Jason Miles
Spotify, a Swedish company with its headquarters in Stockholm and Daniel Ek as its CEO, recently announced that as of the end of March, it had 515 million monthly active users (MAUs), an increase from 489 million at the end of December. Previously, the company predicted that it would complete the most recent quarter with 500 million MAUs.
Nearly all of our (key performance indicators) exceeded expectations, and we had our strongest first quarter since going public in 2018,” the company reported.
Revenue for the first quarter, however, fell short of projections as the company’s advertising revenue grew less quickly than that of several other digital giants due to macroeconomic uncertainty. Podcasting and the Spotify Audience Network helped Spotify’s quarterly ad-supported revenue increase by 17% year over year. According to the firm, “music advertising revenue increased by the low double digits year over year, reflecting double digit year over year growth in impressions sold, partially offset by softer revenue growth.” pricing due to the current macroeconomic environment.”
The company, which has been increasing its emphasis on profitability, also swung to a first-quarter loss; however, its operational deficit narrowed but increased from the previous quarter. Operating expenses increased 36%, or 34% on a constant currency basis, driven by higher personnel costs because of “primarily year-over-year headcount growth,” as well as other factors like severance-related charges linked to recent job cuts. Lower marketing and legal costs partially offset this increase.
Tim Nollen of Macquarie analyst had stated in a Monday report before to the company’s most recent quarterly results statement that “2023 is an important year for Spotify: after disappointing investors in ’22 with further investment spending, it’s important to show a path to profits.” In light of the fact that “many questions remain over its ability to generate consistent profitability,” he claimed. Nollen kept his “outperform” rating and $150 price target on Spotify shares in his study titled “Singing new tunes in 2023,” nevertheless.
The analyst added, “A price increase seems likely,” noting that Spotify has not adjusted its prices in years since it has fiercely competed with Apple Music and Amazon Music, thereby pegging its pricing to that of its rivals. Spotify now has room to hike its pricing thanks to their recent price increases.
