Spotify Technology S.A. (SPOT) on Q1 2022 Results - Earnings Call Transcript
Operator: Good morning. My name is Julian and I will be your conference operator today. At this time, I would like to welcome everyone to Spotify’s Q1 2022 Earnings Conference Call and Webcast. Bryan Goldberg, Head of Investor Relations, you may begin your conference. Bryan Goldberg: Thanks, operator and welcome to Spotify’s first quarter 2022 earnings conference call. Joining us today will be Daniel Ek, our CEO and Paul Vogel, our CFO. We will start with opening comments from Daniel and Paul, and afterwards, we will be happy to answer your questions. Questions can be submitted by going to Slido.com and using the code #Spotify Earnings Q1 ‘22. Analysts can ask questions directly into Slido and all participants can then vote on the questions they find the most relevant. We ask that you try to limit yourself to one to two questions and to the extent, you have got follow-ups, we will be happy to address them time permitting. If for some reason, you don’t have access to Slido, you can e-mail Investor Relations at ir@spotify.com and we’ll add in your questions. Before we begin, let me quickly cover the Safe Harbor. During this call, we will be making certain forward-looking statements, including projections or estimates about the future performance of the company. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could materially differ because of factors discussed on today’s call, in our letter to shareholders and in filings with the Securities and Exchange Commission. During this call, we will also refer to certain non-IFRS financial measures. Reconciliations between our IFRS and non-IFRS financial measures can be found in our letter to shareholders, in the financial section of our Investor Relations website and also furnished today on Form 6-K. And with that, I will turn it over to Daniel. Daniel Ek: Alright. Hi, everyone and thank you so much for joining us. So, I will kickoff by sharing a few of the highlights you may have seen in our shareholder letter. We delivered another strong quarter in Q1. And when you exclude the impact of our withdrawal from Russia, we came in line or ahead on every metric. And this performance builds on the momentum we saw in Q3 and Q4 of 2021 and I am very pleased with the continued acceleration we are seeing in user growth headed into Q2. There are puts and calls in every quarter and this one was no exception. As I have said several times before, Q1 traditionally sees lower new user activations, but despite this, we delivered solid results. And I think this is a testament of our consistency of execution and clearly shows just how compelling our offering remains for creators, users and advertisers, even in the face of uncertainty provoked by world events. So, it’s safe to say that my overall confidence in the business continues to grow on all fronts. Case in point is the strength of our music business, evidenced by the recent release of new royalty data on our loud and clear websites. The data clearly outlines the role Spotify and streaming are playing in growing the entire music ecosystem. Not only is streaming driving record revenues in the music industry, but there are more artists sharing in that success than ever before. In fact, the worldwide growth is truly staggering as more artists hit milestones across all revenue levels. So for the first time, over 1,000 artists generated over $1 million and over 50,000 artists generated more than $10,000 on Spotify alone. For those who are interested in learning more, I would encourage you to check out the loud and clear website. So, our core business remains incredibly strong. And this strength is built on the investments we continue to make in constantly enhancing our platform, which in turn elevates the experience for users and creators. We are especially investing in our core platform capabilities. These are multiyear investments to enable a constant iteration across our products, tools and services. And given the positive results we are seeing, you should expect this to continue for the foreseeable future. And I recognize that many of you want more clarity around when the benefits of all these investments will be realized, including when they will show up in our financial statements. And this is something we will unpack for you at our upcoming Investor Day. But to give you a sense of the breadth and the impact of our investments are already having for creators, users and advertisers, allow me to offer a few examples of things we shipped this quarter. So, take our ads business, which continues to be a strong revenue driver, thanks to the investments we are making to modernize audio advertising, the recent third-party survey validate this belief showing that Spotify is the must buy audio ad partner in the U.S., and we are delivering more impact for advertisers and publishers through our acquisitions like Podsites and Chartable and we are