Spotify Technology SA exceeded Wall Street expectations in its latest quarter, driving an uptick in its stock during premarket trading.
The music-streaming behemoth reported 602 million monthly active users in the fourth quarter, marking a 5% increase from the previous quarter and surpassing analysts’ forecasts of 601 million, according to FactSet data.
Furthermore, Spotify disclosed 236 million premium subscribers, a 4% uptick from the third quarter and surpassing analysts’ projected 235 million.
Spotify credited its robust performance to significant growth in Latin America and other Rest of World regions. The company highlighted the better-than-expected response to a promotional campaign, particularly in terms of premium subscriber uptake.
Despite exceeding expectations on subscriber metrics, Spotify slightly missed revenue targets, reporting €3.67 billion compared to analysts’ projected €3.72 billion.
Nonetheless, the company achieved an all-time high in advertising-supported revenue, reaching €501 million. Spotify’s gross margin of 26.7% slightly exceeded the company’s guidance of 26.6%.
This positive news prompted a 5% surge in shares during premarket trading on Tuesday.
In the fourth quarter, Spotify posted a net loss of €70 million, or 36 cents per share, a notable improvement compared to the €430 million loss, or €2.93 per share, in the same period last year.
The results surpassed analysts’ projections, who had expected a loss of 37 cents per share.
Looking ahead to the first quarter, Spotify forecasts 618 million monthly active users and 239 million premium subscribers. While slightly below the FactSet consensus of 619 million MAUs and 238 million premium subscribers, the company remains upbeat.
Spotify anticipates total revenue of €3.6 billion for the first quarter, in line with market expectations. However, it predicts that currency fluctuations will negatively impact year-over-year revenue growth by 250 basis points.
Overall, Spotify’s favorable user growth and improved financial metrics, coupled with strong performance in key regions and effective promotional campaigns, have bolstered investor confidence, evident in the rise in premarket stock trading.
