Spotify hits all-time high on back of latest earnings
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Spotify hits all-time high on back of latest earnings

Music streaming leader Spotify saw its share price hit an all-time high at the end of last week, when the company released earnings that narrowly beat expectations and pushed them past a milestone number of users. Investors reacted positively to the results – in part because this is only Spotify’s second quarterly report since going public, and, therefore, it has a lot to prove! On Thursday, when it released the figures, its share price closed 4.41% up.

Spotify’s share price has appreciated by 32% so far this year

graph 3007 spotify

SOURCE: Yahoo Finance 

For the first time, Spotify’s platform surpassed 100 million monthly active users. While this might not be a directly financial result, it’s perhaps the most important figure the company released: as its user base grows, Spotify’s advertising business will increase in value alongside it. And, of course, these more-than 100 million people are not yet paying subscribers – the company’s platform is notoriously “sticky” and the potential to upsell these listeners at a later date is a lucrative one.

Overall, Spotify said it had 101 million “ad-supported” monthly active users (analysts had expected 99.7 million). It also beat expectations on the number of premium subscribers (83 million against expectations of 82 million). Regarding revenue, the Street’s prediction was dead on, at $1.49 billion.

This strong performance came in spite of difficulties posed by the European Union’s General Data Protection Regulations (GDPR). The company’s chief financial officer Barry McCarthy told reporters on a call:

“GDPR posed mostly a timing challenge for us, mostly with ad holding companies, exclusively in the free business. It was an opportunity for them to try to negotiate for a broader set of information sharing rights, and we weren't willing to give them. When it became clear we weren't going to soften our position, we were able to move on and get back to the business of booking revenue. So it was kind of a short-term hiccup."

Disclosure

Dominion holds Spotify in its Global Trends Luxury Fund.


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