Spotify Technology (NYSE:SPOT) stock fell on Tuesday after the company reported first-quarter 2025 financial results. Here's a look at the key figures from the quarter.
The Details: Spotify reported quarterly earnings of $1.13 per share, which missed the analyst consensus estimate of $2.33.
The company reported quarterly sales of $4.41 billion (4.19 billion euros), up by 15% year-on-year, which beat the analyst consensus estimate of $4.20 billion.
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Spotify clocked monthly average user (MAU) net additions of 3 million quarter-over-quarter to 678 million, which is in line with the guidance.
Premium subscribers grew 12% year-over-year to 268 million, reflecting year-over-year and quarter-over-quarter growth across all regions, beating expectations by 3 million.
Within Premium, the average revenue per user (ARPU) rose 4% year-over-year to 4.73 euros, and ad-supported revenue rose 8%.
Margins: The gross margin improved by 403 bps year-over-year to 31.6%, driven by improvements in its Premium and Ad-Supported segments.
The Premium gross margin was 33.5%, up 332 bps year-over-year, driven by favorability from audiobooks and music.
The ad-supported gross margin was 15.3%, up 885 bps year-over-year. This was driven by favorability from music, Other Cost of Revenue, and podcasts.
Operating income surged 203% year-over-year to 509 million euros with a margin of 12.1%.
Spotify held 8.0 billion euros in cash and equivalents, generating 534 million euros in free cash flow.
The company's workforce consisted of 7,258 full-time employees globally, down from 7,721 last year.
Outlook: Spotify expects fiscal second-quarter 2025 revenue of $4.52 billion (4.3 billion euros) versus an analyst consensus estimate of $4.39 billion and total MAUs of 689 million.
Bloomberg analyst Geetha Ranganathan said that despite the overall uncertainty, the competitive moat is deepening and the long-term outlook is positive with several levers like potential price increases, a new superfan tier, a bigger ad push and new features like video podcasts.
Spotify stock has gained 31% year-to-date.
Price action: SPOT stock traded lower by 7.15% at $555.01 premarket at the last check on Tuesday.
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