Spotify Beats Earnings Expectations, Reports First Full-Year Profit
Key Highlights:
* Spotify (SPOT) surpassed revenue expectations in fiscal Q4.
* The company reported its first full-year profit, with earnings of €367 million.
* Monthly active users (MAUs) reached 675 million, exceeding analyst estimates.
* Spotify expects Q1 MAUs to reach 678 million, outpacing expectations.
* Gross margins hit a record high of 32.2%, driven by the company's efficiency strategy.
Company Performance:
Spotify's stock rose 8% in pre-market trading following the announcement. Over the past year, shares have surged approximately 150%. The company's improved performance stems from its business overhaul, including layoffs, executive changes, and a pivot away from podcasts.
Spotify is aiming for gross margin targets between 30% and 35% in the long term. It estimates Q1 gross margins will reach 31.5%, above Wall Street projections.
Key Initiatives:
Spotify has introduced new pricing tiers and premium bundles to cater to diverse consumers. The company recently secured a multiyear agreement with Universal Music Group, granting access to upcoming releases and exclusive content.
Analyst Outlook:
Analysts remain optimistic about Spotify's future, citing potential growth drivers such as price increases and the launch of enhanced offerings for subscribers. Wall Street analysts have a median price target of approximately $517 per share, with a majority of Buy ratings.