Spotify (SPOT) Q2 2021 Earnings

Results

• 365 million MAU (monthly active users), up 22% YoY, short of expectations of 372.5 million

• Also fell short of its guidance of 366-373 million users

• Blamed on ongoing pandemic affecting performance in several markets such as in India, pausing of some marketing campaigns, and a user sign-up issue

• Paid subscribers of 165 million, up 20% YoY, within the company’s guidance range

• Revenue of US$2.75 billion, up 23% YoY, just beating expectations

• Ad supported revenue grew 110%

• Accounts for 12% of business now, which has traditionally been below 10%

• Expected to grow its revenue share further as Spotify shifts from a music subscription company to an audio platform, particularly with podcasts greatly helping ad revenue

• Premium revenue grew 17%

• EPS of -US$0.225, significantly beating consensus of -$US0.45

• Gross Profit of US$782 million, up 28% YoY

• Operating profit margin improved to 0.5% from -9.8% Q2 2020, but did reduce from Q2 2021 of 0.7%

• FCF of US$40 million, up 26% YoY

Podcasts

• 2.9 million podcasts at end of Q2, up from 2.6 million the prior quarter

• Aggregate consumption of podcasts rose 95% on Spotify from a year ago. That number was 30% on a per user basis

Guidance for Q3

• Between 377-382 million MAUs

• Between 170-174 Premium subscribers

Full Year Guidance

• 400-407 million MAU by end of year, below consensus of 414.5 million

Market Reaction

• Share price dropped 8% on the open due to falling short of expectations in MAU, marking the biggest intraday decline in three months.