Reports Music

Spotify Q3 2018 Earnings Metrics on Track But Investors Not Convinced

Report by Mark Mulligan
Cover image for Spotify Q3 2018 Earnings
Synopsis PDF PowerPoint Excel

The 20,000 Foot View: Spotify’s XXX 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 XXX million subscribers in XXX 2018, up XXX on XXX 2017, which is in line with MIDiA’s XXX million forecast made at the start of 2018
  • Inactive subscribers were up by one million to reach five million – the first increase since XXX 2017
  • Ad supported monthly active users (MAUs) returned to growth in XXX 2018, adding five million users – the same increase that was registered one year previously 
  • A pattern of seasonal cyclicity is emerging for Spotify’s ad supported business
  • Subscriber growth was largely the same across all regions, but ad supported grew strongly in Latin America – up XXX margin in XXX 2018 fell slightly from the previous quarter to reach XXX reflecting the recurring six monthly cycle of promotional campaigns 
  • Premium revenue grew by XXX during XXX 2018 to reach XXX billion, a faster rate than the XXX by which subscribers increased during the same period, with a gross margin of XXX supported was still just XXX of total revenue in XXX adding just XXX million of revenue, compared to XXX million for premium revenue
  • Spotify ARPU was down in XXX 2018 across three key measures: premium, rights holder and gross profit
  • Churning out users from XXX promotional trials drove ARPU down in XXX subscriber churn was down to XXX the second successive quarter of decline, down XXX each quarter year-on-year
  • Factoring in churn, Spotify added nine million subscribers in total, which means that it lost five million, one more than it retained
  • Delivering good, steady growth is good enough for the music industry, but not good enough for investors

Companies and brands mentioned in this report: Spotify

Unlock critical media insight and intelligence for competitive advantage

Become a Client
Already a client? Login to read this report

Or, purchase this report

Purchase this report