Q1 2025 Update April 29th, 2025 Table of Contents Executive Summary p.03 | Key Highlights | p.04 | | --- | --- | | Financial Summary | p.06 | | MAUs & Subscribers | p.13 | | Product & Platform | p.16 | | Outlook | p.19 | Financial Statements 2 p.22 Executive Summary We are pleased with our performance in Q1, as nearly all of our KPIs were in-line to ahead of guidance. The business added 3 million MAU during the quarter, in-line with our expectations for a seasonally small quarter, while Subscriber net addit ...

Subscriber Growth - Spotify's premium subscriber base increased by 5 million in Q1, a 12% year-over-year growth, totaling 268 million subscribers, marking the second-highest total ever and the highest net addition for a first quarter since 2020 [1] Financial Performance - The company reported a record-high quarterly operating income of €509 million (approximately $528 million), although this was below the guidance of €548 million ($625 million) [2] - Total revenue rose by 15% year-over-year to €4.2 billion ($4.8 billion) [2] - The operating income for the previous quarter was €477 million ($509.48 million) [3] Market Position and Competitive Landscape - Spotify continues to be a leading player in the music streaming industry, outperforming competitors like Apple Music and Amazon Music [4] - The company is expanding into video podcasts, with 330,000 shows available on the platform, and has launched the Spotify Partner Program, which paid out over $100 million to podcast creators in Q1 [4] Product Innovations - Spotify has introduced its AI Playlist feature to over 40 markets, including countries such as the Bahamas, Fiji, Ghana, Jamaica, Kenya, and Singapore [5]

Core Insights - Spotify reported revenue of $4.41 billion for Q1 2025, an 11.7% year-over-year increase, but fell short of the Zacks Consensus Estimate of $4.6 billion, resulting in a surprise of -4.08% [1] - The company's EPS for the quarter was $1.13, compared to $1.05 a year ago, but this also missed the consensus estimate of $2.29, leading to an EPS surprise of -50.66% [1] Key Metrics - Total Monthly Active Users (MAUs) reached 678 million, slightly below the average estimate of 678.34 million [4] - Ad-Supported MAUs were reported at 423 million, compared to the average estimate of 426.42 million [4] - Premium Subscribers totaled 268 million, exceeding the average estimate of 265.41 million [4] Stock Performance - Spotify's shares have returned +8.7% over the past month, outperforming the Zacks S&P 500 composite, which saw a -0.8% change [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating potential for outperformance in the near term [3]

Core Insights - Spotify's CEO Daniel Ek expressed confidence in the company's resilience amid global uncertainty and volatility, suggesting that Spotify is becoming increasingly essential to users' lives [1] - Despite a 9% drop in shares following Q1 earnings and 2025 forecasts, Ek reassured investors about the long-term growth story of Spotify, attributing short-term fluctuations to broader macroeconomic conditions [2] - The company reported a 10% year-on-year increase in monthly active users (MAUs), reaching 678 million, although this figure remained flat compared to the previous quarter [2][3] User Growth and Subscriptions - Ad-supported subscribers increased by 9% year-on-year to 423 million, but were flat quarter-over-quarter, while premium subscribers grew by 12% year-on-year and 2% quarter-over-quarter, totaling 268 million [3] - Spotify achieved its highest net additions in Q1 since 2020, with expectations to add 11 million net new MAUs in Q2, although this forecast carries substantial uncertainty [3] Future Aspirations - Ek articulated an ambitious goal of reaching one billion subscribers, indicating a belief in the vast potential of the streaming business beyond current operations [4] - The company is experiencing positive advertising trends and is expanding its capabilities, particularly in video content, which is seeing increased engagement [4] Financial Performance - Spotify's quarterly revenue grew by 15% year-on-year to €4.2 billion ($4.8 billion), aligning with Wall Street forecasts, while operating income was €509 million, falling short of guidance [5] - The company generated €534 million in free cash flow, but net profit decreased to €225 million from €326 million due to higher payroll taxes [5]

