(News Bulletin 247) – The music streaming specialist reported 246 million paying subscribers in the second quarter, up 12% year-on-year. Its cash generation also reached a record.

Spotify is on track for its 2024 financial year. Its second-quarter results published on Tuesday were enthusiastically received on Wall Street, where the Swedish group has been listed since 2018, with its shares rising 13.4% at the start of trading.

The audio streaming specialist announced that its number of active users had reached 626 million, up 14%. Above all, the number of “premium” and therefore paying users reached 246 million, above the Bloomberg consensus which was set at 245 million.

Spotify derives the bulk of its revenue from these premium subscriptions, which represented 88% of its turnover over the period.

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Record cash flow

The streaming group posted revenue growth of 20% over the year to 3.81 billion euros. Its gross margin stood at 1.11 billion euros, representing 29.2% of revenue, compared to 28.1% expected by Bank of America.

Spotify also delivered robust cash flow, with free cash flow of €490 million compared with just €9 million a year earlier and Bank of America’s expectations of just €217 million.

“The main takeaway is that we had a great quarter (…) with our highest cash flow in a quarter in our history,” CEO Daniel Ek said in a video message posted on X.

The executive attributed the good numbers to the company’s innovations such as “audiobook countdown pages” which allows users to know how soon an audiobook will be posted online, and “daylist”, which configures personalized reading lists that adapt to the user’s mood.

The company also shows that its efforts to cut costs seem to be paying off. Spotify notably launched job cuts last December representing 17% of its workforce, or 1,500 positions, after having already announced cuts of 800 positions in the same year.

“Today, we still have too many people who are dedicated to supporting work and even doing work around work rather than contributing to opportunities with real impact,” its CEO, Daniel Ek, had then lashed out.