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Spotify Stock Falls As Q2 Revenue Misses Consensus, MAU Growth Outlook Disappoints

Spotify's Q2 revenue of $3.46 billion falls short of expectations, while tepid MAU growth outlook weighs on investor sentiment.

Spotify Technology SA (NYSE: SPOT) stock traded lower after it reported the second-quarter FY23 revenue growth of 11% year-on-year to €3.18 billion ($3.46 billion), missing the consensus of $3.57 billion. The Premium Revenue grew by 11% Y/Y to €2.77 billion, helped by subscriber additions.

Total MAUs (Monthly Active Users) rose by 27% Y/Y to 551 million. Premium Subscribers grew from 17% Y/Y to 220 million.

Within Premium, the average revenue per user (ARPU) declined by 6% Y/Y at €4.27. Ad-Supported revenue rose by 12% to €404 million.

According to an NYSE report, Spotify stock traded lower after reporting its second-quarter revenue growth of $3.46 billion, missing the consensus of $3.57 billion.  The premium revenue grew by 11% Y/Y, helped by subscriber additions while total monthly active users rose from 27% Y/Y to 551 million. Premium subscribers also grew by 17% Y/Y to 220 million. MICHAEL M. SANTIAGO/GETTY IMAGES. 

According to Wikipedia,”Spotify is one of the largest music streaming service providers and offers digital copyright restricted recorded audio content, including more than 100 million songs and five million podcasts, from record labels and media companies. Spotify has additional features, such as offline listening and commercial-free listening, offered via paid subscriptions.”

On Monday, Spotify announced that it would raise subscription prices in some markets. 

Margins: The adjusted gross margin improved by 22 bps to 25.5%.

Adjusted Premium gross margin was 28.4%, down by 37 bps Y/Y, reflecting the Marketplace growth. 

Ad-Supported adjusted gross margin was 5.7%, up to 458 bps Y/Y, reflecting improving podcast profitability.

Adjusted Operating Loss was €(112) million, aided by lower marketing spend.

Loss per share of €(1.55) or $(1.69) missed the consensus loss of $(0.70). 

Spotify held €3.5 billion in cash and equivalents and generated €9 million in free cash flow.

Outlook: Spotify sees Q3 revenue of €3.3 billion (consensus $3.78 billion), which includes a 600 bps hit from forex. It expects total MAUs of 572 million. Investors are reacting to the tepid MAU growth outlook.

Price action: “SPOT shares traded lower by 6.55% at $153 premarket on the last check Tuesday,” said Benzinga.

© 2023 Zenger Zenger News does not provide investment advice. All rights reserved.

Produced in association with Benzinga

Edited by Priscilla Jepchumba and Judy J. Rotich

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