Spotify Technology (SPOT) has announced a standout performance for the Fiscal second quarter of 2024, showcasing impressive subscriber growth and significant profitability. Here’s a closer look at the key numbers and what they mean for the streaming giant.
Spotify’s Subscriber Surge
Spotify’s Monthly Active Users (MAUs) jumped by 14% year-over-year to 626 million, reflecting the company’s expanding reach and increasing user engagement. The subscriber base also saw a 12% year-over-year rise, reaching 246 million. This growth highlights Spotify’s strong market presence and its success in attracting and retaining paying customers.
SPOT’s Record-Breaking Quarter
Total revenue soared 20% year-over-year to €3.8 billion, signaling robust demand for Spotify’s services. The company achieved a gross margin of 29.2%, surpassing expectations and showing effective cost management. Operating income flipped to a positive €266 million from last year’s loss of €247 million, thanks to strategic reductions in personnel and marketing expenses. Net income came in at €274 million, or €1.33 per share, a huge turnaround from the previous year’s losses and well above analyst forecasts of $1.13 per share.
Looking Ahead: Strong Guidance for Q3
Spotify is optimistic about the third quarter, forecasting an operating income of €405 million, which exceeds Wall Street’s estimate of €298.1 million. Revenue is expected to reach €4 billion, up from €3.4 billion in the same period last year. This positive outlook indicates that Spotify is on track for continued growth and success.
Spotify User Trends: Slight Miss but Strong Growth
Even though MAUs slightly missed the company’s estimate of 631 million, the 14% year-over-year increase still indicates robust user engagement. Spotify expects MAUs to rise to 639 million in Q3. The number of Premium subscribers exceeded expectations and is anticipated to grow further, reaching 251 million next quarter.
Spotify’s Price Soar
Spotify’s big bets on podcasts and recent price hikes are really starting to show results. The company’s efforts to tighten up its operations and tweak its podcast strategy and royalty deals have paid off, leading to better profits. As a result, Spotify’s stock has soared—up over 57% this year alone and nearly 81% over the past year. This jump in stock price shows that investors are feeling confident and excited about what’s next for Spotify.
Is Spotify a Buy, Sell or Hold?
Analysts are relatively bullish about SPOT stock, with a Moderate Buy consensus rating based on 21 Buys, seven Holds and one Sell. The average SPOT price target of $354.92 implies an upside potential of 20.13% from current levels.
