Amidst global pandemic, the audio streaming app beat expectations to reach 130 million paid subscribers for its premium service
Spotify Technology posted a 31% to 130 million rise in paid music subscribers in the first quarter of 2020, surpassing its expected rise on the back of ‘Family Plan’. According to the company’s Q1 earnings report, Spotify Technologies posted a 22% increase in revenue to €1,848 million as opposed to €1,511 million in the first quarter of 2019. Out of this, premium revenue- which came from paid subscribers and contributes most to the company’s revenue, recorded a rise of 22.7% to Rs €1,700 million, outperforming its expectations. Meanwhile, ad supported revenues rose 17% to €148 million, falling short of its expectations in the wake of global pandemic as ad volumes across media platforms dipped.
“Despite the global uncertainty around COVID-19 in Q1, our business met or exceeded our forecast for all major metrics,” the company said during the earnings announcement. “Beginning in late February, we saw some impact to our business. While MAUs and Subs remained in line with our forecast and held steady, in hard hit markets like Italy and Spain, we saw a notable decline in Daily Active Users and consumption. But over the last few weeks, we’ve seen listening start to rebound, and in many markets, consumption has meaningfully recovered,” it added.
The company saw a 31% increase in monthly active users (MAUs) to 286 million, which was in line with the company’s forecast and expectations. Additionally, Spotify claims that over 19% of its MAUs now engage with podcast content which now consists of over a million titles. In Q1, 76 original and exclusive podcasts were released globally and completed the acquisition of The Ringer, rounding out Spotify’s total number of studio operations to four: Gimlet, Parcast, The Ringer, and Spotify Studios. “There are now more than 1 million podcasts available on our platform, and more than 60% of them are powered by Anchor, which we acquired a year ago. In Q1 specifically, Anchor-powered shows accounted for more than 70% of new podcasts launched on our service,” the company said.
For the second quarter, the company expects the MAU’s to reach anywhere between 289 million – 299 million with total revenue ranging from €1.75 billion – €1.95 billion. The company expects to earn €45 million – €95 million operating profit. However, the company claims that the statements reflect Spotify’s expectations as of April 29, 2020 and are subject to substantial uncertainty. “Given the extraordinary operating circumstances we currently face with respect to the impact of COVID-19 there is a greater likelihood of variances within those ranges than typical quarters,” Spotify explained.