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Spotify Q2 2020 Earnings In the Shadow of COVID

Report by Mark Mulligan
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The 20,000 Foot View: Spotify’s share price grew strongly in June 2020, with the markets responding positively to its podcast investments. However, while that increase was sustained throughout July, by mid-August the share price was heading back down to late-June levels. Though it sat markedly higher than at the start of June, the fluctuation illustrates Spotify’s challenge of maintaining strong enough market momentum to support the promise of its strategic bets.        2020 saw further signs of user base slowdown but revenue growth that exceeded that of the major record labels.

Key        continued to shape Spotify’s user metrics in        2020: total monthly average users (MAUs) were up        year-on-year (YoY) but quarterly MAU additions were down from        million in        2019 to        million in        2020

  • Ad-supported MAUs grew sequentially by        million in        2020 compared to        million in        2019 
  • The        million quarterly subscriber additions were consistent with        2019 and resulted in Spotify meeting MIDiA’s forecasted        million subscribers
  • North America and Europe drove        of quarterly subscriber growth, compared to Latin America and Rest of World having driven        of growth in        2020. 
  • Latin America and Rest of World drove        of quarterly ad-supported MAU growth
  • Once again,        2020 was a quarter of premium revenue and margin growth but a drop on both counts for ad-supported. Premium revenue was up        YoY, increasing by        million, compared to an increase of        million one year earlier
  • Ad-supported revenue was down        annually, compared to a        annual growth in        2019, while ad-supported gross margin was negative for the second successive quarter
  • Spotify’s revenue is becoming uncoupled from major label streaming revenue, growing (in current currency USD terms) annually by        compared to        for the majors

    • Companies and brands mentioned in this report: Spotify

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