Spotify posts decent numbers for Q4

Spotify Q4 results

Revenue - Revenue of €2,689 million grew 24% YoY in Q4 and was above the top end of their guidance range due to significant strength in advertising and favorable FX movements. Premium Revenue grew 22% YoY to €2,295 million while Ad-Supported Revenue was particularly strong, growing 40% YoY to €394 million.

Net profit/loss - The Luxembourg-based company reported a net loss of €39.5 million in Q4.

Gross Margins - Gross Margin was at 26.5% in Q4, above the top end of their guidance range and flat versus the prior-year period. The Gross Margin trend reflected a favorable revenue mix shift towards podcasts, marketplace activity, and Other Cost of Revenue efficiencies.

Free Cash Flow - Free Cash Flow was €103 million in Q4, a €29 million increase YoY primarily due to an increase in net income adjusted for non-cash items. Capital expenditures decreased €19 million due to the finalization of various office build-outs in New York City, Singapore, and Los Angeles.

Operating Expenses - Operating Expenses totaled €719 million in Q4, an increase of 12% YoY. Social Charges were above forecast given the increase in its share price during the quarter. Additionally, personnel costs came in lower than expected as well as certain marketing expenses.

Monthly Users - Total Monthly Active Users (MAUs) grew 18% YoY to 406 million in the quarter, up from 381 million last quarter. The Premium Subscribers grew 16% YoY to 180 million in the quarter, up from 172 million last quarter and near the top end of the guidance range. All regions contributed to growth, led by Europe and Latin America on an absolute QoQ basis.

Future Outlook - The company has given a projection of total revenue at €2.60 billion. Total MAUs and total Premium subscribers are expected at 418 million and 183 million.

Target Price - 25 analysts offering 12-month price forecasts for the Spotify stock have a median target of $296.09, with a high estimate of $373.24 and a low of $156.19.

Spotify stock 5.75% lower on Wednesday at $191.92 per share.

Spotify Q4 results: INDmoney Review

The company reported a decent set of numbers for Q4 led by outperformance in MAUs, continued momentum in our subscription business, and meaningful advertising results. However the growth has slowed over the years due to saturation in the music streaming business and the company is trying to look for new avenues like audio podcasting to help bring in new growth.