Published: Thu, May 03, 2018
Markets | By Erika Turner

Spotify misses on revenue in first earnings report since IPO

Spotify misses on revenue in first earnings report since IPO

Spotify is set to announce its first-quarter results Wednesday after the bell, its premier report as a public company following its direct IPO last month.

A loss of 23 cents a share.

Spotify lost 169 million euros, or 1.01 euros per share, in the first quarter, narrowing from a loss of 173 million euros at the same time previous year.

Spotify is falling 7% to just above $158 a share in post-market trading after reporting an earnings miss Wednesday afternoon.

Sony Music, like WMG and UMG, received stock in lieu of some early royalty payments and advances from Spotify. It had converted an operating loss of €41 million, but it's a 71 percent reduction from 2017.

Spotify said paid subscriptions for the second quarter would be in the range of 79 million to 83 million, which at the midpoint was below Wall Street's consensus forecast of 81.79 million, Reuters reports.

The company will hold a conference call at 5:00 p.m ET to discuss its results. The disparity may owe to the company's popular family plans, which help Spotify increase its user base but bring in less revenue per subscriber.

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Investors keyed on a disappointing outlook for revenue growth.

Even amid fierce competition from the likes of Apple and Amazon, Spotify added 4 million paying customers during the quarter, and its paid subscriber numbers increased 45% from the year before.

Expectations for the full 2018 year remain unchanged, with 198-208 million total monthly active users including 92-96 million Premium subscribers.

Many analysts and investors have bet that Spotify will become a significantly profitable company in the future and are betting that one way it will improve its bottom line is by increasing its gross margins.

The company now has 170 million monthly active users in total, the majority using the free, ad-supported version of the service. If we split that evenly, Spotify is growing at roughly 2 million subscribers per month.

France's Vivendi, the owner of Universal Music Group, the world's biggest music label, said recently it is mulling a stock market listing of its wholly owned music unit.

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