First Earning Report: Spotify Reaches 75 Million Paid Users

03 May, 2018, 12:17 | Author: Lillian Steele
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Spotify Technology SA missed the beat on Wednesday.

Spotify's first quarterly earnings as a public company were less than awesome.

Amazon Music has not provided exact subscriber numbers, however, affirms subscriptions grew over 100% within the last six months to "tens of millions of paid customers".

Spotify disappointed investors last night with its first financial update since its unusual stock market debut last month.

Spotify's largest market is in Europe, where 36 percent of its monthly active users reside, the company said Wednesday. ARPU was €4.72 (£4.16) in Q1, down 14% year-on-year (6% at constant currency).

"It looks like there may be too many discounts and too high a percentage of premium subs may be in for the cheaper family and student plans", Mogharabi said.

"The current modest gross margins for Spotify are not an impediment to healthy and growing free-cash-clot generation", Morgan Stanley analyst Ben Swinburne wrote earlier this week.

Shares of Spotify fell by over 9 percent in after-hours trade on the New York Stock Exchange after the company announced its results on Wednesday.

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In the last quarter, Spotify brought in revenues of around $1.36 billion. Revenue is expected to range $1.32 billion to $1.56 billion next quarter, while Wall Street was looking for $1.55 billion.

But while the results were largely in line with estimates, investors remain concerned Spotify is losing money.

Spotify, which launched its streaming music service a decade ago, has enjoyed a surge in subscriber growth only in recent years.

According to the earnings report, Spotify's total revenue rose to €1.14 billion - in line with analyst expectations - marking a 26 percent gain YOY but a 1 percent decrease from last quarter.

The gross margin improved to 24.9 percent from 24.5 percent in Q4 and 11.7 percent in Q1 2017. Spotify saw €102 million in revenue from its ad-supported offering in the first period, which was down 22% from the fourth quarter.

The Spotify report mentioned that it has 170 million monthly active users and 75 million paid subscribers.

Investors sold the stock on the news. The company said it experienced strong growth in Asia and increasing momentum in Japan.

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