already seeing the impact these moves are high on renewal rates and deal sizes. And these moves will bring important innovation to the marketplace and accelerate our ability to unlock significant revenue growth in both music and podcasts. At Spotify, we are constantly testing and experimenting. And in Q1 alone, we ran almost 2,000 experiments, which is a 5% increase over the previous quarter. Some of those experiments led to full global product launches like the new updates and campaigns we rolled out for Blend, which drove 17x more new user registration than even our annual rap campaign. And in the first 20 days of the Blend campaign, we had 22 million users create Blend playlists. And we are also seeing incredible user engagement worldwide with over 60% of streams coming from Gen Z listeners on Blend. And these results are exactly the types of outcomes we aim to drive and we will continue to aggressively experiment with further user improvements. And our podcast business also continues to surpass even our own high expectations, with podcast share of overall consumption hours reaching another all-time record last quarter. And we now have more than 4 million podcasts on our platform, up 53% year-over-year and up from 3.6 million last quarter, with emerging markets like Latin America and Asia driving a lot of this growth. And with more than 1,150 original and exclusive shows on our platform, overall podcast consumption is strong and increasingly sticky especially as we innovate with features like video, which more and more creators are taking advantage of as they seek to reach new global audiences and connect and interact with their fans in new ways. And with that, I will hand it over to Paul to go a little bit deeper into the numbers and then Bryan will open it for Q&A. Paul Vogel: Great. Thanks, Daniel and thanks everyone for joining us. While Daniel touched on most of our key KPIs, I want to add a bit of color on our operating performance, which was ahead of plan, excluding the wind down of our Russian business, which started in March. Please note, Russia represented approximately 1% of our total MAU and subscribers and less than 1% of our revenues at the start of Q1. Let me first start with MAU. On a reported basis, our total MAU grew to 422 million in Q1. It’s important to note that MAU did see an estimated 3 million benefit from a brief service outage that logged users out of Spotify causing a portion of affected users to create new accounts to log back in. This had the effect of double counting these users in the month of March. We saw this reverse in April as we cycled the 1 month anniversary of the outage. With that in mind, normalized MAU was approximately 490 million in the quarter, still roughly 1 million ahead of plan. Our strength was led by strong results in Latin America and Rest of World led by Indonesia, Brazil and Mexico. On the Premium front, we reached 182 million subscribers in Q1. As we shared in early March, our exit from Russia led to 1.5 million disconnects in that market. Adjusting for that impact, net subscriber growth finished ahead of plan and was aided by outperformance in Latin America and Europe. We also continue to grow ARPU nicely in the quarter, which was up 6% year-on-year and 3% on a constant currency basis. Revenue finished slightly ahead of guidance. We had a really great strength in advertising in the quarter at 30% growth. However, it’s important to note we are trending closer to mid-30% growth prior to Russia’s invasion of Ukraine. With respect to gross margins, Q1 finished modestly above plan at 25.2%. The modest fee was a few small differences versus our forecast, but nothing material to call out. Additionally, our core margins continue to improve while we invest aggressively against new initiatives. Looking to the second quarter, we expect the remaining wind down of our Russia business to reduce Q2 MAU by an incremental 5 million and subscribers by another 600,000. Regardless, we are very encouraged by the trends we are seeing across the rest of the business. And on a like-for-like basis, we see very healthy gains in Q2. Excluding Russia and the MAU benefit caused by the March service outage referenced earlier, our guidance for 428 million MAU implies an increase of approximately 14 million net MAU, a healthy uptick in organic growth versus the 9 million we reported last year and 13 million in Q2 2020. We continue to see promising growth in our largest developed markets, an ongoing rebound in developing markets like India and increased traction in our 2021 market launches. Our Q2 subscriber guidance of 187 million implies net adds of 6 million ex-Russia and reflects the benefit from our global campaign later in the quarter. Lastly, our outlook for Q2 gross margin of 25.2% reflects our expectations for continued core operating improvement across our music and podcasting businesses offset by select growth initiatives. As a reminder Q2 2021, gross margins