Core Insights - Spotify reported strong growth in Q1 2025, with revenue increasing by 16% year-over-year to 4.2 billion euros and premium subscribers rising by 12% to 268 million [2][3] - Despite revenue growth, earnings per share (EPS) of 1.07 euros missed Wall Street expectations due to higher-than-expected employment taxes [4][6] - The company continues to show strong operating metrics, with average revenue per user increasing by 4% to 4.73 euros and overall gross margin improving to 31.6% [5] Financial Performance - Revenue for Q1 2025 was 4.2 billion euros, up from 3.6 billion euros in Q1 2024, reflecting a 16% increase [2] - EPS for Q1 2025 was 1.07 euros, a 10% increase from 0.97 euros in Q1 2024, but fell short of expectations [2][4] - Premium subscribers grew to 268 million, up from 239 million, marking a 12% increase [2][3] - Free cash flow more than doubled to 534 million euros, a 158% increase from the previous year [2][5] Market Reaction - Following the earnings report, Spotify's share price dropped by 6% in early morning trading [6] - The earnings miss due to tax-related costs has raised concerns among investors [6] Future Outlook - Spotify anticipates total users to reach 689 million in the current quarter, slightly below expectations, while premium subscribers are expected to grow to 273 million, slightly above expectations [8] - The company remains optimistic about continued growth in 2025 despite potential headwinds such as consumer spending slowdowns and currency volatility [7][8]

Core Viewpoint - Wall Street experienced significant volatility in April due to President Trump's tariffs and trade policies, with major stock indexes mostly in negative territory for the month [1][2] Group 1: Stock Performance and Recommendations - A number of corporate giants with market capitalizations over $50 billion have managed to provide positive returns of over 5% month to date despite the turmoil [2] - Five recommended stocks with favorable Zacks Rank include Netflix Inc. (NFLX), Newmont Corp. (NEM), Philip Morris International Inc. (PM), Agnico Eagle Mines Ltd. (AEM), and Spotify Technology S.A. (SPOT) [3] Group 2: Netflix Inc. (NFLX) - Netflix exceeded the Zacks Consensus Estimate for earnings in Q1 2025, maintaining healthy engagement levels despite trade-related challenges [7] - The launch of Netflix's Ad Suite in the U.S. is expected to drive subscriber and average revenue per user (ARPU) growth, with plans for international expansion in Q2 [8] - NFLX's expected revenue and earnings growth rates for the current year are 14% and 27.7%, respectively, with a 1.8% improvement in earnings estimates over the last week [11] Group 3: Newmont Corp. (NEM) - Newmont is advancing its growth projects, including the Ahafo North project, with commercial production expected to start in the second half of 2025 [12][13] - NEM's expected revenue and earnings growth rates for the current year are 0.9% and 16.4%, respectively, with a 2% improvement in earnings estimates over the last week [14] Group 4: Philip Morris International Inc. (PM) - Philip Morris is transitioning to smoke-free products, with strong pricing power and a projected 12-14% growth in smoke-free product sales [15][16] - PM's expected revenue and earnings growth rates for the current year are 7.3% and 13.2%, respectively, with a 2.9% improvement in earnings estimates over the last week [17] Group 5: Agnico Eagle Mines Ltd. (AEM) - Agnico Eagle is focused on production growth through projects like the Kittila expansion and acquisitions, enhancing its market position [18][19] - AEM's expected revenue and earnings growth rates for the current year are 18.9% and 33.3%, respectively, with a 5.8% improvement in earnings estimates over the last week [20] Group 6: Spotify Technology S.A. (SPOT) - Spotify operates through Premium and Ad-Supported segments, with total Monthly Active Users (MAUs) reaching 675 million, surpassing estimates [21][23] - SPOT's expected revenue and earnings growth rates for the current year are 14.8% and 75.8%, respectively, with a 1.6% improvement in earnings estimates over the last week [24]

