-- Spotify Technology (SPOT) reported stronger-than-expected first-quarter profit, while the audio-streaming platform's premium subscriber growth and outlook disappointed investors, sending the stock lower in Tuesday trading.
For the March quarter, per-share earnings rose to 3.45 euros ($4.04) per diluted share from 1.07 euros a year earlier, topping the FactSet consensus of 2.95 euros. Revenue climbed 8% to 4.53 billion euros, in line with estimates.
Monthly active users increased 12% to 761 million, while Wall Street expected 759.1 million. Premium subscribers increased 9% to 293 million, though analysts projected growth to 293.2 million.
"We added 3 million net subscribers during the quarter, finishing at 293 million, in line with our guidance," Chief Financial Officer Christian Luiga said on an earnings call with analysts, according to a FactSet transcript. "We saw no surprises with respect to price increase-related churn following our January US price increase."
Spotify's New York Stock Exchange-listed shares fell 14% intraday. The stock has dropped 26% this year.
In the current quarter, Spotify expects revenue of 4.8 billion euros, while analysts are looking for 4.77 billion euros. The company projects monthly active users to increase by 17 million to 778 million, above the consensus of 774.8 million. Premium subscribers are anticipated to increase by 6 million to 299 million, versus Wall Street's forecast 300.4 million.
Guidance for premium subscriber growth is "modestly below the significant outperformance we saw in the prior-year quarter, which benefitted from items such as favorable adjustment to our iOS app in the US," Luiga said.
Premium revenue in the March quarter jumped 10% to 4.15 billion euros, while ad-supported revenue declined 5% to 385 million euros.
"Brands have always valued Spotify for its high user engagement, its beloved brand and its high-quality content, but the market shifted," CEO Alex Norstrom said on the call. Advertisers' pivot to biddable buying prompted a rebuild of the company's ad stack to tap into that market, he said.
Price: $428.60, Change: $-67.22, Percent Change: -13.56%