had a one-time benefit of roughly 200 basis points due to the release of accruals for prior period publishing royalty estimates. As discussed on the Q4 earnings call, we continue to see a number of opportunities for investment. In light of the positive results we are seeing and the attractive long-term potential of these investments, we will continue to pursue many of these initiatives this calendar year. As a result, we expect to keep gross margins around Q1 levels throughout the balance of 2022. And while we aren’t providing guidance beyond Q2, our current expectations for next year would be a continued upward momentum in our core business and a smaller drag from new investments. Finally, I want to conclude with an update on our upcoming Investor Day. We look forward to updating you on the progress we have made since our direct listing, sharing details about our roadmap and providing clarity on the financial progress that we expect over the intermediate and longer term. We are still finalizing plans for the Investor Day, so stay tuned for more information about timing, speakers and everything else to come. And with that, I will turn it back over to Bryan for Q&A. A - Bryan Goldberg: Alright. Thanks, Paul. And again, if you have got any questions, please go to slido.com #Spotify Earnings Q1 ‘22. Once your question is entered, you can edit or withdraw it by selecting the option in the bottom right and we will be reading the questions in the order they appear in the queue with respect to how people vote up their preference for questions. And our first question today is going to come from Mario Lu and it’s on the current operating environment in streaming. Last week, Netflix mentioned market saturation and competition is two main factors for its slowed growth. Are these similar concerns for Spotify? Daniel Ek: Yes. Thank you for joining the call, everyone, and I look forward to sharing more at our upcoming Investor Day that we talked about. And in the meantime, we will share more about the quarter on our For The Record podcast. So, I really hope you guys will tune in. Thank you so much. Bryan Goldberg: Okay. And that concludes today’s call. A replay of the call will be available on our website and also on the Spotify app under Spotify Earnings Call Replays. Thanks, everyone, for joining.
Spotify Technology (NYSE:SPOT) Sees Positive Analyst Update and User Growth
- Spotify Technology (NYSE:SPOT) has been upgraded to a "Buy" by Guggenheim, with a notable increase in user engagement and subscriber growth.
- The company's monthly active users (MAUs) reached 678 million in Q1 2025, marking a 10% year-over-year growth.
- Premium subscribers grew by 12%, totaling 268 million, thanks to innovative features like Spotify Wrapped and AI DJ.
Spotify Technology (NYSE:SPOT) is a leading player in the audio streaming industry, known for its vast library of music and podcasts. The company has been making strides in user engagement and subscriber growth, which has caught the attention of analysts. On June 6, 2025, Guggenheim updated its rating for SPOT to a "Buy," with the stock priced at approximately $715.49 at the time of the announcement.
Spotify's user engagement has seen a notable increase, with monthly active users (MAUs) reaching 678 million in the first quarter of 2025. This marks a 10% year-over-year growth, driven by Spotify's strategic expansion in emerging markets like Latin America. The company's localized strategies have played a crucial role in attracting new users and retaining existing ones.
In addition to growing its user base, Spotify has successfully converted free users to premium subscribers. The number of premium subscribers rose by 12%, totaling 268 million. This growth is largely due to innovative features like Spotify Wrapped and AI DJ, which enhance user experience and engagement. These features have helped Spotify maintain its competitive edge in the audio streaming market.
Despite the positive developments, SPOT's stock price has seen a slight decrease. The current price is $712.42, reflecting a decrease of 0.4, or approximately -0.06% in percentage terms. The stock has traded between $707.97 and $716.11 today, with a market capitalization of approximately $143.14 billion. The trading volume on the NYSE is 867,552 shares, indicating active investor interest.
Spotify's expanding user base and innovative features underscore its potential for global dominance in the audio streaming industry. As highlighted by Benzinga, the company's strategic moves and growing appeal worldwide make it a stock to watch. With Guggenheim's "Buy" rating, investors may find SPOT an attractive option in the current market landscape.
Spotify Technology's (NYSE:SPOT) Financial Performance and Market Position
- Spotify's Q1 2025 earnings per share were $1.13, missing analyst expectations.
- The company reported quarterly sales of $4.41 billion, surpassing forecasts and indicating a 15% year-over-year growth.
