Spotify Q1 2020 Earnings First Signs of Pre-Recession Weakness

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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