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Spotify records modest growth, replaces weekly, daily plans in India with ‘Premium Mini’

“In Q4, we added 25 million MAUs and benefited from faster growth in India, US, and Western Europe, with India serving as a notable source of upside vs. our forecast driven by successful marketing campaigns,” Spotify said in their press release for their Q4 2020 earnings. As before, the region India is in, “Rest of World”, accounts for the smallest number of Spotify users, at around 19%. The company didn’t significantly exceed its prior guidance of how it would perform, indicating that the boost additions received from the COVID-19 lockdowns has subsided.

  • Premium Mini in India: Spotify launched a stripped down version of its Premium offering in India for just Rs 25 a week. The company said the launch, which also happened in Indonesia, was “of note”, but did not elaborate on results, perhaps because the service, which has also been released in Indonesia, has just been launched. Premium Mini appears to be replacing a weekly or daily premium subscription option that already existed with a watered down version, indicating an upsell strategy rather than a sachet strategy.
  • ARPU declines: “Within Premium, average revenue per user (“ARPU”) of €4.26 in Q4 was down 8% Y/Y (but down only 3% Y/Y in constant currency terms vs. down 6% Y/Y in Q3),” Spotify said. The company said that it has increased prices in many territories and has seen “highly encouraging” results come out of that. Price increases have been happening across the board, but India has been spared (as is the case with international streaming services in the country; Netflix has taken service tax and GST hits to avoid changing its pricing in India, even as it constantly adds to its monthly price in other parts of the world).
  • 2021 trends not certain: The company said that the pandemic’s impact was, all things considered, slightly positive in 2021, even as ad revenue took a hit. “Looking ahead, we are optimistic about the underlying trends in the business into 2021 and beyond, however, we face increased forecasting uncertainty versus prior years due to the unknown duration of the pandemic and its ongoing effect on user, subscriber, and revenue growth,” the company said.

Financial snapshot — Q4FY20

  • Revenue: €2.17 billion (up 27% YoY, up 8% QoQ)
  • Gross profit: €575 million (up 21% YoY, up 9% QoQ)
  • Premium subscribers: 155 million (up 24% YoY, up 7% QoQ)
  • Ad-supported MAUs: 199 million (up 30% YoY, up 8% QoQ)

Letter to Shareholders | Press Release

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