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Spotify users are streaming again, but ad revenues still suffer due to COVID crisis

The COVID-19 pandemic’s continued impact on Spotify’s business was apparent in the results of the company’s Q2 2020 earnings today. On some fronts, Spotify had good news. As more users turned to streaming services to keep themselves entertained while social distancing, Spotify grew its active monthly users by 29% to reach 299 million in the quarter. Its paid subscriber growth also topped Wall St. expectations with 138 million paid users, versus estimates of 136.4 million. However, the pandemic took a negative toll on Spotify’s advertising business, with ad revenue down 21% year-over-year to €131 million in Q2.
Spotify’s Premium subscriptions, which still account for the majority (~90%) of its revenues, grew by 17% to reach €1.76 billion in the quarter. The company attributed this growth to a range of factors, including growth in more expensive Family Plan subscriptions and its new Duo option for two users, as well as the expansion of those plans to new markets, like Russia.
Meanwhile, the company touted that users’ listening hours are also now returning to levels near what they were before the COVID-19 health crisis.
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