Spotify published its financial results for Q1 2020 today (April 29), and reported that it had 130 million Premium Subscribers globally at the end of the quarter (ended March 31), up 31% year-on-year.
Total monthly active users (MAUs), meanwhile, grew 31% YoY to 286m.
Spotify reports that Q1 2020 was the third consecutive quarter of YoY MAU growth above 30% and that in all four of the company’s regions, MAU grew faster in Q1 2020 than it did Q1 2019.
The streaming company’s Latin America and Rest of World regions continue to see the fastest MAU growth, with those regions growing 36% and 65% Y0Y, respectively.
Spotify also says that it is “beginning to see growth in reactivations following stay-at-home orders being implemented globally”.
“While it is too early to tell what the lasting impact will be from this emerging trend, we will be tracking this over the coming months as the global health emergency evolves,” adds the company.
Spotify’s total revenue in Q1 2020 was €1.8 billion, up 22% YoY, while premium revenue grew 23% YoY to €1.7bn.
Ad-Supported revenues (€148 million) grew 17% YoY, but fell short of expectations “as a result of impacts from COVID-19, particularly the last three weeks of the quarter”, reports the streaming company.
Operating expenses totaled €489m in Q1, an increase of 16% from Q1 2019, which was was “short of our plan” according to Spotify.
“The cost of Share Based Compensation, both from the social charges as a result of share price movements and lower than expected grants of new equity, was the largest driver of the variance to forecast this quarter.
“We are committed to retaining all existing employees, but are mindful about the absolute level of hiring until we have more clarity on the global economic picture and the length of our work from home status.”
“Social charges, in particular, came in €24 million lower than plan and overall equity expense was €36 million less than expected. We also experienced positive variance from COVID-19-related forces; travel was down significantly this quarter, and certain areas of spend like events and campaigns were postponed to a later period or cancelled.
“To that end, as mentioned above, we have decided to slow the pace of hiring for the remainder of the year until we have better visibility into the economic impact of COVID-19. We will continue to focus our investments in areas of strategic importance, and remain committed to our long-term targets for hiring in Research & Development.
“Additionally, we are committed to retaining all existing employees, but are mindful about the absolute level of hiring until we have more clarity on the global economic picture and the length of our work from home status. At the end of Q1, our workforce consisted of 5,779 FTEs globally.
Spotify told shareholders today that “despite the global uncertainty around COVID-19 in Q1, our business met or exceeded our forecast for all major metrics”.
It added: “For Q2 and the remainder of the year, our outlook for most of our key performance indicators has remained unchanged with the exception of revenue where a slowdown in advertising and significant changes in currency rates are having an impact.
“Our business remains very healthy with more than €1.8 billion in liquidity and we expect to be free cash flow positive for the year. Overall, despite some changes in listening patterns, we are encouraged with the trends we are seeing, and continue to be optimistic about the underlying growth fundamentals of the business.
“We are in unprecedented times and, like most, we are trying to navigate this uncertainty as best we can. 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.”
“While we are pleased with how our business has performed so far, our thoughts and attention are most focused on the health and well-being of our employees, the greater creative community and society at large.
“We are in unprecedented times and, like most, we are trying to navigate this uncertainty as best we can. 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.
“Operationally, we are now in week 7 of our entire employee base working remotely. The team has universally risen to this new temporary reality, and it’s been inspiring to watch everyone support each other virtually. From a performance standpoint, we are encouraged and haven’t seen any falloff in overall employee productivity despite the current work from home situation.
“Our hiring was also in line with expectations in the quarter. That being said, we have taken steps to slow hiring for the remaining three quarters of 2020 and have reduced open headcount by roughly 30% from prior growth expectations. We will continue to grow, and believe we are in a great position to invest in product and innovation. We also recognize it may be more challenging to effectively recruit and onboard given the inherent uncertainty moving forward.”Music Business Worldwide