Spotify Q1 2020 Earnings First Signs of Pre-Recession Weakness
Report by
Mark Mulligan

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The 20,000 Foot View: 2020 was a solid quarter for Spotify but showed early signs of impact across premium and especially ad supported. With a global recession looming, these may be the first signs of vulnerability in a challenged economic climate.
Key Insights
- Spotify ended 2020 with million subscribers, up on 2019
- Premium ARPU fell to – the lowest figure since Spotify went public, below the full-year (FY) 2015 high of
- Premium ARPU has thus reduced by more than a third and will be pushed down further by new products, offers and emerging market growth
- Spotify’s MAU-to-subscriber rate fell points from in 2019 to in 2020, and in 2019, due to faster free user growth
- Spotify is sacrificing both ARPU and conversion rates in the pursuit of emerging market growth
- Latin America and Rest of World were the workhorses of Spotify’s growth during 2020, accounting for of all new subscribers; one year previously the share was
- Premium revenue was up year on year but was only up on 2019
- Ad-supported revenue was up on 2019 but down on 2019 – in 2019 the quarterly decrease was only
- Future ad revenue will likely be negatively impacted by a softening ad market in the coming recession
- Spotify has clear momentum in podcasts, passing Apple in 2020 to become the most widely-used podcast platform, with of podcast users using it
Companies and brands mentioned in this report: Spotify, Alphabet