Spotify shares shot up in pre-market trading Tuesday after the Swedish streaming company reported that expanded video offerings, growing audiobook popularity and AI-generated playlists helped it swing to a profit for the first three months of the year, even as its subscriber and user growth slowed.
The company’s results topped Wall Street expectations, as did its revenue forecast for the current quarter, sending its US-listed shares up 8% before the opening bell. Spotify Technology SA closed Monday at $272.24, up 44% since the start of the year.
Here’s a quick look at the results:
Total Revenue rose 19.5% from last year’s first quarter to $3.86 billion. Analysts had forecast $3.88 billion per share, according to Zacks Investment Research.
Net Income of $212.6 million reversed a year-ago loss of $244 million.
Earnings per share of $1.05 handily topped Wall Street’s prediction for earnings of 66 cents per share, according to Zacks.
Subscribers: Total monthly active users grew 19% year-over-year to 615 million, up from 15% growth a year ago but pared from the 23% growth seen in the fourth quarter of 2023. The figure was also short the company’s guidance for the quarter by about 3 million.
Premium subscribers — those who pay for the service — rose 14% from last year to 239 million. That’s down from 22% growth in the 2023 first quarter. Ad-supported monthly active users increased 22% to 388 million.
The company attributed the lower-than-expected user growth to “organizational change,” a veiled reference to its massive layoffs in December, and “moderated marketing activity.” The streamer ended the quarter with 7,721 employees, down from 16.5% from the 9,248 it reported at the end of 2023. It recorded $89 million in “social charges,” due to the layoffs, which it said were “more than offset” by lower personnel costs and marketing spending.
Among the stock catalysts was a forecast for revenue of $4.1 billion, topping analyst estimates for $4.02 billion, according to Zack’s.
In a short video posted to LinkedIn ahead of the conference call to discuss the results, CEO Daniel Ek touted “record engagement” in Spotify’s growing list of content offerings, including its newly introduced videos and the audiobooks it introduced last year.
“We just turned 18 years old,” Ek said in the video. “So as an adult company, we are now consistently profitable, which is great news.”
This is a developing story, more to come…..
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