Reports Music

Spotify Q2 2019 Earnings Mature Markets Still the Engine Room of Growth

Mark Mulligan
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The 20,000 Foot View:             2019 was another solid quarter for Spotify, adding the same number of subscribers it typically does in promotional quarters. Core metrics such as churn and average revenue per user (ARPU) all moved in the right direction, but Spotify remains out of contract with two major label partners and needs emerging markets’ subscriber growth to start picking up the slack before mature western markets slow.

Key Findings

  • Spotify hit            subscribers in            2019, a rise            eight million on            2018 and                       million from one year earlier            the same annual increase as           
  • Ad-supported monthly            users (MAUs) were up            million                       2018
  • Spotify’s paid            rate rose half a point                       2019 to reach           
  • Latin America            ‘Rest of World’ contributed            of            subscriber growth in            2019. These            will need to contribute more            moving forward
  • Ad-supported MAUs            slightly from            2019 in North            and Latin America but grew            in Rest of World to                       million
  • Premium ARPU            up slightly to            while ad-supported            reached           
  • While emerging            will be key to subscriber            they will dent ARPU and            revenue growth
  • Europe consolidated            position as a majority premium            for Spotify in            2019 with                       paid conversion rate, up from                       2019
  • Premium revenue                       to reach            million in            2019,            gross margin recovering to the            level it was at one            earlier
  • Net premium            growth of            million was just            more than in            2018
  • Ad-supported revenue            up            on            2019 to reach            in            2019
  • Podcasts are            yet delivering meaningful revenue
  • Spotify churn            to            in            2019, its lowest            yet, having been at            one            previously
  • Artists representing            majority of streams rose from            2016 to over            in            2019

Companies and brands mentioned in this report: Anchor, Gimlet, Parcast, Spotify, Warner Chappell