Spotify (SPOT) Q4 Earnings Preview: Strong Subscriber Growth, Profitability in Sight
Earnings Date: Tuesday, before the bell
Wall Street Expectations:
* Revenue: €4.16 billion (vs. €3.67 billion in Q4 2023)
* Adjusted EPS: €1.89 (vs. adjusted loss of €0.36 in Q4 2023)
* Total MAUs: 665 million (vs. 602 million in Q4 2023)
* Premium subscribers: 260 million (vs. 236 million in Q4 2023)
Key Points:
* Spotify has achieved all-time share highs, surging 150% over the past year.
* The company underwent a major overhaul, including layoffs and a strategic shift away from podcasts.
* Spotify aims for long-term gross margins between 30% and 35%, with projections for expansion in Q4.
* The launch of new tiers, price hikes, and advertising growth are catalysts for future revenue.
* A multiyear distribution agreement with Universal Music Group could impact the company's economic profile.
Analyst Consensus:
* Median price target: $517
* Buy ratings: 29
* Hold ratings: 9
* Sell ratings: 3
Additional Context:
Spotify remains on track to achieve full-year profitability for the first time. Despite price increases, churn levels remain low, indicating strong subscriber retention. The company's business overhaul has focused on improving its financial performance and expanding beyond music into audiobooks and podcasts. Analysts anticipate solid growth and margin expansion in Q4, driven by a combination of factors including new product offerings and increased monetization efforts.