Spotify Continues To Rule The Streaming World by Exceeding All Expectations in Q1 2019

BY Onkar Gupte

Spotify Q1 2019 report

Although Spotify maybe in its nascent stage in India, the music streaming giant is exceeding all expectations on a global scale. According to Q1 2019 reports, Spotify has crossed over 100M Premium subscribers a gowth of 32% Y/Y, marking an important milestone in the company's history. Monthly active users grew 26% Y/Y to 217 million, slightly lower than the midpoint of their 215-220 million MAU guidance range. The company also earned around €1,511 million in revenue, a growth of 33% Y/Y, out of which €1,385 million consists of Premium revenue and €126 million consists of Ad-supported revenue. Spotify announced that it has under-performed than expected in the Ad-revenue blaming the shortfall on pricing and has hinted on a better performance in Ad-business during Q2. Gross profit came upto 373 Million an increase from last years 283 during this quater. Spotify spent a considerable amount on Sales and marketing for its aggressive approach to increase subscriber base. Total spend on sales and marketing came up to € 172 Million. Average revenue per user (“ARPU”) was €4.71 in Q1, roughly flat Y/Y (down 2% excluding the impact from foreign exchange rates). Two of Spotfiy's  strongest areas of growth in Q1 were measurement and programmatic revenues. Measurement related revenues doubled from 20% to 40% of total ad revenues Y/Y, while Programmatic and Self-Serve grew 53% Y/Y and now account for 26% of Total Ad-Supported Revenue. Spotify ended Q1 with €1.7 billion in cash and cash equivalents, restricted cash, and short term investments. The streaming app also made its entry in the Indian Market during this quarter. Spotify India was launched in late February, expanding its global market footprint to 79 countries. Within 1 week more than 1 million users signed up for Spotify and the growth has gone up to 2 million users in India. Europe continues to be the best region for Spotify with over 36% of the total MAU's and 40% of total subscribers.

Future is Podcasts?

According to the report, Spotify saw a small incremental benefit from podcasts during Q1 following its acquisitions of Gimlet Media and Anchor in February and the successful rollout of Spotify owned and exclusive content (The Joe Budden Podcast, Amy Schumer Presents: 3 Girls, 1 Keith, Dope Labs, etc.) The company expects the revenue from podcasts to accelerate through 2019 with a robust advertising solution for podcasts in place for its core ad-supported business.

Global Music Report 2019

The International Federation of the Phonographic Industry (“IFPI”) released its annual Global Music Report in April 2019. IFPI reported that industry growth accelerated to 9.7% in 2018 to $19.1 billion, an increase from 8.1% in 2017 and the fourth consecutive year of growth. While Physical declined 10% and Downloads declined 21%, Streaming grew 34%, and now accounts for 47% of all industry revenue. Streaming is the engine driving the growth in recorded music revenue and Spotify is the engine driving the growth in Streaming.

Spotify Q2 2019 Expectations

These forward-looking statements reflect Spotify’s expectations as of April 29, 2019 and are subject to substantial uncertainty. Q2 2019 Guidance: ? Total MAUs: 222-228 million, up 23-27% Y/Y ? Total Premium Subscribers: 107-110 million, up 29-34% Y/Y ? Total Revenue: €1.51-€1.71 billion, up 18-35% Y/Y ? Gross Margin: 23.5-25.5% ? Operating Profit/Loss: €(15)-(€95) million

Tags : Business Spotify Music Streaming global music report q1 report