- Spotify anticipates Q2 2025 revenue of $4.52 billion and a user base growth to 689 million monthly average users.
Spotify Technology (NYSE:SPOT) is a leading music streaming service known for its vast library and personalized playlists. The company competes with other streaming giants like Apple Music and Amazon Music. On April 30, 2025, Evercore ISI maintained an "Outperform" rating for SPOT, even though the stock was in a "hold" position, priced at around $603.36.
Spotify's first-quarter 2025 financial results were mixed. The company reported earnings per share of $1.13, which was below the analyst consensus estimate of $2.33. However, Spotify's quarterly sales were strong, reaching $4.41 billion, surpassing the expected $4.20 billion. This represents a 15% increase compared to the previous year.
The platform's user base continues to grow, with an addition of 3 million monthly average users, bringing the total to 678 million. This aligns with Spotify's guidance. Looking ahead, the company anticipates second-quarter 2025 revenue of $4.52 billion, exceeding the analyst forecast of $4.39 billion. They also project total monthly average users to reach 689 million.
Following the earnings announcement, Spotify's shares dropped by 3.5%, closing at $576.94. Despite this, the stock has since rebounded, currently priced at $613.98, reflecting an increase of 6.42% or $37.04. The stock has fluctuated between a low of $565.02 and a high of $615.25 today.
Spotify's market capitalization is approximately $122.93 billion, with a trading volume of 4.22 million shares on the NYSE. Over the past year, SPOT has reached a high of $652.63 and a low of $280.66, indicating significant volatility in its stock price.
Spotify Technology's (NYSE:SPOT) Financial Performance and Market Position
- Spotify's Q1 2025 earnings per share were $1.13, missing analyst expectations.
- The company reported quarterly sales of $4.41 billion, surpassing forecasts and indicating a 15% year-over-year growth.
- Spotify anticipates Q2 2025 revenue of $4.52 billion and a user base growth to 689 million monthly average users.
Spotify Technology (NYSE:SPOT) is a leading music streaming service known for its vast library and personalized playlists. The company competes with other streaming giants like Apple Music and Amazon Music. On April 30, 2025, Evercore ISI maintained an "Outperform" rating for SPOT, even though the stock was in a "hold" position, priced at around $603.36.
Spotify's first-quarter 2025 financial results were mixed. The company reported earnings per share of $1.13, which was below the analyst consensus estimate of $2.33. However, Spotify's quarterly sales were strong, reaching $4.41 billion, surpassing the expected $4.20 billion. This represents a 15% increase compared to the previous year.
The platform's user base continues to grow, with an addition of 3 million monthly average users, bringing the total to 678 million. This aligns with Spotify's guidance. Looking ahead, the company anticipates second-quarter 2025 revenue of $4.52 billion, exceeding the analyst forecast of $4.39 billion. They also project total monthly average users to reach 689 million.
Following the earnings announcement, Spotify's shares dropped by 3.5%, closing at $576.94. Despite this, the stock has since rebounded, currently priced at $613.98, reflecting an increase of 6.42% or $37.04. The stock has fluctuated between a low of $565.02 and a high of $615.25 today.
Spotify's market capitalization is approximately $122.93 billion, with a trading volume of 4.22 million shares on the NYSE. Over the past year, SPOT has reached a high of $652.63 and a low of $280.66, indicating significant volatility in its stock price.
Spotify Technology S.A. (NYSE:SPOT) Price Target and Financial Performance Overview
- Mark Mahaney from Evercore ISI set a price target of $650 for Spotify, indicating a potential upside of 7.81%.
- Previous quarter earnings per share (1Q 2025) were $1.16, missing the consensus estimate of $2.37.
- Quarterly sales reached $4.53 billion, missing expectations but indicating a 15% year-on-year growth.
