Spotify published its financial results for Q1 2020, reporting that Latin America was one of the markets where the company is experiencing the fastest growth, increasing the number of users by 36% in the region on year on year basis.
Globally, the audio streaming company reported a 31% jump in paid music subscribers to 130 million and a 22% rise in revenue in the first quarter, results that offset a decline in ad sales due to the spread of the coronavirus. The firm added 6 million subscription accounts during the quarter, and 30 million year-on-year. Total monthly active users (including non-paid) also grew 31% year-on-year to 286 million.
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Latin America now accounts for 21% of global Spotify subscriptions, with a total of 27 million paid users. The region is also home to 22% of monthly active users on the platform, or 63 million – 16 million users were added between the Q1 2019 and Q1 2020.
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Locally targeted content
Made in Medellin, an original podcast about the life and music of Colombian artist J. Balvin – which earned more than 295 million media impressions across the US, Spain, Colombia, Argentina, Chile, and Mexico – was highlighted by Spotify as a notable global launch in the first quarter, alongside Mom’s Basement, a show about the culture and personalities of gaming hosted by Faze Banks and Kemstar of the popular eSports group FaZe Clan; and Le Nuage, a “fact-based” thriller that became the #1 podcast in France the week it launched.
“Family Plan was a significant driver of our outperformance once again. Spotify Kids (our stand-alone beta app designed for children three and older) launched in eight more markets during Q1 – Australia and the UK in February, Mexico, Brazil, and Argentina in mid-March, and most recently the US, Canada, and France toward the end of the quarter”, said the company in a statement.
Additionally, Spotify expanded the pilot of its Duo offering, premium plans for two people, into three more geographies this quarter: Canada, France, and Japan. The Duo plan is now available in 23 markets total following strong results from rollouts in Denmark, Ireland, Poland, and Latin America last year.
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For the second quarter, Spotify expects premium subscribers in the range of 133 million to 138 million. “We are fortunate that as a business we are able to operate with very little disruption and our hope is that providing music, information, and an escape for many can provide some joy and comfort,” the company said in a statement.
Coronavirus outbreak
The company said it started to see the coronavirus outbreak impact on its business as of late February. While monthly active users and subscribers continued to grow, “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.”
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The firm also commented on changes in habits: “It’s clear from our data that morning routines have changed significantly. Every day now looks like the weekend. This trend was seen more significantly in Podcasts than in Music, likely due to the fact that Car and Commute use cases have changed quite dramatically. However, listening time around activities like cooking, doing chores, family time, and relaxing at home have each been up double digits over the past few weeks.”
Revenues
Total revenue of €1.85 billion ($2.01 billion) grew 22% year-on-year, roughly in line with expectations. Premium revenue grew 23% to €1.7 billion ($1.85 billion) and ad-supported revenues grew 17% to €148 million ($161 million), falling short of expectations as a result of impacts from COVID-19, particularly the last three weeks of the quarter.
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Spotify reduced its revenue outlook for 2020 by around 5%, to a range of €7.65 billion ($8.33 billion) to €8.05 billion ($8.77 billion). It maintained its expectations for users and subscribers, expecting 328 million to 348 million total monthly average users and 143 million to 153 million premium subscribers.
