Spotify Technology SA (SPOT) reported robust financial performance for the first quarter of fiscal 2024, exceeding analysts’ expectations. Revenue climbed 20% year-over-year to €3.64 billion ($3.95 billion), outpacing the consensus estimate of $3.85 billion. Earnings per share (EPS) of €0.97 ($1.05) also surpassed the $0.70 consensus.
Premium revenue, which accounts for the majority of Spotify’s income, grew 20% year-over-year to €3.25 billion, driven by subscriber additions and increased average revenue per user (ARPU). Total monthly active users (MAUs) reached 615 million, marking a 19% increase annually but falling short of the original guidance by 3 million. Spotify attributed the lower-than-expected MAU growth to reduced marketing activity following record performance in 2023 and recent organizational changes, including layoffs.
Ad-supported MAUs experienced a 22% year-over-year growth to 388 million, while premium subscribers increased by 14% year-over-year to 239 million. Within the Premium tier, ARPU rose by 5% year-over-year to €4.55. Ad-supported revenue also saw an 18% increase to €389 million.
Spotify’s gross margin improved significantly, reaching 27.6%, reflecting enhanced profitability in podcast and music streaming services. Operating income reached a new quarterly high of €168 million with a margin of 4.6%. Spotify held €4.7 billion in cash and equivalents and generated €207 million in free cash flow.
For the second quarter, Spotify projects revenue of €3.8 billion (consensus estimate: $3.76 billion) and total MAUs of 631 million. SPOT shares surged over 107% in the past year, providing investors with access to the company’s growth through ETFs such as Global X Social Media ETF (SOCL) and ProShares On-Demand ETF (OND).
