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Audio streaming giant Spotify surpassed its 207 million forecast with 210 million paying premium subscribers, up from 205 million at the end of 2022.
Stockholm, Sweden-based Spotify, led by CEO Daniel Ek, also reported 515 million monthly active users (MAUs) at the end of March, up from 489 million at the end of December. The company previously estimated that he would end the latest quarter with 500 million MAU.
The company said it had “the strongest first quarter since going public in 2018, beating expectations on nearly every key performance indicator.”
However, first-quarter earnings were below expectations as the company’s ad revenue continued to grow, but the pace slowed as some digital giants’ advertising momentum slowed amid macroeconomic clouds. Spotify’s quarterly ad revenue grew 17% year-over-year, driven by podcasting and the Spotify Audience Network. “Music advertising revenue was up double-digit year-over-year, reflecting double-digit year-over-year growth in impressions sold, partially offset by softer pricing due to the current macroeconomic environment. We achieved mid-level growth,” the company said.
The company, which has stepped up its focus on profitability, also suffered a loss in the first quarter, but its operating loss was smaller than expected, but wider. Operating expenses increased 36%, 34% at constant currency, driven by higher staff costs “primarily due to year-on-year headcount growth” and other factors such as severance-related costs following recent headcount reductions .Offset by reduced marketing and legal costs
Macquarie analyst Tim Nollen stressed in Monday’s report ahead of the company’s latest quarterly earnings release: Ultimately, “many questions remain about our ability to generate consistent profitability,” he argued. In his report, titled “Singing New Songs in 2023,” Noren repeated an “Outperform” rating and a $150 price target on Spotify stock.
Analysts also explained that “a price hike seems likely,” explaining: Recent price increases have given Spotify room to raise its prices. “
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