Spotify Q1 2019 Earnings
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The 20,000 Foot View: 2019 was a quarter of milestones for Spotify, hitting million subscribers, launching in India and becoming a podcast company. However, it was also a quarter in which a number of metrics started to soften. With the exception of ad revenue, none of these subtle shifts are enough on their own to provoke any serious concern. Collectively though, and contextualised against next quarter’s performance, these metrics may just prove to be early indicators of a potential change of pace.
- Spotify hit million subscribers in 2019, a rise of four million on 2018 and up million from one year earlier
- Ad-supported monthly average users (MAUs) were up seven million from but this was fewer than the million added one year earlier
- Spotify’s paid conversion rate dropped half a point to however, this was up six points from 2018
- Rest of World ad-supported MAUs grew by around three million in 2019 quarter-on-quarter, while subscribers grew by just million, diluting the paid user ratio
- Spotify’s long-term premium average revenue per user (ARPU) decline slowed in 2019 with ARPU at the lowest rate ever, down just one cent from 2018
- Premium saw gross margin up to and revenue up year-on-year (YoY) to billion, but ad revenue was up just YoY and gross margin dropped to
- Spotify’s podcast acquisitions are yet to have any meaningful impact on revenue but will become a growing priority for Spotify, including for its creator strategy
- Rightsholders are becoming progressively less tolerant of family plans because of their dilutive impact on ARPU
- Spotify will need podcasts to start delivering revenue to offset the impact lower ARPU from emerging markets will have on music revenue growth
- MIDiA forecasts Spotify to reach million subscribers by the end of 2019 with million of those in Europe, million in North America, million in Latin America and million in Rest of World
Companies and brands mentioned in this report: Anchor, Gimlet, Spotify, Warner Music