After the close tonight, music streaming company and recent IPO Spotify (SPOT) will report its 1Q18 results.
After a sluggish couple of weeks immediately following its IPO, SPOT began to reverse higher in mid-April. The expiration of its quiet period on April 30 created a positive catalyst for the stock as analysts' were decisively bullish on the stock -- which is now hitting new all-time highs.
With the surge higher ahead of the print, there typically comes increased risk as it relates to matching investors expectations.
SPOT already guided Q1. This puts the onus on its Q2 guidance, and, its other key metrics (gross margin, premium sub additions), as far as keeping this upward momentum is concerned.
Reports Q1 (Mar) loss of €1.01 per share. The Capital IQ Consensus of (€0.29). Revenues fell 0.9% year/year to €1.14 bln vs the €1.14 bln Capital IQ Consensus. This is inline with its guidance of EUR1.10-1.15 bln.
SPOT finished the quarter with 170 million Monthly Active Users (MAU) and 75 million Premium Subscribers, up 30% and 45%, respectively, y/y.
- Gross Margin was 24.9%, above the high end of its guidance range of 23-24%. Excluding adjustments to prior period estimates primarily related to changes in rights holder liabilities booked in the quarter, it would have finished at the high end of our stated range. These adjustments accounted for approximately 124 basis points of Gross Margin in Q1.
- Co issues in-line guidance for Q2, sees Q2 revs of 1.1-1.3 vs. €1.29 bln Capital IQ Consensus Estimate. Expects MAUs of 175-180 mln, up 28-32% y/y; gross margin of 24-26%; and operating loss of EUR60-140 mln
- Co issues reaffirms revenue guidance for FY18, sees FY18 revs of 4.9-5.3 vs. €5.2 bln Capital IQ Consensus Estimate. Expects MAU of 198-208 mln; gross margin of 23-25%; operating loss of EUR 230-330 mln.