Spotify Q1 2019 Earnings

The 20,000 Foot View: Q1 2019 was a quarter of milestones for Spotify, hitting 100 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.

Key Findings

  • Spotify hit 100 million subscribers in Q1 2019, a rise of X on Q4 2018 and up X from one year earlier
  • Ad-supported monthly average users (MAUs) were X from Q4 but this was X than the X million added one year earlier
  • Spotify’s paid conversion rate X to X%; however, this was X points from Q1 2018
  • Rest of World ad-supported MAUs X by around X in Q1 2019 quarter-on-quarter, while subscribers grew by X, diluting the paid user ratio
  • Spotify’s long-term premium average revenue per user (ARPU) X in Q1 2019 with ARPU at €X, the X, down just X from Q4 2018
  • Premium saw gross margin up to X% and revenue up X% year-on-year (YoY) to €X, but ad revenue was up just X% YoY and gross margin dropped to X%
  • 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 X to start delivering revenue to offset the impact  X from emerging markets will have on music revenue growth
  • MIDiA forecasts Spotify to reach X subscribers by the end of 2019 with X of those in Europe, X in North America, X in Latin America and X in Rest of World

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

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