Spotify (NYSE: SPOT) rises despite lower monthly users in Q1

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on Apr 23, 2024
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  • Spotify's Q1 sees 14% rise in premium subscribers to 239M, hitting analyst estimates.
  • Revenue grows 20% YoY to €3.64B, with operating income reaching €168M.
  • Monthly active users increase by 19% YoY to 615M, slightly below company guidance.

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Spotify Technology (NYSE: SPOT) stock surged by 7.99% in premarket trading today following the release of its first-quarter results, which largely met analysts’ expectations.

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The music streaming giant reported a 14% year-over-year increase in premium subscribers, reaching 239 million, in line with company guidance and analyst estimates compiled by Bloomberg.

Solid performance in premium subscribers

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Spotify’s robust growth in premium subscribers reflects its continued double-digit year-over-year expansion across all regions. Particularly noteworthy is the strong performance of its Family and Duo plans, which contributed to the uptick in subscriber numbers.

The company’s focus on monetization and revenue growth appears to be bearing fruit, with premium revenue rising 20% year-over-year to $3.25 billion, driven by both subscriber growth and an increase in Average Revenue Per User (ARPU).

Revenue growth and margin expansion

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Despite a slight dip in revenue compared to the previous quarter, Spotify reported a 20% year-over-year revenue increase to €3.64 billion, in line with company guidance.

Operating income also saw significant improvement, reaching a new quarterly high of €168 million, compared to a loss of -€156 million in the same period last year.

This performance underscores the company’s efforts towards margin expansion and revenue growth, as highlighted by Spotify’s Co-Founder and CEO, Daniel Ek.

Monthly active users a challenge for Spotify

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While premium subscriber numbers showed strong growth, Spotify faced challenges with its monthly active users (MAUs), which grew by 19% year-over-year to 615 million, slightly below company guidance and analyst forecasts.

The moderation of marketing activities contributed to more normalized growth after a record performance in 2023. However, healthy growth was still observed across all regions, particularly in Latin America and the Rest of the World.

Spotify’s Q2 2024 outlook

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Despite the challenges in monthly active users, Spotify remains optimistic about its growth prospects and its ability to achieve the ambitious targets outlined for the year.

Spotify anticipates further growth in the second quarter of 2024, with expectations of reaching 631 million total MAUs and 245 million total premium subscribers.

The company also projects a total revenue of €3.8 billion for the quarter, despite potential headwinds from foreign exchange rate movements.

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