In its first quarterly report since becoming a public company, Spotify on Wednesday reported a much wider-than-expected loss.
In its first quarterly report since becoming a public company, Spotify had disappointing news: a loss that came in much bigger than expected.
Investors sold the stock on the news. In recent after-hours trading, shares in the streaming music company were down $11.74 a share, of 6.9%, to $158.26.
The company announced its first-quarter results Wednesday after the bell. The report follows its direct initial public offering last month.
Here’s what the company reported and how those results compared with Wall Street expectations and its prior results.
Revenue: €1.14 billion. Analysts on average were expecting €1.14 billion. In the first quarter a year ago, Spotify posted €902 million in sales.
EPS (GAAP): A loss of €1.01 a share. Wall Street was expecting a loss of €0.23 a share. In the same period a year earlier, the company lost €1.15 a share.
Net loss: €169 million. The comapny lost €173 million in the first quarter a year ago.
Monthly Active Users: 170 million. In the fourth quarter, the company had 157 million. In the first quarter last year, it had 131 million.
Premium subscribers: 75 million. That’s up from 71 million in the fourth quarter and 52 million in the year-ago period.
The company’s results were weighed down by a decline in advertising revenue and slow growth in money from its subscriptions. Spotify saw €102 million in revenue from its ad-supported offering in the first period, which was down 22% from the fourth quarter. It pulled in $1.04 billion in revenue from its subscriptions, which was up just 2% from the fourth quarter.
The company did show improvement on its costs, though. Its gross profit margin, which represents the portion of its revenue it has left after paying the direct costs of providing its services, came in at 24.9% for the quarter. That was up from 24.5% in the fourth quarter and 11.7% in the year-ago period.
Many analysts and investors have bet that Spotify will become a significantly profitable company in the future and are betting that one way it will improve its bottom line is by increasing its gross margins.
But the company also kept its operating costs in line. It had €324 million in operating expenses in the period, which was down from €369 million in the fourth quarter. A big cut in marketing expenses helped the company lower its overall costs.
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