Spotify Q4 Earnings Preview: Strong Subscriber Growth and Profitability in Focus
Ticker: SPOT
Earnings Date: Pre-market Tuesday
Key Metrics to Watch:
* Revenue: €4.16 billion (est.) vs. €3.67 billion in Q4 2023
* Adjusted EPS: €1.89 (est.) vs. adjusted loss of €0.36 in Q4 2023
* Total Monthly Active Users (MAUs): 665 million (est.) vs. 602 million in Q4 2023
* Premium Subscribers: 260 million (est.) vs. 236 million in Q4 2023
Business Overhaul and Financial Performance:
Spotify has undergone a significant business overhaul, leading to mass layoffs, C-suite changes, and a strategic shift away from podcasts. Despite these moves, the company remains on track for its first-ever full-year profitability. Its gross margin has expanded to 31.1% in the most recent quarter, supported by price hikes and other monetization initiatives.
New Content and Distribution Deals:
The company introduced higher-priced audio bundles, including music, podcasts, and audiobooks. It also secured a new multiyear distribution agreement with Universal Music Group (UMG.AS), providing access to upcoming releases and specialized products like video.
Analyst Sentiment:
Wall Street analysts have a median price target of around $517 per share on SPOT, with a majority of Buy ratings. They expect further growth in subscriber numbers and monetization efforts. However, they also caution that the pace of margin expansion may slow in the future.
Analyst Commentary:
Geetha Ranganathan, senior media analyst at Bloomberg Intelligence, highlights potential catalysts for continued growth, including price hikes, new tiers, and improvements in ad revenue. JPMorgan analyst Doug Anmuth reiterates his Overweight rating and $555 price target, noting Spotify's positive framing of the UMG deal.
Conclusion:
Spotify's Q4 earnings report will provide insights into the company's progress in subscriber growth, profitability, and its strategic initiatives. Analysts will closely monitor the impact of the UMG deal and the company's outlook for the coming quarters.