Table of Contents
a. Key Points
The premium segment continues to outperform ad-based.
The advertising gross margin contraction is temporary.
Spotify is investing in more compute and product marketing.
Recent price hikes went well.
b. Demand
Met revenue estimate & beat guidance by 0.6%.
Premium revenue beat estimate by 1%.
Ad-supported revenue missed estimate by 9%.
Beat monthly active user (MAU) estimate & identical guidance by 2 million each.
Met premium subscriber estimate.
Beat premium average revenue per user (ARPU) estimate by 1.4%.
More context on demand later in this piece.
c. Profits & Margins
Beat 32.8% GPM estimate by 20 basis points (bps; 1 basis point = 0.01%) & beat guidance by 20 bps.
Beat EBIT estimate by 4.4% & beat guidance by 8.3%.
Beat FCF estimate by 4.3%.
More context on margins later in this piece.
d. Balance Sheet
€8.8B in cash, equivalents, restricted cash & short-term investments.
Diluted share count fell by 0.5% Y/Y.
Paid off their convertible notes this quarter.
e. Guidance & Valuation
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