Spotify shares Plummet after first Public Earnings

Spotify Technologies SA (NYSE: SPOT) reported its first quarter financial results for the fiscal year. This is the company’s first earnings since going public through direct listing in April, but failed to impress investors despite reporting strong user growth. Spotify shares plummeted by 9.1 percent on Thursday after the opening bell.

For the first quarter, Spotify reported revenue of 1.14  billion euros or $1.37 billion, increasing 26 percent year over year.

Premium revenue contributes to the majority of Spotify’s revenue, which drove in 1.03 billion euros or $1.22 billion, increasing by 25 percent year over year. Ad-supported revenue was 102 million euros or $122.2 million, increasing 38 percent year over year. Average revenue per user was 4.72 euros or $5.65, declining 14 percent year over year.

Although majority of the revenue for Spotify comes from Premium subscribers, the company says advertising revenue can potentially become a stand-alone growth opportunity.

Spotify reported operating loss was 41 million euros or $41.1 million, increasing by 71 percent from the previous year’s same quarter loss of 139 million euros.

Spotify still reported a net loss for the quarter, but has declined significantly since the previous year’s same quarter. The company did say the its quarterly losses were a result of investments to expand more previously, but also mentioned that it would turnaround shortly.

Monthly active users grew to 170 million, increasing 30 percent year over year. Premium subscribers grew to 75 million, increasing 45 percent year over year. The results failed to impress investors, despite it being on track to meet Spotify’s forecast of 200 million by the end of the year.

For the upcoming fiscal year, Spotify forecasts monthly active users to grow by 26 percent to 32 percent to 198 to 208 million users on a revenue growth of 20 percent to 30 percent to $5.86 billion to $6.34 billion.

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