. Spotify will support those that have been sold, but it looks like that will be the end of the line for Spotify’s much-discussed move to hardware. Spotify noted that the costs associated with Car Thing were partially offset by a positive change to prior period estimates for rightsholder liabilities. Gross margin fell to 24.6% from 28.4% a year ago, and missed Spotify’s own estimate of 25.2% for that.

Spotify has overall exceeded its own sales and earnings estimates, but it continues to be unprofitable. Its net loss in the quarter was $197 million (€194 million), on sales of $2.9 billion (€2.864 billion).

Podcasts remain a positive point for the company. Spotify noted that it now has 4.4 million podcasts on the platform, and that “the number of MAUs that engaged with podcasts grew substantially by double digits year-over-year, and podcast consumption rates per user continued to rise.

The company pushed further in advertising for its free user base, and it noted that its percentage of total ad-supported revenue was at an all-time high. Looking at the chart from previous quarters, however, you can see that overall revenue is still growing much faster than advertising, so the bigger question will be whether the costs of supporting this ever-expanding base can be balanced against to inbound sales. Premium ARPU, the top chart, also sees a growing gap to overall premium revenue, although Spotify noted that some of this has been offset by price increases for subscriptions:

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