Spotify Technology S.A. (NYSE:SPOT) is a leading music streaming service that offers a vast library of songs, podcasts, and other audio content to users worldwide. Competing with platforms like Apple Music and Amazon Music, Spotify has carved out a significant market share with its user-friendly interface and personalized playlists. On April 30, 2025, Mark Mahaney from Evercore ISI set a price target of $650 for SPOT, suggesting a potential upside of 7.81% from its trading price of $602.93 at that time.
Despite the optimistic price target, Spotify's first-quarter 2025 financial results were mixed. The company reported earnings per share of $1.16, which fell short of the analyst consensus estimate of $2.37. This shortfall in earnings might have contributed to the cautious outlook from some analysts. However, Spotify's quarterly sales were a bright spot, reaching $4.53 billion below the expected $4.56 billion.
Spotify's user base continues to expand, with the platform adding 3 million monthly average users in the first quarter, bringing the total to 678 million. This growth aligns with the company's guidance and highlights its ongoing appeal to music and podcast listeners. Looking ahead, Spotify anticipates second-quarter 2025 revenue of $4.65 billion, which is below the analyst forecast of $4.74 billion. The company also projects its total monthly average users to reach 689 million, indicating continued user growth.
Following the earnings announcement, Spotify's shares experienced a 3.5% drop, closing at $576.94. However, the stock has since rebounded, with the current price at $604.15, reflecting an increase of 4.72% or $27.21. Today, SPOT has traded between a low of $565.02 and a high of $605.69. Over the past year, the stock has seen a high of $652.63 and a low of $280.66, indicating significant volatility. With a market capitalization of approximately $120.96 billion and a trading volume of 2,221,371 shares, Spotify remains a key player in the music streaming industry.
Spotify Technology S.A. (NYSE:SPOT) Price Target and Financial Performance Overview
- Mark Mahaney from Evercore ISI set a price target of $650 for Spotify, indicating a potential upside of 7.81%.
- Previous quarter earnings per share (1Q 2025) were $1.16, missing the consensus estimate of $2.37.
- Quarterly sales reached $4.53 billion, missing expectations but indicating a 15% year-on-year growth.
Spotify Technology S.A. (NYSE:SPOT) is a leading music streaming service that offers a vast library of songs, podcasts, and other audio content to users worldwide. Competing with platforms like Apple Music and Amazon Music, Spotify has carved out a significant market share with its user-friendly interface and personalized playlists. On April 30, 2025, Mark Mahaney from Evercore ISI set a price target of $650 for SPOT, suggesting a potential upside of 7.81% from its trading price of $602.93 at that time.
Despite the optimistic price target, Spotify's first-quarter 2025 financial results were mixed. The company reported earnings per share of $1.16, which fell short of the analyst consensus estimate of $2.37. This shortfall in earnings might have contributed to the cautious outlook from some analysts. However, Spotify's quarterly sales were a bright spot, reaching $4.53 billion below the expected $4.56 billion.
Spotify's user base continues to expand, with the platform adding 3 million monthly average users in the first quarter, bringing the total to 678 million. This growth aligns with the company's guidance and highlights its ongoing appeal to music and podcast listeners. Looking ahead, Spotify anticipates second-quarter 2025 revenue of $4.65 billion, which is below the analyst forecast of $4.74 billion. The company also projects its total monthly average users to reach 689 million, indicating continued user growth.
Following the earnings announcement, Spotify's shares experienced a 3.5% drop, closing at $576.94. However, the stock has since rebounded, with the current price at $604.15, reflecting an increase of 4.72% or $27.21. Today, SPOT has traded between a low of $565.02 and a high of $605.69. Over the past year, the stock has seen a high of $652.63 and a low of $280.66, indicating significant volatility. With a market capitalization of approximately $120.96 billion and a trading volume of 2,221,371 shares, Spotify remains a key player in the music streaming industry.
Spotify Technology S.A. (NYSE:SPOT) Maintains Strong Market Position Amidst Competition
- Goldman Sachs maintains a "Buy" rating for Spotify Technology S.A. (NYSE:SPOT), with a stock price of $621.77, indicating confidence in its growth prospects.
