Daniel Ek, CEO of Swedish music streaming service Spotify, gestures as he makes a speech at a press convention in Tokyo on September 29, 2016.
Toru Yamanaka | AFP | Getty Photos
Spotify reported first quarter earnings on Tuesday, notching report quarterly revenue and beating estimates on the highest and backside traces, after a 12 months of deep cost-cutting and streamlining.
This is how the corporate did, in contrast with analyst expectations:
- Earnings per share: 97 cents vs. 65 cents anticipated by LSEG analysts
- Income: $3.64 billion vs. $3.61 billion anticipated by LSEG analysts
- Month-to-month lively customers (MAUs): 615 million vs. 618 million estimated by StreetAccount
Spotify shares jumped greater than 10% on the information. The corporate additionally beat steerage on quarterly gross margin.
The streaming big went into cost-cutting mode final 12 months, shedding greater than 1 / 4 of its headcount, in accordance with business tracker Layoffs.fyi. Spotify resigned a marquee take care of controversial podcaster Joe Rogan earlier this 12 months however in any other case considerably pared again its ambitions within the podcast enterprise.
Spotify additionally issued steerage for the upcoming quarter. The corporate expects internet new MAUs of 16 million, for a complete of 631 million month-to-month lively customers. It additionally guided to an improved gross margin of 28.1%, pushed by business-wide price enhancements.
“General, we’re inspired by the sturdy begin to the 12 months and look at the enterprise as nicely positioned to ship on the objectives outlined at our 2022 Investor Day,” the corporate informed shareholders in a presentation.
Most of the modifications the corporate made within the final 12 months got here after Mason Morfit’s ValueAct disclosed a stake within the firm in February 2023 and publicly referred to as for spending rationalization. Spotify laid off 17% of its employees by the tip of the 12 months.
Spotify’s enterprise itself additionally confirmed development, with MAUs rising 19% year-over-year and a pair of% in comparison with the prior quarter. Nonetheless, the corporate missed its MAU steerage by 3 million customers. Spotify attributed the slowed development to “moderated advertising exercise” — pushed by cost-cutting — leading to “extra normalized development.”
ValueAct, which manages almost $12 billion in belongings, has a 0.5% Spotify stake valued at $280 million. When the activist investor first disclosed the place in 2023, it owned round 1.2% of Spotify. The worth of its preliminary funding has greater than doubled, in accordance with FactSet estimates.
