Spotify announced impressive quarterly financial results, leading to a significant 14% surge in its share price during premarket trading.
Spotify reported a historic quarterly profit that exceeded analyst predictions on Tuesday, leading to a more than 14 percent increase in its shares during premarket trading.
The company, known for its audio-streaming services, aimed
to lower expenses by implementing layoffs and reducing its marketing budget
last year. At the same time, it focused on expanding its user base through
promotional activities and new investments in podcasts.
Profit demonstrated a consistent upward trend, reaching 1.11
billion euros, surpassing analysts’ projections of 1.07 billion euros.
Furthermore, earnings per share amounted to 1.33 euros, exceeding the estimated
1.06 euros, as indicated by IBES data from LSEG.
Revenue increased to €3.81 billion ($4.14 billion) in Q2
2024, slightly below analyst projections of €3.82 billion. Notably, the company
did not meet its target for monthly active users (MAUs). Spotify had previously
set a goal of reaching 631 million MAUs but fell short, attracting 626 million
MAUs during the quarter.
The organization reported an increase in user numbers across
all regions. However, it did not achieve its monthly active user target due to
ongoing adjustments in marketing strategies.
"It's definitely something we take very seriously, if
we miss our own forecasts," CEO Daniel Ek said in an interview. "For
me, it's a question of when, not if. We will return to strong MAU growth, I
feel good about it."
Spotify’s gross profit margin experienced an expansion,
moving from 27.6 percent in the preceding quarter to 29.2 percent.
Spotify reported a historic quarterly profit that exceeded
analyst predictions on Tuesday, leading to a more than 14 percent increase in
its shares during premarket trading.
The company, known for its audio-streaming services, aimed
to lower expenses by implementing layoffs and reducing its marketing budget
last year. At the same time, it focused on expanding its user base through
promotional activities and new investments in podcasts.
Profit demonstrated a consistent upward trend, reaching 1.11
billion euros, surpassing analysts’ projections of 1.07 billion euros.
Furthermore, earnings per share amounted to 1.33 euros, exceeding the estimated
1.06 euros, as indicated by IBES data from LSEG.
Revenue increased to €3.81 billion ($4.14 billion) in Q2
2024, slightly below analyst projections of €3.82 billion. Notably, the company
did not meet its target for monthly active users (MAUs). Spotify had previously
set a goal of reaching 631 million MAUs but fell short, attracting 626 million
MAUs during the quarter.
The organization reported an increase in user numbers across
all regions. However, it did not achieve its monthly active user target due to
ongoing adjustments in marketing strategies.
"It's definitely something we take very seriously, if
we miss our own forecasts," CEO Daniel Ek said in an interview. "For
me, it's a question of when, not if. We will return to strong MAU growth, I
feel good about it."
Spotify’s gross profit margin experienced an expansion, moving from 27.6 percent in the preceding quarter to 29.2 percent.
The company's total monthly active users (MAUs) for the
quarter were 626 million, falling short of the projected 631 million. Despite
this, it represented a noteworthy 14% increase compared to the corresponding
period last year. The strea”ing service anticipates that Q3 MAUs will reach 639
million.
The numbe” of premium subscribers surpassed the company’s
projection of 245 million, reaching 246 million, which represents a substantial
12% annual growth. Spotify anticipates a further increase in the subscriber
base, estimating it to reach 251 million in the third quarter.
Free cash flow, a crucial financial indicator closely
monitored by investors, achieved a remarkable record of 490 million euros
during the quarter under review. This represents a significant surge compared
to the previous year’s corresponding period, when it stood at a mere 9 million
euros.
The average revenue per user (ARPU) for Premium
subscriptions experienced an 8% year-over-year increase, reaching 4.62 euros.
Excluding foreign exchange headwinds, this growth rate stands at 10%. The
company attributes this ARPU increase to the benefits of price adjustments,
which were partially offset by discounted plans and reduced pricing in emerging
markets.