Spotify’s premium business grows in Q1, but what about ads?

Between Q4 and now, revenue from ad-supported users has gone down by 28%.
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Spotify has reached 100 million paid subscribers, however revenue from ad-supported users may be at a slowdown point as the audio-streaming platform expands its podcast division in an effort to grow ad revenue.

The Swedish-based audio streaming platform reported a profit of  €373 million (approximately CAD$560 million), a 32% increase year-over-year.

The company pulled in €1.51 billion (CAD $2.27 billion) in total revenue, also a 33% increase compared to the same period last year but just 1% in growth from Q4 2018 results of €1.49 billion (CAD $2.24 billion).

A 28% decline in revenue from ad-supported users quarter-over-quarter likely contributed to those numbers as the app reported €126 million (CAD $189 million), compared to €175 million (CAD $263 million) three months before.

Measurement and programmatic revenues saw strong growth. Measurement revenues doubled to 40% of total ad revenues while programmatic/self-serve revenue grew 53% year-over-year.

Spotify’s monthly active users are on the rise. Q1 reported 217 million (up 26% year-over-year), attributed to partnerships with Samsung and Hulu. Users in the U.S. who purchased Samsung’s Galaxy S10 device got the app preloaded with a free six-month trial. Hulu subscribers were given access to Spotify’s commercial plan at standard prices. Those deals to not apply in Canada.

Premium subscribers, of which there are 100 million, grew by 2% year-over-year. In February, Spotify launched in India where more than one million users signed up in the first week. Growth exceeded the platform’s expectations, doubling to two million users and is now available in 79 countries.

Ad-supported users reached 123 million a 21% year-over-year increase from 102 million. However, this only represents a 6% growth from Q4 (116 million).

In late 2018 Spotify for Podcasters was launched in beta and 50,000 shows have been submitted through the platform following the acquisition of Gimlet and Anchor in Q4.

The company expects to continue significant growth next quarter, predicting more than 110 million paid subscribers growing slightly faster (29 to 34%) than monthly active users (23 to 27%). Spotify is also forecasting revenue growth anywhere between €1.51 and €1.71 billion (18 to 35%).

All conversions from Euros to CAD are based on calculations made April 29.

 

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