Spotify Q4 2020 earnings ARPU pays the price for growth
The 20,000 Foot View: In 2020 Spotify accelerated the growth of its total user base, with emerging markets playing a key role. However, revenue increases became decoupled from user growth across all categories, resulting in ARPU deflation.
- Spotify finished 2020 with million subscribers, up on 2019. For the fifth successive year Spotify added more subscribers than during the previous year
- Subscriber growth is becoming uncoupled from premium revenue, which grew by a lower million)
- End of year average monthly premium ARPU was down significantly in 2020 to from in 2019
- Although consumption hours were up, they did not grow as strongly as users, resulting in a decline in average hours per user
- Spotify finished 2020 with million ad-supported monthly active users (MAUs), adding million compared to million in 2019
- Ad revenue grew by just in 2020, reaching million. For the first time, ad revenue fell to below of total revenue, hitting in 2020
- Monthly ad-supported ARPU fell again in 2020, from in 2019 to ‘rest of world’ subscriber-to-MAU ratio fell from in 2019 to in 2020, down from a high of in 2018.
- Revenue is slowing: 2020 was the first year since 2017 that the premium revenue growth was less than the prior year (up billion compared to billion in 2019)
- Spotify finished 2020 with million podcast listeners, representing of all MAUs, but growth is faster than revenue, meaning podcast’s annual ARPU fell in 2020
Companies and brands mentioned in this report: Spotify