Reports Music

Spotify Q2 2020 Earnings In the Shadow of COVID

Mark Mulligan
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The 20,000 Foot View:  Spotify’s share price grew strongly in June 2020, with the markets responding positively to its podcast investments. However, while that increase was sustained throughout July, by mid-August the share price was heading back down to late-June levels. Though it sat markedly higher than at the start of June, the fluctuation illustrates Spotify’s challenge of maintaining strong enough market momentum to support the promise of its strategic bets.            2020 saw further signs of user base slowdown but revenue growth that exceeded that of the major record labels.

Key Insights

               continued to shape Spotify’s user metrics in            2020: total monthly average users (MAUs) were up            year-on-year (YoY) but quarterly MAU additions were down from            million in            2019 to            million in            2020
  • Ad-supported MAUs            sequentially by            million in            2020            to            million in            2019 
  • The            million            subscriber additions were consistent with            and resulted in Spotify meeting            forecasted            million subscribers
  • North America            Europe drove            of quarterly subscriber            compared to Latin America and            of World having driven            of            in            2020. 
  • Latin America            Rest of World drove            of            ad-supported MAU growth
  • Once again,            was a quarter of premium            and margin growth but a            on both counts for ad-supported.            revenue was up            YoY, increasing                       million, compared to an increase                       million one year earlier
  • Ad-supported revenue            down            annually, compared to a            growth in            2019, while ad-supported            margin was negative for the            successive quarter
  • Spotify’s revenue            becoming uncoupled from major label            revenue, growing (in current currency            terms) annually by            compared to            the majors

Companies and brands mentioned in this report: Spotify