This information has been prepared by IG, a trading name of IG Australia Pty Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
Spotify's third-quarter (Q3) earnings report was good, but not great for investors. The stock of the music streaming company dropped after it released its revenue report.
Spotify’s slow revenue growth
Spotify was expected to be a major stock since initial public offering [IPO] went public earlier this year. While the stock peaked in the summer, it’s been fluctuating in Q3. The company’s revenue in Q3 was $1.54 billion, an increase of 31% from 2017.
‘The quarter was largely in line with our expectations and our guidance range, except that Operating Margin outperformed our forecast’, said Spotify.
Spotify still top music provider
The corporation said that it gained more monthly active users, adding four million subscribers to its paid premium service for a total of 87 million dedicated listeners.
Despite competition from Apple Music and its 50 million customers, Spotify is still the most dominant music streaming provider in the world. The corporation reported that the service is raising its customer numbers in Latin America.
Spotify helped to lift its subscriber base by offering discount plans for students and families. The corporation also had profits predominately through its free, ad-supported service.
Spotify’s plans for Q4
Spotify plans to expand its entertainment options through new partnerships. The corporation will join with Hulu and Showtime, two other streaming services, to offer more content to customers.
Spotify warned that profits may decrease in Q4 because of its synergy with Google Home. The company will provide the voice-activated system to new subscribers as part of its family plan. As a result of the discount, the service expects that its future profits will diminish.
‘We anticipate that this partnership will have an adverse impact of approximately 50 basis points on our Gross Margin profile in Q4,' noted Spotify in an address to stockholders.
.jpg)
