Spotify on track in first results post-IPO - Mobile World Live

Spotify on track in first results post-IPO

03 MAY 2018

Spotify narrowed its net loss slightly in its first results since going public last month, as paid subscribers hit 75 million.

Revenue for Q1 2018 was €1.1 billion, an increase of 26 per cent year-on-year and in line with company and analyst guidance, with net loss decreasing from €173 million to €169 million.

The music streaming app had 170 million monthly active users in the quarter, up 20 per cent from the same period last year, and 75 million paid subscribers, up 45 per cent.

Spotify, which is yet to post a profit, promised investors the app would hit 96 million paid subscribers by the end of the year. According to its outlook, it is expecting 79 million to 83 million by Q2 and 92 to 96 million by the end of the year.

It expects revenue for the full year to hit €4.9 billion to €5.3 billion.

“We continue to see strong growth in emerging markets, particularly Asia given our recent launches in Vietnam and Thailand, as well as increasing momentum in Japan,” the company said.

It noted that extending the length of its free trial for paid users from 30 days to 60 days in certain key markets including the US, Australia, and Brazil will have “a positive effect on conversion and smooth some of the seasonal intake trends over time.”

Advertising
Revenue from paid users, who use the ad-free version and pay around €10 a month, made up the majority of its revenue – the figure was €1 billion in Q1, up 25 per cent year-over-year. Ad-supported revenue was €102 million, up 38 per cent.

“Ad spending continues to grow faster on our mobile platform, which comprises a majority of ad revenue. From a product perspective, video is our fastest growing source of revenue, while audio remains our largest source of revenue and continues to experience solid growth,” the company noted.

“We launched a beta version of our self-serve advertising platform (Ad Studio) late last year. Hundreds of advertisers have successfully launched campaigns through the platform, and thousands more have signed up requesting access,” it added.

According to analyst Richard Windsor, who runs a blog called Radio Free Mobile, free subscribers are important because they not only act as a “great funnel” for adding paid subscribers, but because of the data they provide, which allows Spotify to “refine its algorithms and improve its ability to categorise music as well as recommend it to users with increasing levels of accuracy.”

“I have long believed that this is what will allow Spotify to eventually go directly to the artists and cut out the labels,” he said.

Spotify is probably aware of this, which is why it recently gave users of its free version access to more music.

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Saleha Riaz

Saleha joined Mobile World Live in October 2014 as a reporter and works across all e-newsletters - creating content, writing blogs and reports as well as conducting feature interviews...More

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