Reports Music

Spotify Q4 2018 Earnings Strong Subscriber Growth With a Hint of Profitability but Long-Term ARPU Deflation

Mark Mulligan
Cover image for Spotify Q4 2018 Earnings
PDF Synopsis Spreadsheet Presentation

Get full access to this report and assets

Already a MIDiA client? Login here to view this report.

If you are interested this report, or related reports such as Spotify by the Numbers Trials, Churn and Margin, Spotify Earnings Growth Still Comes At A Cost and Spotify Q1 2018 Earnings Steady Course But Is It Enough? get in touch today to enquire about a report bundle.

The 20,000 Foot View:  Spotify finished 2018 strongly, over performing in both subscriber and ad-supported MAU additions. This was accompanied by Spotify’s first ever profitable quarter and two major podcast acquisitions early in 2019, hinting at a positive year ahead. However, at the same time, premium ARPU continues a long-term decline. This is the price Spotify is paying for maintaining global subscriber market share.

Key Findings

  • Spotify hit            subscribers, up            from            million in           
  • Spotify added            net new subscribers in            2018,            same as in            2017
  • Ad-supported users            strongly, adding            million, which was            more than the            million added            previous year
  • Europe is            a majority premium region for            with            of European MAUs in            paying a subscription 
  • Year-on-year, North            share of global subscribers decreased                       in            2017 to            in            2018
  • Annual European            was largest with            million registered                       2018 – this was            higher                       2017, compared to a            increase            Latin America
  • Globally,            2018            to Spotify improving conversion rates            all markets, and potentially becoming            majority premium business at some            in 2019 or 2020
  • Premium revenue            Europe grew by            in 2018                       million net new revenue) compared                       annual growth in 2017            million            new revenue)
  • Ad-supported revenue            by            in 2018 (adding            million            new revenue) compared to                       million            new revenue) in 2017
  • Premium revenue            new momentum, while ad-supported revenue            to start delivering  
  • Following a            of            in            2018, Spotify brought            churn rates down to            in            and then            in            2018
  • The cumulative            of churn throughout the year            an annual churn rate of            from            in 2017 
  • Spotify added            gross new subscribers in 2018            to            million in 2017
  • Premium ARPU            from            in 2016 to            in            a fall of           
  • Over the            period, ad-supported ARPU followed a            opposite trend, growing            from            to           
  • Spotify slightly            its global subscriber market share                       in 2018, up from            in            but is having to discount            aggressively to do so
  • Spotify’s average            revenue per user (AARPU) grew            just            in 2018, but investments            ad tech and infrastructure will            see accelerated growth in 2019
  • Podcasts are            next big play, and will            see Spotify commissioning top-quality radio            from right under the noses            radio companies

Companies and brands mentioned in this report: Amazon, Amazon Music Unlimited, Anchor, Apple, Apple Music, Gimlet, Spotify