1/ $SPOT 1Q'22 Update
Last 6 months has been a lesson about how difficult consumer internet is. These companies can create enormous consumer surplus for users, but capturing some of that value can be onerous for the company. TBD whether SPOT can capture value.
Here's my notes.
Last 6 months has been a lesson about how difficult consumer internet is. These companies can create enormous consumer surplus for users, but capturing some of that value can be onerous for the company. TBD whether SPOT can capture value.
Here's my notes.
2/ MAU was 422 mn in 1Q'22 (vs 418 Mn guidance). Adjusting for some one-off benefit from last yr, MAU was 419 Mn, so still ahead of guidance.
1Q'22 Premium subs was 182 Mn (including 1.5 mn in Russia). Guidance was 183 Mn, so it was a miss.
GM 25.2% (vs guidance of 25.0%)
1Q'22 Premium subs was 182 Mn (including 1.5 mn in Russia). Guidance was 183 Mn, so it was a miss.
GM 25.2% (vs guidance of 25.0%)
3/ ARPU was +6% in Q1 (3% on constant currency); but since last year's price increase also comes to anniversary, SPOT expects ARPU to end flat to slightly up in 2022
Ad revenue +31% YoY, but was tracking 35-36% before the Ukraine war
Ad revenue +31% YoY, but was tracking 35-36% before the Ukraine war
4/ Outlook for 2Q'22
MAU outlook implies a secular momentum. In 2Q'20 and 2Q'21, SPOT added 13 mn and 9 Mn MAU respectively. They're guiding 14 Mn next quarter.
Gross margin is expected to remain flat throughout 2022, not something the market wanted to hear.
MAU outlook implies a secular momentum. In 2Q'20 and 2Q'21, SPOT added 13 mn and 9 Mn MAU respectively. They're guiding 14 Mn next quarter.
Gross margin is expected to remain flat throughout 2022, not something the market wanted to hear.
5/ Incredible how everyone in the media industry would love to be labelled as "Netflix for X" just a couple years back and now they want none of it.
With ad-supported segment showing negative 1.5% gross margin, the content costs are quite relevant question though.
With ad-supported segment showing negative 1.5% gross margin, the content costs are quite relevant question though.
6/ "structurally, podcasting should be a better business model than music from a gross margin perspective"- my guess is this is becoming "show me" story before investors start believing in it
Podcast MAU to total MAU hit an all-time high in the quarter.
Podcast MAU to total MAU hit an all-time high in the quarter.
7/ "when we look at some of the more mature markets for us and the music growth and now the growth with podcasting, and we look at the comparisons like radio, i.e. audio consumption patterns, we still see the sort of ceiling being probably 2x-3x from where we're today in hours"
8/ Why spend on Barcelona deal?
Barcelona attracts 700 mn unique viewers/yr. Some of their games are watched by 4x-5x audience size of Super Bowls.
Barcelona attracts 700 mn unique viewers/yr. Some of their games are watched by 4x-5x audience size of Super Bowls.
9/ Why not spending on digital channels?
Ek danced around the tight rope here making the case for spending ad dollars on physical world but also not forgetting that they are building a digital ad business
Ek danced around the tight rope here making the case for spending ad dollars on physical world but also not forgetting that they are building a digital ad business
10/ Although they don't disclose the details of their deal with Google, Spotify says they're indifferent to what payment method customer chooses.
So why was the deal still important? Three reasons (see image)
So why was the deal still important? Three reasons (see image)
11/ SPOT highlighted Indonesia and India for next big MAU opportunity. Not sure about Indonesia, but India is a tough market although MAU base is indeed pretty big.
Spotify will discuss more about podcasts and audio opportunity in the upcoming Investor Day this quarter.
Spotify will discuss more about podcasts and audio opportunity in the upcoming Investor Day this quarter.
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