Spotify misses on revenue in first earnings report since IPO

May 03, 2018, 09:34
Spotify misses on revenue in first earnings report since IPO

Spotify's first earnings report as a public company hit the wrong note for investors.

Spotify is set to announce its first-quarter results Wednesday after the bell, its premier report as a public company following its direct IPO last month.

Concerning Q2 outlook, the streaming giant projects paid subscribers between 79 million - 83 million.

Average revenue per user in the first quarter fell to 4.72 euros, down from around 6.84 euros towards the end of 2015.

But diminishing revenue-per-user, as Spotify races to boost its membership through discounted family and student plans, took a toll. Those numbers were up 30 percent and 45 percent. But...

The losses were down from 139 million euros (RM 655,240,335.75) in the same quarter a year earlier and figured within the company's expectations.

For the three months ended March 31, Spotify pulled in €1.14 billion (about $1.36 billion) in revenue, matching analyst estimates.

EPS (GAAP): A loss of €1.01 ($1.21) a share. It had converted an operating loss of €41 million, but it's a 71 percent reduction from 2017. Excluding currency effects, Spotify expects revenue growth of 20 percent to 38 percent.

Many analysts and investors have bet that Spotify will become a significantly profitable company in the future and are betting that one way it will improve its bottom line is by increasing its gross margins.

Spotify said it also was seeing "increasing momentum" in Japan - the world's second-largest music market where CDs still dominate. A big cut in marketing expenses helped the company lower its overall costs.

Tencent Music Entertainment (TME), which attracts three-quarters of China's booming music-streaming market, has been reported to be eyeing a listing in 2018. Since, Spotify has pointed to its ad-supported free tier's growth potential, even rolling out its first-ever mobile upgrade to the reported 99 million non-paying listeners, enhancing functionality and user experience.

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