The global leader in the sector, with double the number of subscribers of nearest rival Apple Music, Spotify has launched in places like India, the Middle East and North Africa in recent months.
In March 2011, Spotify announced a customer base of one million paying subscribers across Europe, and by September 2011, the number of paying subscribers had doubled to two million. In August 2012, Time reported 15 million active users, four million being paying Spotify subscribers. Spotify: 286m users / 130m subscribers. At the end of March 2020, Spotify had 286 million monthly active users, including 130 million premium subscribers and 156 million ad-supported (i.e. Free) listeners. Apple Music: 60m subscribers. In June 2019, Apple announced that there were 60 million people paying for an Apple Music subscription.
Spotify Technology SA, the world's leading streaming platform, said on Monday it had hit 100 million paid subscribers as it reported a better-than-expected rise in first-quarter revenue.
The global leader in the sector, with double the number of subscribers of nearest rival Apple Music, Spotify has launched in places like India, the Middle East and North Africa in recent months, seeking to fuel the next stage of its development as it continues to price aggressively in the developed world.
The results helped ease concerns Spotify was under significant pressure from rivals such as Apple Inc, whose 28 million U.S. paid subscribers of its music service surpassed Spotify's 26 million in earlier April. Amazon.com Inc has also launched an advertising-supported free music tier to its service.
'Competition is just not a big factor for us, it's really all about growth,' Spotify Chief Executive Officer Daniel Ek said on a conference call after the release of the quarterly results. Ek reiterated the company planned to 'keep on growing at more than 30 percent per year,' referring to revenue and users.
Shares of Spotify were largely flat at $138.30.
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Growth in the quarter also had less of an impact than some analysts had anticipated on average revenue per user - 4.71 euros, or roughly flat with the same period last year - as the company expanded into markets where prices are lower and relied on promotions to find new subscribers.
'There had been a concern that Spotify's forecast for strong subscriber net adds in (2019) would come at a cost to ARPU (Average Revenue Per User) as it relied more heavily on promotions and pushed into lower-ARPU regions such as India, but these results should go some way to easing those concerns,' Atlantic Equities analyst James Cordwell said.
Spotify said it had 217 million monthly active users (MAUs) in March, up from 173 million in the same quarter a year earlier. Analysts on average were expecting the company to have 218.6 million subscribers, according to research firm FactSet.
Premium or paying subscribers at the end of the quarter were 100 million, up from 75 million a year earlier. Analysts were expecting the company to have 99 million paid subscribers.
Revenue rose 33 % to 1.51 billion euros ($1.69 billion), beating analysts' estimates of 1.47 billion euros, according to IBES data from Refinitiv.
Gross margins for the quarter were 24.7 %, above Spotify's guidance of 22.5 % to 24.5 %, as it added more paying customers and gave away fewer promotional Google Home Mini smart speaker devices.
Europe contributed 40 % of the total paid subscribers, followed by North America with 30 %.
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Spotify said it expects to have about 107 million to 110 million premium subscribers by the end of the current quarter and 117 million to 127 million subscribers by the end of the year.
Spotify also said it expects total revenue of 1.51 billion euros to 1.71 billion euros for the second quarter and 6.35 billion to 6.8 billion euros for 2019. Analysts were expecting it to forecast total revenue of 1.62 billion euros in the quarter and 6.67 billion for the year.
The company reported a loss attributable to shareholders of 0.79 euros per share. Analysts were expecting a loss of 0.35 euros per share.
Spotify said it has spent 308 million euros buying podcast companies Gimlet Media and Anchor FM and another 50 million buying Cutler Media LLC, the parent company of Parcast.
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Spotify’s Q4 2019 financial and user metrics reveal that it grew its total monthly active users (MAUs) to 271 million — up 31% on the 207 million it reported for the same period last year and 9% on the 248 million from the previous quarter.
Additionally, the music streaming giant reported that paid premium subscribers hit 124 million, a year-on-year (YoY) increase of 29% and quarter-on-quarter (QoQ) increase of 10%. This means the Swedish company is maintaining a roughly 45% ratio of paid to ad-supported users.
In terms of financials, Spotify reported revenue of €1.86 billion ($2 billion), up 24% year-on-year (YoY) and 7% quarter-on-quarter (QoQ). The company also returned an operating loss of €77 million ($84 million), compared to operating profits of €94 million ($103 million) last year and €54 million ($60 million) for the previous quarter. Spotify attributed the recent drop in part to an 80% YoY increase in operating expenses, largely due to a “higher than expected” increase in social charges (payroll taxes).
The podcast effect
Perhaps most notably, this was Spotify’s biggest ever net addition of premium subscribers in a single quarter, and also the most quickly it has added 10 million paying users.
Podcasts have played an increasingly big part in Spotify’s growth strategy, which has involved acquiring podcast studios to create exclusive content. For Q3 2019, Spotify said 14% of its users had listened to a podcast during the quarter, a figure that grew to 16% for the final quarter of the year. Moreover, overall podcast consumption hours increased 200% YoY, though this is likely the result of Spotify’s huge bet on the podcasting medium, including creating a clearer divide between podcasts and music inside the app.
Spotify previously said podcasts are likely a major driver in terms of converting ad-supported users to premium subscribers, though it’s not entirely clear why — possibly people who listen to podcasts are simply more averse to intrusive advertisements.
Spotify Subscribers Usage
“We have a growing body of evidence showing that there are significant benefits to engagement, retention, and conversion of users from ad-supported to premium, stemming from consumption of podcast content,” Spotify said. “We have seen benefits to retention on the order of several hundred basis points, which is a material change on a retention curve, for users that engage with spoken word content relative to those that haven’t, and early data indicates that these users are more likely to convert to premium over time.”
Spotify Login
Make no mistake — Spotify will be investing a lot more in podcasting in the next 12 months and beyond. In fact, the company today announced another notable acquisition, snapping up Bill Simmons’ The Ringer sports podcast network for an undisclosed amount.
“Any decision to accelerate our investment in podcast and technology spend should be viewed as an indication of our belief that our strategy is having tangible results,” the company said. “We have gained even more confidence in the data, particularly around the benefits from podcasts, and as a result 2020 will be an investment year.”