Earnings Results: • Revenue grew 21% year-over-year on a constant currency basis to €3.6 billion • Premium ARPU growth accelerated to 7% year-over-year on a currency-neutral basis • Gross margin hit a Q1 record of 27.6%, surpassing guidance by 121 basis points • Operating income of €168 million set a new record • Free cash flow was positive at €207 million
Future Guidance: • Forecasting 631 million MAU in Q2, an increase of 16 million from Q1 • Expecting 245 million subscribers in Q2, an increase of 6 million over Q1 • Projecting currency-neutral revenue growth rate of over 22% year-over-year in Q2 • Anticipating gross margin of 28.1% and operating income of €250 million in Q2 • Expecting sequential ramp in gross margin through 2024 and improvements in operating income and margin
The Q1 2024 earnings call highlighted Spotify’s solid performance driven by strong revenue growth, expanding gross margins, and record-setting operating income. Despite missing MAU targets due to factors like workforce reduction disruption and pulled back marketing spend, Spotify remains focused on monetization and resourcefulness. The company is adjusting marketing efforts to acquire and reactivate high-value users.
Spotify continues to enhance its product offerings, adding more value for consumers through audiobooks, podcasts, and video content. The company aims to capture this added value through periodic price increases across various markets. Flexibility is a key focus, with plans to introduce audiobook-only and music-only subscription tiers.
Spotify maintains a positive outlook for 2024, projecting continued revenue growth and profitability improvements. The company is confident in its ability to deliver on the ambitious goals outlined in its 2022 Investor Day presentation, with potential upside from its newfound discipline and resourcefulness.
Notable quotes: • Daniel Ek: “Bottom line, we are really good at pivoting our attention when it makes sense. When I say pivot, I really mean making tweaks that will get us to an even better outcome.” • Daniel Ek: “This isn’t just a sort of one-trick pony anymore, but it is actually multiple verticals working together to provide a consistent great story around just more and more choice for consumers that drives more and more engagement.” • Ben Kung: “Consider this a real trend and not just a function of one-offs.”