Core Insights - Spotify reported first-quarter operating income of 509 million euros, missing analyst estimates of 519.9 million euros, while revenue matched expectations at 4.2 billion euros [1] - Monthly active users (MAUs) grew to 678 million, consistent with the company's prior guidance [1] - The company issued a disappointing operating income forecast for the current quarter [1] Stock Performance - Spotify stock is down 4.8% to $568.90 before the market opens, following a 3.7% dip that ended a four-day winning streak [2] - The stock has increased by 106.4% year over year and 33.6% year to date [2] - The stock's recent rally lost momentum around the $625 level, which also capped a breakout attempt towards its all-time high of $652.18 [2] Options Market Sentiment - A shift in sentiment among options traders, who were more bullish than usual before earnings, may add pressure on the stock [3] - The 10-day call/put volume ratio for Spotify is 1.58, ranking higher than 97% of all readings from the past year [3] Analyst Outlook - The disappointing results may lead analysts to reassess their positive outlooks on Spotify [4] - Currently, 21 of 30 covering brokerages rate Spotify stock as a "buy" or better, with an average 12-month target price of $637.52, representing a 6.6% premium to its latest close [4]

分组1 - Spotify reported quarterly earnings of $1.13 per share, missing the Zacks Consensus Estimate of $2.29 per share, representing an earnings surprise of -50.66% [1] - The company posted revenues of $4.41 billion for the quarter ended March 2025, missing the Zacks Consensus Estimate by 4.08%, compared to year-ago revenues of $3.95 billion [2] - Over the last four quarters, Spotify has surpassed consensus EPS estimates just once and topped consensus revenue estimates two times [2] 分组2 - Spotify shares have increased approximately 33.6% since the beginning of the year, while the S&P 500 has declined by -6% [3] - The current consensus EPS estimate for the coming quarter is $2.46 on revenues of $4.74 billion, and for the current fiscal year, it is $10.61 on revenues of $19.65 billion [7] - The estimate revisions trend for Spotify is currently favorable, resulting in a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [6] 分组3 - The Zacks Industry Rank for Internet - Software is currently in the bottom 43% of over 250 Zacks industries, suggesting that the industry outlook can materially impact stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Group 1 - Spotify reported Q1 revenue of €4.2 billion ($4.8 billion), a 15% year-over-year increase, meeting guidance and analyst expectations [1] - Operating profit was €509 million, below the expected €548 million, impacted by over €76 million in social costs related to employee wages and benefits [1] - Subscription users grew by 12% to 268 million, exceeding analyst expectations of 265.2 million, with Q2 user forecast at 273 million [1] Group 2 - CEO Daniel Ek expressed confidence in the long-term outlook despite short-term challenges, stating the company's direction is clearer than ever [1] - Monthly active users increased by 10% to 678 million, slightly below analyst expectations of 679 million, with Q2 forecast at 689 million [1] - Analysts noted that despite uncertainties, competitive advantages are strengthening, with positive long-term prospects driven by potential price increases and new features [2] Group 3 - Spotify is expanding into audiobooks and podcasts, recently entering the video content space to compete with YouTube [2] - The company has launched a new partnership program compensating creators based on content consumption rather than advertising, paying $100 million to podcast publishers and creators since the start of the year [2] - The music industry is experiencing a slowdown, prompting record labels to seek new revenue streams from artists, while Spotify is developing a higher-priced "Music Pro" package [3] Group 4 - Following the earnings report, Spotify's stock initially dropped over 8% in pre-market trading but later narrowed the decline to 5% [3] - As of March 31, the company's stock had risen 22% year-to-date, with a more than 100% increase over the past 12 months [3]

Group 1 - Spotify's Q1 revenue was €4.19 billion, slightly below market expectations of €4.21 billion [1] - The Q1 gross margin was 31.6%, exceeding market expectations of 31.5% [1] - The number of monthly active users in Q1 reached 678 million, slightly below the market estimate of 679.04 million [1] - Total paid subscribers in Q1 were 268 million, surpassing market expectations of 265.22 million [1] Group 2 - Q1 earnings per share were €1.07 [2] - For Q2, the expected monthly active users are 689 million, below the market estimate of 694.38 million [2] - Projected Q2 revenue is €539 million, lower than the market expectation of €553.2 million [2] - Expected total paid subscribers for Q2 are 273 million, slightly above the market estimate of 271.41 million [2] Group 3 - Spotify's stock dropped over 6% in pre-market trading [3]