Spotify Q4 Earnings Beat Forecasts, Boosted by Strong Subscriber Growth and Margin Expansion
Spotify Technology (SPOT) reported impressive fiscal fourth quarter results on Tuesday, surpassing revenue expectations and achieving its first full-year profit.
Key Highlights:
* Monthly active users (MAUs) surged by 35 million to a record 675 million, exceeding analyst estimates.
* First quarter MAUs are projected to reach 678 million, also ahead of market expectations.
* Fourth-quarter profit reached €367 million ($1.82 per share), reversing the €70 million loss reported in the same period last year.
* Gross margins expanded to a record 32.2%, driven by Spotify's focus on efficiency.
Business Overhaul and Strategic Shifts:
Spotify's recent business overhaul, which included layoffs, executive changes, and a shift away from podcasts, has contributed to its turnaround in performance.
Gross Margin Targets and Future Projections:
The company remains committed to its long-term gross margin targets of 30% to 35%, expecting to reach 31.5% in the first quarter. Analysts anticipate a slowdown in margin expansion in 2025, but acknowledge potential catalysts such as price increases and the launch of premium tiers.
New Distribution Deal with Universal Music Group:
A multiyear distribution agreement with Universal Music Group (UMG.AS) is expected to provide benefits, including access to new releases and specialized products like video. The financial terms of the deal remain unclear, but Spotify is likely to have gained value from the agreement.
Analyst Consensus:
Wall Street analysts have a median price target of $517 for Spotify shares, with majority Buy ratings and a positive overall outlook.
Disclaimer: This article is for informational purposes only and should not be construed as financial advice. Consult with a qualified financial advisor before making any investment decisions.