Spotify hit 381 monthly average users in the third quarter and expects to top 400m by year’s end. Advertising is booming, too.

Spotify’s premium subscribers and monthly average users (MAU) both grew 19% in the quarter that ended 9/30; 172m people were on the paid tier and 381m listened on the ad-supported version. South Korea, Bangladesh and Pakistan led the growth.

Revenue was up 27% to €2.5b ($2.9b), largely due to significant strength in advertising revenue, which grew 75% over last year’s COVID-affected quarter to €323m. Ek told investors ad revenue will top €1b in a single year for the first time this year.

One particularly interesting metric: After years of decline, the average revenue per user on the subscription tier rose 4%, to $5.03. Gross margin is 26.7%.

“The business is doing really well and I’m pleased that we continue to deliver across the areas that are fundamental to our growth and long-term strategy,” said Spotify CEO and Founder Daniel Ek. “Audio is our right to win. While we have been relentless in our pursuit of being the world’s largest audio platform, it’s still early days and we are just getting started.”

Ek also indicated that COVID is largely in the rearview mirror. "We have learned and are responding faster to change," he noted in a call with investors, singling out the recovery of India, where the company resumed marketing activities at the end of Q2.

Spotify further reported that it was “pleased with the trends in churn” and continues to expect full-year 2021 churn to be down vs. 2020.

CFO Paul Vogel said MAUs are "back on a growth trajectory" and the company is projecting a total of 400m-407m users by 12/31, "a pretty significant milestone."

Turning to podcasts, Ek said one of Spotify's goals is to increase the number of creators on the site by "losing the friction" in terms of creating and posting content. "The biggest opportunity is enabling more discovery" in podcasting, he said, affirming that the streamer is working on ways to improve the "discovery experience."

Investors greeted the news warmly, pushing the stock up more than 5% from Tuesday's close of $252.39. Early morning trading saw the stock near $270 a share, its highest price since the end of June.