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Spotify Q2 2019 Earnings Mature Markets Still the Engine Room of Growth

Report by Mark Mulligan
Cover image for Spotify Q2 2019 Earnings
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The 20,000 Foot View:         2019 was another solid quarter for Spotify, adding the same number of subscribers it typically does in promotional quarters. Core metrics such as churn and average revenue per user (ARPU) all moved in the right direction, but Spotify remains out of contract with two major label partners and needs emerging markets’ subscriber growth to start picking up the slack before mature western markets slow.

Key Findings

  • Spotify hit        million subscribers in        2019, a rise of eight million on        2018 and up        million from one year earlier – the same annual increase as        2019
  • Ad-supported monthly average users (MAUs) were up        million from        2018
  • Spotify’s paid conversion rate rose half a point from        2019 to reach       
  • Latin America and ‘Rest of World’ contributed        of all subscriber growth in        2019. These markets will need to contribute more substantially moving forward
  • Ad-supported MAUs declined slightly from        2019 in North America and Latin America but grew strongly in Rest of World to reach        million
  • Premium ARPU was up slightly to        while ad-supported ARPU reached       
  • While emerging markets will be key to subscriber growth, they will dent ARPU and premium revenue growth
  • Europe consolidated its position as a majority premium market for Spotify in        2019 with a        paid conversion rate, up from        in        2019
  • Premium revenue grew        to reach        million in        2019, with gross margin recovering to the same level it was at one year earlier
  • Net premium revenue growth of        million was just        million more than in        2018
  • Ad-supported revenue was up        on        2019 to reach        million in        2019
  • Podcasts are not yet delivering meaningful revenue
  • Spotify churn fell to        in        2019, its lowest rate yet, having been at        one year previously
  • Artists representing the majority of streams rose from        in 2016 to over        in        2019

Companies and brands mentioned in this report: Anchor, Gimlet, Parcast, Spotify, Warner Chappell

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