Spotify(US:SPOT) Benzingaยท2025-02-04 19:16Core Viewpoint - Spotify Technology S.A. reported strong quarterly sales and user growth, leading to positive analyst ratings despite slightly missing earnings per share estimates [1][2][3]. Financial Performance - Quarterly earnings were $1.88 per share, below the analyst estimate of $2.06, while quarterly sales reached $4.53 billion (4.24 billion euros), up 16% and exceeding the consensus estimate of $4.15 billion [1]. - Monthly average user (MAU) net additions were 35 million, surpassing guidance by 10 million, and subscriber net additions were 11 million, exceeding guidance by 3 million [2]. Analyst Ratings and Expectations - Goldman Sachs analyst Eric Sheridan reiterated a Buy rating with a price target of $550, while JP Morgan analyst Doug Anmuth maintained an Overweight rating [3]. - Analysts expect a positive market reaction due to strong revenue growth, premium subscriber count momentum, and gross margins of 32.2%, above the company's guidance of 31.8% [3]. Forward Guidance - The company guided fiscal first-quarter 2025 MAUs in line with estimates, premium subscribers slightly ahead, and total revenue in line, with operating profit expected to be approximately 23% higher than previous estimates [4]. - The profitability trend into 2025 is viewed favorably, alleviating investor concerns regarding potential headwinds from management commentary and industry news [5]. Strategic Insights - Sheridan's analysis highlights stable user and subscriber trends, rising pricing, and effective subscriber funnel conversion as key drivers for revenue and operating margin improvement [6]. - JP Morgan noted that Spotify is making progress towards medium-term financial targets, with expectations for strong performance across all metrics in the first quarter [8]. Upcoming Earnings Call Focus - Analysts will seek updates on gross margin drivers, operating income, free cash flow, MAU and premium subscriber growth, and pricing strategies during the upcoming earnings call [9].