Spotify grows to 75M subscribers, earnings disappoint Wall Street
Streaming leader Spotify on Wednesday issued its first earnings report after going public in February, noting a sequential increase in paying subscribers and revenue of $1.36 billion. The performance missed Wall Street expectations.
Spotify finished the quarter ending in March with a new high of 75 million subscribers, an increase of 45 percent from the same time last year, the company said. Those premium members are folded into the 170 million active users the service recorded over the same period, a figure up 30 percent year-over-year.
For the quarter, Spotify recorded year-over-year revenue growth of 26 percent, in line with its own estimates, but short of Wall Street predictions. The firm's stock price tanked in after-hours trading, down to as low as $153.50, or nearly 10 percent at the time of writing.
In April, industry competitor Apple Music reached a milestone 40 million subscribers, up from 27 million recorded last June.
While Spotify's subscriber base is nearly double that of Apple Music, Apple is gaining paying users at a rapid rate of 5 percent per month. As noted by The Wall Street Journal, Apple Music's trajectory will put the service ahead of Spotify in the U.S. sometime this summer.
Whether domestic growth will translate into international gains remains to be seen, but users are showing continued interest in Apple's product with some 8 million potential customers currently signed up for a three-month trial.
Apple executives touted Apple Music's growth during an earnings conference call for the second quarter of 2018, with CEO Tim Cook saying the product helped push services revenue to a new high of $9.1 billion. CFO Luca Maestri added the most recent March quarter saw Apple Music reach a new record for both revenue and paid subscribers.
Spotify finished the quarter ending in March with a new high of 75 million subscribers, an increase of 45 percent from the same time last year, the company said. Those premium members are folded into the 170 million active users the service recorded over the same period, a figure up 30 percent year-over-year.
For the quarter, Spotify recorded year-over-year revenue growth of 26 percent, in line with its own estimates, but short of Wall Street predictions. The firm's stock price tanked in after-hours trading, down to as low as $153.50, or nearly 10 percent at the time of writing.
In April, industry competitor Apple Music reached a milestone 40 million subscribers, up from 27 million recorded last June.
While Spotify's subscriber base is nearly double that of Apple Music, Apple is gaining paying users at a rapid rate of 5 percent per month. As noted by The Wall Street Journal, Apple Music's trajectory will put the service ahead of Spotify in the U.S. sometime this summer.
Whether domestic growth will translate into international gains remains to be seen, but users are showing continued interest in Apple's product with some 8 million potential customers currently signed up for a three-month trial.
Apple executives touted Apple Music's growth during an earnings conference call for the second quarter of 2018, with CEO Tim Cook saying the product helped push services revenue to a new high of $9.1 billion. CFO Luca Maestri added the most recent March quarter saw Apple Music reach a new record for both revenue and paid subscribers.
Comments
Relatively small company with HUGE number of paying subscribers can't make money?
It just does not add up.
Here we go again. Bad math and why do you link the numbers to another article that is wrong.
Please explain how 5% growth catches up to Spotify by the summer. It doesn't. They are also growing and have a bigger lead.
- Apple is gaining paying users at a rapid rate of 5 percent per month. As noted by The Wall Street Journal, Apple Music's trajectory will put the service ahead of Spotify in the U.S
thanks$1.36b in revenue. If we simply attribute ALL the revenue for the quarter to paying accounts, of which there are 75 million, that gets us $18/account for the quarter, or and average of $6/account per month. And that’s by attributing ALL the revenue to the paying subs. So it’s less that $6/account average because some of the revenue comes from the advertising targeted at the 95 million free accounts.
Spotify's premium monthly ARPU has been coming down, it was €4.72 (around $5.65) for this past quarter. Spotify likely would like to see that rise. But considering how Spotify counts premium users, it isn't as bad as it might seem. A family plan costs $14.99 in the U.S. and can account for up to 6 premium users (as counted by Spotify). And the student plan is $4.99 in the United States.
This business is mature enough that it should be profitable. They have grown a large subscriber base and yet they make no profit. It’s hard to see how further growth in subscribers can turn things around.
At best, this business model will only generate very small profits.