Spotify has just unveiled its first-quarter earnings report for 2020, which showcases how COVID-19 has impacted how and when people are streaming their music and podcasts. As you may guess this is one business that largely benefited from the impact of a global lockdown. While they do state that there was a notable decrease in Daily Active Users and consumption and regions such as Italy and Spain, but over the past few weeks, these numbers have bounced back.
Unlike most business in the era of a pandemic, Spotify has seen no major negative impacts in their financials and monthly active users. With the demand for digital content higher than ever, they reported a 22% jump in first-quarter revenue and their premium subscribers rose 31% from a year earlier – now totalling 286 million users – which was in line with their forecast. This is now the third consecutive quarter of 30%+ growth.
The when and how people stream music was also understandably affected in a variety of ways, with usage in car, via on the go wearables and web platforms drop, double digits in some instances. Meanwhile, the audience across TV and game consoles grew in excess of 50% in the same period. The company’s CEO Daniel Ek highlighted that the company’s partnerships with more than 300 device makers and its extensive expansion into podcasts sector among a few reasons for its continued appeal to an audience now forced to stay at home.
When it comes to the types of music users are preferring, Spotify notes that they’ve also seen an uptick in searches for “chill” and “instrumental” music, likely to occupy people while they work and potentially to help take the edge off their anxiety and or stress.
With Q1 resulting in an operating loss of 17 million, this isn’t a bad thing considering their loss of 77M in Q4 2019 and 47M in Q1 2019. With their hiring being slowed down for the rest of 2020 and no large investments on the horizon, it wouldn’t be surprising to see Spotify have a positive operating income in the coming quarters. Although, Spotify is predicting an operating loss of 45-95 million for Q2 2020, due to the unpredictable and volatile times.
Click here to review the full earnings release, and take a look at the highlights below: