Spotify Technology Stock Falls On Downbeat Q4 Revenue Forecast


Spotify Technology SA (NYSE: SPOT)

Spotify announced its first quarterly profit since going public on the New York Stock Exchange on April 3 this year.

The streaming company increased the number of paying customers to 87 million during the quarter, after adding 4 million new customers.

However, the company issued a disappointing revenue forecast for its fiscal fourth quarter, which will come to a close in December. Shares of the Luxembourg-based tech firm were down $13.19, or 8.81% to $136.00 before markets opened on Thursday.

SPOT Earnings & Outlook

Spotify posted a profit of 43 million euros ($48.7 million) during the quarter. In the third quarter of fiscal 2017, the company had a loss of €394 million. On a per-share basis, Spotify earned €0.23 versus a loss of €1.84 a year earlier.

Net revenues were €1.35 billion ($1.54 billion), up 31% from the prior-year period, and ahead of expectations of €1.34 billion.

Monthly active users were 191 million, a rise of 28% from the comparable period last year, but below expectations of 191.8 million by FactSet. Ad-supported monthly active users were 109 million, up 20% and ahead of 107.5 million estimates.

For the current quarter, Spotify projects monthly active users to be between 199 million to 206 million. Analysts expect MAUs to come in at 204.3 million during the quarter, according to FactSet figures.

Spotify expects fourth-quarter revenue to be in the range of €1.35 billion and €1.55 billion. The midpoint of the guidance falls below the consensus of analysts surveyed by Bloomberg.

Spotify Company Comments

In its earnings letter to investors, Spotify had this to say, “The quarter was largely in line with our expectations and our guidance range, except that Operating Margin outperformed our forecast.

The company also highlighted its efforts to take out fake accounts, “We continue to work to identify and remove users that we consider to be “fake” from our reported metrics. This includes, but is not limited to, bots and other users who aim to manipulate stream counts for purposes of royalty calculations. Such users are removed from our metrics in a timely fashion once they are discovered. However, some such users may remain in our reported metrics because of the limitations of our ability to identify their accounts.”

Company Profile

Spotify Technology SA, together with its subsidiaries, provides music streaming services worldwide. It operates through two segments, Premium and Ad-Supported. The Premium segment offers commercial-free music services to subscribers comprising unlimited online and offline high-quality streaming access to its catalog.

The Ad-Supported segment provides ad-supported users with limited on-demand online access to its catalog. As of December 31, 2017, its platform included 159 million monthly active users and 71 million premium subscribers in approximately 61 countries and territories. The company was founded in 2006 and is based in Luxembourg City, Luxembourg. – Yahoo Finance