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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. XXX 2020 saw further signs of user base slowdown but revenue growth that exceeded that of the major record labels.

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

  • Ad-supported MAUs grew sequentially by XXX million in XXX 2020 compared to XXX million in XXX 2019 
  • The XXX million quarterly subscriber additions were consistent with XXX 2019 and resulted in Spotify meeting MIDiA’s forecasted XXX million subscribers
  • North America and Europe drove XXX of quarterly subscriber growth, compared to Latin America and Rest of World having driven XXX of growth in XXX 2020. 
  • Latin America and Rest of World drove XXX of quarterly ad-supported MAU growth
  • Once again, XXX 2020 was a quarter of premium revenue and margin growth but a drop on both counts for ad-supported. Premium revenue was up XXX YoY, increasing by XXX million, compared to an increase of XXX million one year earlier
  • Ad-supported revenue was down XXX annually, compared to a XXX annual growth in XXX 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 XXX compared to XXX for the majors

    • Companies and brands mentioned in this report: Spotify

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