Spotify Stock (NYSE:SPOT)
After hours, Spotify (NYSE:SPOT) is down 4.2%. This is because the company’s earnings report for the third quarter showed that profits were lower than expected and that margins were still a problem. As a result, Spotify stock is down.
The final tally of €3.04 billion in revenue represents an increase in sales of 21%. And the growth of monthly active users exceeded projections by 20% and reached 456 million.
Of those, the number of premium customers increased by around 13% to 195M, thus exceeding expectations. Monthly active users funded by advertisements had a 24% increase year-over-year, reaching 273 million.
Regarding the breakdown of revenues, premium revenues increased by 22% to reach $2.65 billion. Ad-supported revenues increased by 19% to reach $385 million.
However, the gross margin decreased to 24.7% from 26.7% a year before, even though it increased sequentially from 24.6%. From an operational gain of $75 million the year before, the corporation swung to an operating loss of $228 million.
According to the statement by Spotify, “Gross margin came in below expectations, primarily owing to an adverse revision to previous period projections for rights holder obligations.” Because of the problematic general climate, our advertising revenue grew more slowly than anticipated, adversely affecting our profit margins.
Meanwhile, it led to an operational loss of €300M for the fourth quarter, which compares to estimates that predict a loss of €171M. Additionally, it forecasted a missing gross margin for the fourth quarter, anticipating 24.5% rather than the consensus of 25.3%. Spotify did anticipate sales of €3.2 billion and monthly active users (MAUs) of 479 million, which was above projections for 470.5 million MAUs.
Featured Image- Unsplash @ Alexander Shatov
Author Shariq Khan 
