Spotify Technologies (SPOT.US), Swedish music streaming company listed on Wall Street, reported Q1 2023 earnings report before the Wall Street session opened today. Results can be seen as mixed but there are some positives that boosted investors' sentiment towards the company. While Q1 revenue at €3.04 billion was mostly in-line with market expectations, the company booked a deeper loss per share than expected (-€1.16 vs -€0.85 expected). Nevertheless, Spotify surprised positively with user numbers. Company hinted last month that it has managed to cross 500 million monthly active users (MAU) but Q1 report showed that MAU climbed to 515 million by the end of March - an over-5% increase from Q4 2022 and 22% jump from Q1 2022. Moreover, the company also surprised to the upside when it comes to premium subscribers - 210 million against expected 207.5 million. A small beat in gross margin shows that the company's efforts to improve profitability may be paying off - Spotify announced in January that it will cut its workforce by 6% and eliminate some projects.
Spotify issued a guidance pointing to a 530 million MAU in Q2 2023 while premium subscribers are seen reaching 217 million in April-June 2023 period. Q2 revenue guidance was issued at €3.2 billion. Gross margin is seen coming in at 25.5% - an improvement compared to Q1. Long-term goal for gross margin is for it to climb to the 30-35% range. While Spotify's competitors like Apple Music or YouTube Premium have recently boosted prices of its subscriptions, Spotify made no mention of such plans in the earnings release.
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- Revenue: €3.04 billion vs €3.09 billion expected
- Loss per share: -€1.16 vs -€0.85 expected
- Gross margin: 25.2% vs 24.9% expected
- Operating loss: -€156 million vs -€186.2 million expected
- Premium subscribers: 210 million vs 207.5 million expected
- Total monthly active users: 515 million vs 502 million expected
Spotify Technologies (SPOT.US) trade around 5% higher after Q1 earnings. Stock reached a 1-year high near $145.35 at the beginning of today's cash session but has erased some of the gains since. Source: xStation5
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