The production company music distribution and pedcasts in ‘streaming’ Spotify entered ‘black numbers’ in the first quarter of 2020, after a net profit of one million euros was recorded, compared to the losses of 142 million accounted for in the same period last year.
The company has stressed that it has met the forecasts despite the current situation generated by the Covid-19 pandemic. In addition, it has stressed that it has 1.8 billion euros of liquidity and estimates to record a positive cash flow throughout the year.
Revenue grew by 22.3%, to 1,848 million euros, while the costs associated with the revenue, largely derived from the copyright that Spotify has to pay to artists and record labels, rose 20.9%, to 1,376 million euros.
Of the total turnover, 1.7 billion euros corresponded to the amounts paid by users with ‘premium’ subscriptions, up 23%, while the other 148 million euros came from advertising served to users who use the app for free, up 17%.
With regard to costs, sales and marketing costs reached EUR 231 million, up 34.3%, while the R&D item picked up by 4.5%, to EUR 162 million. General and administrative expenses fell by 3.2% to EUR 96 million.
Despite the improvement in margins, Spotify’s operating profit was still negative at 17 million euros, resulting in a 63% improvement over the operating result of -47 million euros in the first quarter of 2019. Thus, the net profit was due to financial outliers, that positively impacted the accounts at 58 million euros, compared to net financial expenditure of EUR 122 million a year ago.
The number of active users between January and March stood at 286 million, 31% more than in the same period last year. Of that figure, 130 million users were paid for, while 163 million used the app for free.
The company has stressed that, although the number of monthly active users and subscription growth remained “online” with forecasts, in some countries heavily impacted by the pandemic, such as Italy or Spain, “a noticeable decline” was observed in daily active users and consumption.