Spotify Q2 2023 Earnings: Will weaker-than-expected results drag Spotify share price lower?

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Spotify Q2 2023 Earnings

Spotify stock was 14.26% lower on Tuesday, 25th July 2023 at $140.38 per share after the company reported results for the quarter ending June 2023. The share price fell as it missed analysts' estimates for revenue and offered weaker-than-expected guidance.

Spotify: Historical Share Price Performance

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Spotify: Monthly Users

Total Monthly Active Users (MAUs) grew 27% YoY to 551 million in this quarter, up from 433 million last quarter ending June 2022. The Premium Subscribers grew 17% YoY to 220 million in this quarter, up from 188 million last quarter ending June 2022. All regions contributed to the growth, led by the Rest of the World and Latin America. The Q2 promotional campaign contributed to this subscriber upside.

 Q1 2023Q2 2023YoY % change
Total MAU433 million551 million27.25%
Premium Subscribers188 million220 million17.02%
  • Continued improvements in Ad-Supported retention and performance marketing efficiencies.
  • Strong growth amongst Gen Z listeners
  • Shifts in competitor dynamics in select developing markets

Spotify: Total Revenue 

Total Revenue grew 11% YoY to €3.2 billion and was well in line with their guidance reflecting consistent Premium Revenue growth as well as Ad-Supported Revenue growth.

 Q1 2023Q2 2023YoY % change
Total Revenue€ 2,864 million€ 3,177 million10.93%

Premium Revenue grew 11% YoY to €2,773 million led by subscriber growth of 17% YoY. 

Ad-Supported revenue grew 12% YoY across nearly all regions: Music advertising revenue grew mid-single-digits YoY, reflecting double-digit growth in impressions sold, partially offset by softer pricing due to the macroeconomic environment. Podcast advertising revenue growth re-accelerated to more than 30% YoY with sold impressions across both Original and Licensed podcasts. 

Spotify: Net Loss

The company reported a net loss of €302 million in the quarter ending June 2023, due to an increase in expenses such as R&D, Sales, and Marketing along with General and Administrative costs. 

 Q1 2023Q2 2023YoY % change
Net Loss€ -125 million€ -302 million-141.60%

The loss can be attributed to the increased operating expenses as well, which grew 13% YoY driven predominantly by charges related to efficiency efforts of €91 million. Out of which roughly €83 million were related to real-estate impairments and the remaining €8 million were severance-related and other charges.

Spotify: Analyst View

  • Jefferies raised its share price target to $145 from $130
  • Piper Sandler cuts its share price target to $150 from $165
  • Evercore ISI raised its share price target to $195 from $185
  • Deutsche Bank raised its ratings on the stock to 'buy' from 'hold'