We published plenty of material on Spotify’s latest quarterly financials yesterday, but we’ve been combining the data with historical figures from the company to dig a little deeper.
For example, since the start of 2012, Spotify has spent €1.22bn on research and development, and a further €1.81bn on sales and marketing: more than €3bn across these two categories in that six and a half years.
That includes €258m so far this year (around $300.5m) on R&D, which represents a 47.4% increase on the first half of 2017 – a year in which Spotify’s full-year R&D spend nearly doubled, from €207m in 2016 to €396m in 2017.
R&D has accounted for 10.7% of Spotify’s turnover in the first half of 2018 compared to 10% for full-year 2017 and 7% in both 2015 and 2016. The streaming service’s sales and marketing spend stands at €311m for the first half of 2018, up 21.5% year-on-year.
These figures provide some useful context for how Spotify has used its VC and debt funding, although they do not cover its entire history since R&D and sales/marketing only started to be broken out in its annual financial reports in 2012.
The most obvious comparison is to Pandora, the other major western pureplay music-streaming service to have gone public, albeit a company much narrower in its geographic focus. We’ve had a scoot through Pandora’s historic financials this morning too, and note that the company has spent $515m on ‘product development’ since the start of 2012, and $2.03bn on sales and marketing.
These figures do not include Q2 2018, since Pandora won’t be publishing those quarterly figures until 31 July. Interestingly, Pandora’s investment in both categories actually fell year-on-year in the first quarter of 2018: down 9.4% for product development and down 0.7% for sales and marketing.
In any case, using the most direct comparison – Q1 this year – Spotify’s R&D spend was around $134m (at today’s Euro-to-Dollar exchange rate) compared to Pandora’s $35.9m. In terms of percentage of revenues, that’s 10.1% and 11.2% respectively though.
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