Spotify Q2 2018 Earnings More Needed from Emerging Markets and Ad Supported
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The 20,000 Foot View: Spotify’s 2018 earnings show continued solid progress across most of its performance metrics. However, investor scrutiny is intensifying, especially with the growing subscriber arms race in the US becoming — albeit incorrectly — perceived as a litmus test for global success. Spotify’s earnings reflect a need to drive faster growth in emerging markets and ad supported, which helps explain the company’s extra emphasis on its artists’ direct business efforts, even though this puts Spotify at direct odds with its rights holder partners. The tightrope act continues.
- Spotify hit million subscribers, up from million in 2017, which is in line with MIDiA’s million forecast made at the start of 2018
- Ad supported users, on a restated basis, declined by one million compared to
- Trials are having slightly less impact with subscriber net adds at eight million, one million less than the net adds in the previous promotional trial quarter 2018 saw no reported change in the distribution of Spotify’s users, either paid or subscribers
- Rest of World, a priority region, is not growing fast enough – just million net subscriber added, highlighting the importance of the Indian licensing impasse
- Spotify needs to start delivering on its Rest of World promise, especially to shift investor attention away from the US subscriber arms race it is unlikely to win
- Total revenue in 2018 was million, up on the previous quarter and year-on-year, which was a slower yearly growth rate than in
- Ad supported revenue is not growing fast enough, falling to of all revenue in compared to in though ad supported margins and APRU improved
- Premium ARPU was up to in from in but still below levels and down from one year previously
- Rights holder income per subscriber was up slightly to from in but still significantly below the level of
- Gross subscriber adds were million in meaning it lost a net total of four million subscribers in the quarter
Companies and brands mentioned in this report: Amazon, Amazon Music Unlimited, Apple, Apple Music, Spotify