Spotify posts better than expected 2019 Q2 results with 232 million Monthly Active Users – an increase of 29% year on year. According to the company ‘the business outperformed our expectations in Q2 2019, with our gross margin up slightly year on year, despite our investments in podcasting, and with revenue growing more than 2.5x faster than the growth in operating expenses.’
The growth in Monthly Active Users (MAUs) was put down to its launch on PlayStation consoles across the Middle East and Latin America, better than expected performance in Germany and Japan which have traditionally favoured physical formats and their launch in India. However, the most significant source of improvement has been the increase in long-term retention due to its continued product innovation particularly evident in its emerging geographies.
Spotify highlighted its continued innovation with the further rollout of Spotify Lite which is now is now available in 36 markets and the expansion of its beta test of Spotify Stations (a genre based, radio-like experience) to the US in late May/early June. Tens of millions of users are now streaming podcast content on a monthly basis, and more are discovering new forms of audio content each day. Podcast audiences grew more than 50% quarter on quarter and has nearly doubled since the start of the year.
Spotify finished Q2 with 108 million Premium subscribers globally, up 31% year on year and churn declined to a record low of 4.6% year on year.
Total revenue for the quarter was €1,667 million up 31% year on year. Premium revenue of €1,502 million in Q2 grew 31% year on year giving an average revenue per user of €4.86 and ad-supported revenue was €165 million up 34% year on year showing ‘a meaningful acceleration of growth from Q1.’
The quarter posted a €3 million loss a significant reduction on the €47 million loss in Q1. The company put this down to ‘…higher Gross Profit and lower than expected spend across artist marketing, R&D, and G&A.’ The company is forecasting continued growth but is predicting losses for the next two quarters mainly due to provisions for continuing investments.
Spotify’s full financial results for the quarter ending 30th June 2019 can be downloaded here.
