Spotify Q2 2019 Earnings Mature Markets Still the Engine Room of Growth
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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 million subscribers in 2019, a rise of eight million on 2018 and up million from one year earlier – the same annual increase as 2019
- Ad-supported monthly average users (MAUs) were up million from 2018
- Spotify’s paid conversion rate rose half a point from 2019 to reach
- Latin America and ‘Rest of World’ contributed of all subscriber growth in 2019. These markets will need to contribute more substantially moving forward
- Ad-supported MAUs declined slightly from 2019 in North America and Latin America but grew strongly in Rest of World to reach million
- Premium ARPU was up slightly to while ad-supported ARPU reached
- While emerging markets will be key to subscriber growth, they will dent ARPU and premium revenue growth
- Europe consolidated its position as a majority premium market for Spotify in 2019 with a paid conversion rate, up from in 2019
- Premium revenue grew to reach million in 2019, with gross margin recovering to the same level it was at one year earlier
- Net premium revenue growth of million was just million more than in 2018
- Ad-supported revenue was up on 2019 to reach million in 2019
- Podcasts are not yet delivering meaningful revenue
- Spotify churn fell to in 2019, its lowest rate yet, having been at one year previously
- Artists representing the majority of streams rose from in 2016 to over in 2019
Companies and brands mentioned in this report: Anchor, Gimlet, Parcast, Spotify, Warner Chappell