Spotify Earnings vs. Expectations
In the recently released Q1 earnings report, audio streaming company Spotify generated €2.147 billion ($2.6 billion) This represents a 16% increase in comparison to the same quarter last year. Additionally, the figure was near the very top of Q1 guidance range from the business in the prior quarterly report.
Spotify also reported a slightly positive net income of €23 million ($27.8 million), which is well above the loss of €125 million ($150.9 million) that the company reported to close out the 2020 fiscal year. This led to a basic earnings of about $0.14 per share. However, the business did report a diluted loss of about $0.30 per share. This figure did outperform Zacks consensus estimate of a per share loss of $0.57, but fell short of the Most Accurate projection of a per share loss of $0.25.
However, subscriber and user growth were the main highlights for Spotify. Business saw tremendous growth as total monthly active users jumped up to 356 million people. The new users represent a 24% increase from the same quarter last year. More importantly, paid subscription users increased by 21%, with the company reporting 158 million active users in that category. The largest areas for growth came from the United States (US), Mexico, Russia, and India. The business saw disappointment in the lower than projected results from Europe and Latin America.
Future Outlook and Stock Market Reaction
The audio streaming business did provide full fiscal year guidance to investors alongside its report. These new projections are modestly smaller than previously expected, with Spotify estimating somewhere between 402 million to 422 million monthly active users and total revenue in a range of €9.11 billion ($1.1 billion) to €9.51 billion ($1.15 billion). The company also expects to lose between €250 million ($302 million) to €150 million ($181 million) over the course of the year.
These adjusted guidance figures from Spotify disappointed investors heavily, with company stock down over 7% in early premarket trading. The company stock is now worth around $270 per share, down over $20 from closing price on Tuesday. The price is markedly lower than the all-time high price of $364 per share seen in February of this year.
In a statement released by the company with the Q1 earnings report, Spotify wrote, “We are pleased with our performance in Q1. The business delivered subscriber growth and Gross Margin at the top end of our guidance range, a continued improvement in ARPU, and operating income better than plan. We saw greater MAU variability this quarter, but results were within our range of expectations given the outperformance in Q4 and the continued impact from COVID-19.”
About the Author
Tom Price is a writer focusing on Entertainment and Sports Features. He has a degree from NYU in English with a minor in Creative Writing. He has been previously published for Washington Square News, Dignitas, CBR, and Numbers on the Boards.