Spotify Ad Trends Improve as COVID-19 Drags On, CEO Says
COVID-19 has been a mixed bag for Spotify. Monthly active users in Q2 grew 29% year on year to 299 million, at the top end of guidance, said Wednesday's shareholder letter. Ad revenue fell to $154 million from $194 million.…
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Revenue rose to $2.22 billion vs. $2.17 billion. Quarter to date through May, ad-supported sales fell 25% vs. 2019, said CEO Daniel Ek on a call: “Big declines” were due to the COVID-19 pandemic but improved to 12% lower in June. Pandemic-related softness in April and May, including payment failures by Premium users in Latin America and emerging regions, were offset by strength in North America and other areas. Struggling regions rebounded in June, with increased reactivations and slower churn. Overall listening hours in June returned to previous levels, Spotify said. Consumption trends by platform “are beginning to normalize,” with in-car listening at the end of Q2 less than 10% below pre-COVID-19 levels; they sank as far as 50% year on year in April. Spotify stock has jumped about 70% since the company signed comedian Joe Rogan to an exclusive podcast deal in mid-May, noted Pivotal Research Group's Jeffrey Wlodarczak in a Wednesday investor note. The analyst attributed the spike to “hope that Spotify can eventually become” like Netflix with “exclusive podcast content helping to drive higher subscriber growth, lower subscriber churn, increased engagement, greater ability to move consumers from the free funnel to premium and eventually reverse negative ARPU [average revenue per user] trends.”