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Spotify (SPOT), a Swedish audio streaming giant, posted a first quarter profit that fell far short of expectations.
The company posted earnings per share (EPS) of 1.07 euros ($1.22) on revenue that rose 15% year-over-year to 4.19 billion euros ($4.77 billion). Visible Alpha polled analysts who projected EPS at 2.13 euros. Spotify, on the other hand, said that it expects Q1 revenue of 4.77 billion euros.
The number of monthly active users increased by 10% to 678 millions, and the number of premium subscribers grew by 12% to 268 millions. Spotify’s guidance for the last quarter was 678 million users and 265 millions subscribers.
Spotify has announced that it expects to have 689 MAUs and 273 M premium subscribers in the second quarter.
"The underlying data at the moment is very healthy: engagement remains high, retention is strong, and thanks to our freemium model, people have the flexibility to stay with us even when things feel more uncertain," Spotify CEO Daniel Ek said. "So yes, the short term may bring some noise, but we remain confident in the long-term story, and the direction we're heading in feels clearer than ever."
Spotify shares were trading Tuesday with a value of a third higher than they were on the previous day. According to Deutsche Bank analysts in a note last week, Spotify's "ad-supported revenue is more exposed to digital advertising budget cuts, and the weakening dollar is an FX headwind to revenue, though less so for profitability given its costs skew toward USD."
