Reports Music

Spotify Q1 2019 Earnings

Report by Mark Mulligan
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The 20,000 Foot XXX 2019 was a quarter of milestones for Spotify, hitting XXX 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 XXX million subscribers in XXX 2019, a rise of four million on XXX 2018 and up XXX million from one year earlier
  • Ad-supported monthly average users (MAUs) were up seven million from XXX but this was fewer than the XXX million added one year earlier
  • Spotify’s paid conversion rate dropped half a point to XXX however, this was up six points from XXX 2018
  • Rest of World ad-supported MAUs grew by around three million in XXX 2019 quarter-on-quarter, while subscribers grew by just XXX million, diluting the paid user ratio
  • Spotify’s long-term premium average revenue per user (ARPU) decline slowed in XXX 2019 with ARPU at XXX the lowest rate ever, down just one cent from XXX 2018
  • Premium saw gross margin up to XXX and revenue up XXX year-on-year (YoY) to XXX billion, but ad revenue was up just XXX YoY and gross margin dropped to XXX 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 XXX million subscribers by the end of 2019 with XXX million of those in Europe, XXX million in North America, XXX million in Latin America and XXX million in Rest of World

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

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