Spotify beats on revenue and earnings – but share price declines on weaker than expected guidance
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Spotify beats on revenue and earnings – but share price declines on weaker than expected guidance

Market-leading music streaming platform Spotify reported third quarter earnings this month, demonstrating an underlying business that was outperforming competitors. That strength led it to beat the Street’s expectations on both revenue and earnings – but a less positive than hoped for guidance range saw the share price decline at the end of last week. Over the last five days, investors have reversed some of that loss, and sent Spotify back up by 3.22%.

As initial disappointments over guidance dispersed, Spotify’s solid third quarter won it some fans

graph 0711 spotify

Source: Yahoo Finance

Spotify trounced consensus estimates on earnings for its third quarter. Analysts had projected that the streaming service would post a loss of 0.24 euros per share, but last Thursday, the company blew that out of the water by reporting earnings of 0.23 euros per share. It also managed a narrow beat on revenue, returning 1.35 billion euros instead of the expected 1.33 billion euros.

When it came to the number of streamers using the service, Spotify’s own estimates were dead on. The company had forecast a wide range of potential new premium subscribers for its third quarter (between 2 million and 5 million), and reported results in the upper-end of it (4 million). That brings the company’s total number of premium subscribers up to 87 million.

That’s a significant number. For comparison’s sake, Apple Music had about 40 million paying users by the mid-point of this year, and is still trying to catch up to Spotify. Also notable is the fact that Spotify is still adding an impressive number of paid subscribers every quarter. Spotify doesn’t expect that to change any time soon, and says it hopes to have a total number of paid users somewhere between 93 million and 96 million by the end of the year.

Dominion holds Spotify in its Global Trends Ecommerce Fund.

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