Spotify Q4 Earnings: Strong Subscriber Growth, Profitability in Sight
Earnings Release: Tuesday, before market open
Key Metrics to Watch:
* Revenue: €4.16 billion (est.) vs. €3.67 billion in Q4 2023
* Adjusted EPS: €1.89 (est.) vs. €-0.36 loss in Q4 2023
* Monthly Active Users (MAUs): 665 million (est.) vs. 602 million in Q4 2023
* Premium Subscribers: 260 million (est.) vs. 236 million in Q4 2023
Key Developments:
* Spotify remains on track to achieve full-year profitability for the first time, driven by strong subscriber growth and low churn levels.
* Gross margin expanded to 31.1% in the previous quarter, and Wall Street estimates further expansion to 31.8% in Q4.
* The company introduced various subscription tiers, including an audio bundle and audiobooks-only plan, leading to price increases.
* Spotify signed a multi-year distribution deal with Universal Music Group, including compensation for artists and access to upcoming releases.
Analyst Expectations:
* Consensus estimates from Bloomberg show a median price target of $517 per share with a majority of Buy ratings.
* Analysts anticipate further margin expansion, driven by price hikes and new subscription tiers.
* The impact of the deal with Universal Music Group on Spotify's economic profile will be closely scrutinized during the earnings call.
Key Differentiators:
* Spotify's continued subscriber growth despite price increases.
* Progress towards profitability, a significant milestone for the music streaming giant.
* Strategic shifts, including a reduced focus on podcasts, contributing to the company's strong performance.