Spotify Anticipated to Report Strong Earnings Amidst Record Growth
Spotify (SPOT) is poised to unveil its fiscal fourth-quarter earnings on Tuesday, with analysts predicting a continuation of robust subscriber gains and low churn rates despite recent price adjustments.
Shares have soared to all-time highs, reaching approximately $550, a surge of roughly 150% over the last year. The company is expected to achieve full-year profitability for the first time, marking a significant milestone from the stock's all-time lows in 2022.
Spotify's success stems from a thorough business overhaul, including workforce reductions, leadership changes, and a strategic shift away from podcasts.
Analyst Expectations
According to Bloomberg consensus estimates, Wall Street anticipates the following:
* Revenue: €4.16 billion (€3.67 billion in Q4 2023)
* Adjusted earnings per share: €1.89 (€0.36 loss in Q4 2023)
* Total monthly active users (MAUs): 665 million (602 million in Q4 2023)
* Premium subscribers: 260 million (236 million in Q4 2023)
Gross Margin Expansion
Spotify has set ambitious long-term gross margin targets of 30-35%. In the most recent quarter, its gross margin improved from 26.4% to 31.1%. Analysts forecast a further increase to 31.8% in Q4.
Growth Catalysts
Bloomberg Intelligence senior media analyst Geetha Ranganathan suggests several catalysts for Spotify's continued growth, including price hikes, the launch of new premium tiers, increased advertising revenue, and expansion into non-music verticals like audiobooks and podcasting.
Universal Music Group Deal
A new multiyear distribution agreement between Spotify and Universal Music Group (UMG.AS) is anticipated to be a key topic on the earnings call. The deal covers compensation for recorded songs and publishing rights, with Spotify gaining access to exclusive releases and specialized products.
Analyst Sentiment
Wall Street analysts covering Spotify have a median price target of around $517 per share, with 29 Buy ratings, nine Holds, and three Sells.