Spotify Q3 2018 Earnings Metrics on Track But Investors Not Convinced
Report by
Mark Mulligan
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The 20,000 Foot View: Spotify’s 2018 earnings once again showed continued solid progress across most of its performance metrics, with strong progress in many areas. However, weakening investor confidence across US tech stocks as a whole, coupled perhaps unrealistic investor expectations saw Spotify’s share price fall again.
Key Findings
- Spotify reported subscribers in 2018, up on which is in line with million forecast made at the of 2018
- Inactive subscribers up by one million to five million – the first since 2017
- Ad supported active users (MAUs) returned to in 2018, adding five million – the same increase that registered one year previously
- A pattern seasonal cyclicity is emerging for ad supported business
- Subscriber growth largely the same across all but ad supported grew strongly Latin America – up
- Gross margin 2018 fell slightly from the quarter to reach reflecting the six monthly cycle of promotional
- Premium revenue by during 2018 to reach a faster rate than the which subscribers increased during the period, with a gross margin
- Ad supported still just of total revenue adding just million of revenue, to million for premium revenue
- Spotify ARPU down in 2018 across three measures: premium, rights holder and profit
- Churning out from promotional trials drove ARPU in
- Quarterly subscriber was down to the second quarter of decline, down each year-on-year
- Factoring in Spotify added nine million subscribers total, which means that it five million, one more than retained
- Delivering good, growth is good enough for music industry, but not good for investors
Companies and brands mentioned in this report: Spotify