- Spotify reports significant user base expansion with monthly average user net additions of 35 million and an 11% increase in premium subscribers to 263 million.
- Despite missing earnings estimates, Spotify's quarterly sales reached $4.53 billion, a 16% increase, surpassing consensus estimates and highlighting its strong revenue generation capabilities.
Spotify Technology S.A. (NYSE:SPOT), a leading music streaming service, competes with giants like Apple Music and Amazon Music, securing a significant market share. On February 4, 2025, Goldman Sachs reiterated its "Buy" rating for Spotify, reflecting confidence in the company's growth prospects with a stock price of $621.77.
Key to Spotify's success is its strong subscriber growth and rising margins. The company reported an impressive expansion of its user base, with monthly average user net additions of 35 million, surpassing guidance by 10 million. Premium subscribers grew by 11% to 263 million, exceeding expectations by 3 million, showcasing Spotify's ability to attract and retain users globally.
Despite missing earnings estimates with $1.88 per share against the expected $2.06, Spotify's quarterly sales reached $4.53 billion, surpassing the consensus estimate of $4.15 billion. This 16% increase in sales underscores Spotify's robust revenue generation capabilities, even as it continues to invest in expanding its user base and enhancing its platform.
Analysts like Goldman Sachs' Eric Sheridan and JP Morgan's Doug Anmuth have shown optimism towards Spotify's performance, with Sheridan setting a price target of $550 and Anmuth maintaining an Overweight rating. The stock's current price of $621.77 marks a significant increase of 13.24% or $72.69, indicating strong investor confidence.
With a market capitalization of approximately $121.72 billion, Spotify stands as a major player in the music streaming industry. The stock has seen a trading volume of 6,513,129 shares today, fluctuating between a low of $581.07 and a high of $623.40, the latter being its highest price over the past year. The lowest price for SPOT in the past year was $227.52, showcasing its substantial growth.
Spotify Technology S.A. (NYSE:SPOT) Maintains Strong Market Position Amidst Competition
- Goldman Sachs maintains a "Buy" rating for Spotify Technology S.A. (NYSE:SPOT), with a stock price of $621.77, indicating confidence in its growth prospects.
- Spotify reports significant user base expansion with monthly average user net additions of 35 million and an 11% increase in premium subscribers to 263 million.
- Despite missing earnings estimates, Spotify's quarterly sales reached $4.53 billion, a 16% increase, surpassing consensus estimates and highlighting its strong revenue generation capabilities.
Spotify Technology S.A. (NYSE:SPOT), a leading music streaming service, competes with giants like Apple Music and Amazon Music, securing a significant market share. On February 4, 2025, Goldman Sachs reiterated its "Buy" rating for Spotify, reflecting confidence in the company's growth prospects with a stock price of $621.77.
Key to Spotify's success is its strong subscriber growth and rising margins. The company reported an impressive expansion of its user base, with monthly average user net additions of 35 million, surpassing guidance by 10 million. Premium subscribers grew by 11% to 263 million, exceeding expectations by 3 million, showcasing Spotify's ability to attract and retain users globally.
Despite missing earnings estimates with $1.88 per share against the expected $2.06, Spotify's quarterly sales reached $4.53 billion, surpassing the consensus estimate of $4.15 billion. This 16% increase in sales underscores Spotify's robust revenue generation capabilities, even as it continues to invest in expanding its user base and enhancing its platform.
Analysts like Goldman Sachs' Eric Sheridan and JP Morgan's Doug Anmuth have shown optimism towards Spotify's performance, with Sheridan setting a price target of $550 and Anmuth maintaining an Overweight rating. The stock's current price of $621.77 marks a significant increase of 13.24% or $72.69, indicating strong investor confidence.
With a market capitalization of approximately $121.72 billion, Spotify stands as a major player in the music streaming industry. The stock has seen a trading volume of 6,513,129 shares today, fluctuating between a low of $581.07 and a high of $623.40, the latter being its highest price over the past year. The lowest price for SPOT in the past year was $227.52, showcasing its substantial growth.
