Spotify Technology S.A. (SPOT) shares plummeted 9.22% in intraday trading on Tuesday following the release of its first-quarter earnings report and second-quarter outlook. Despite showing strong user growth, the company's revenue and profit projections for Q2 fell short of analyst expectations, sparking investor concerns.
For the first quarter, Spotify reported revenue of EUR 4.19 billion, slightly below the estimated EUR 4.20 billion. However, the company outperformed in terms of user acquisition, with monthly active users (MAU) reaching 678 million, surpassing the forecast of 671.9 million. Looking ahead to the second quarter, Spotify's outlook painted a mixed picture. While the company expects MAU to grow to 689 million, exceeding analyst estimates of 684.9 million, its revenue forecast of EUR 4.3 billion falls short of the EUR 4.38 billion anticipated by analysts.
The primary driver behind the stock's decline appears to be Spotify's lower-than-expected Q2 operating income forecast. The company projects Q2 operating income of EUR 539 million, which includes EUR 18 million in payroll taxes, falling below the analyst estimates of EUR 557.5 million. CEO Daniel Ek acknowledged the potential for "short-term noise" but expressed confidence in the company's long-term prospects, citing strong growth in Latin America and Asia-Pacific regions.
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