Spotify Q2 2020 Earnings In the Shadow of COVID
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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 Insights
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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