Spotify Posts 10% Q4 Revenue Jump, but Shares Fall on Cautious Q1 Guidance
Spotify shares closed 8% lower Wednesday, at $317.25, after conservative Q1 revenue guidance based on pandemic uncertainties and ongoing effects on user, subscriber and revenue growth. Revenue guidance for Q1 is $2.4 billion-$2.6 billion with 354 million-364 million monthly active…
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users (MAUs), including 155 million-158 million paid, said the company's Q4 shareholder letter Wednesday. Q4 revenue was $2.6 billion vs. $2.3 billion in the year-ago quarter. MAUs rose 8% to 345 million -- 155 million premium, 199 million ad-supported -- but premium user retention rate slipped year on year; the company expects churn to decline in 2021. Average revenue per user (ARPU) among premium subscribers fell by $5.12. Moving into 2021, COVID-19 “still has the potential to be a headwind, as it's difficult to fully gauge its impact,” said CEO Daniel Ek on a Wednesday investor call. Though sheltering at home in 2020 led to more listeners turning to Spotify for music and podcasts, “it also created disruption in listening habits, consumption hours and the release of new music and podcasts,” Ek said. Responding to an analyst question on whether conservative guidance is an indication user growth has peaked, Chief Financial Officer Paul Vogel cited promotional activity in Q1 2020 that didn’t repeat in Q1 this year. He also noted a pull-forward of listeners in a strong Q4. Spotify announced family plan price hikes Monday in 25 additional markets and full portfolio price increases in Sweden, Norway, Finland and Iceland to improve ARPU, Ek said. The music service had 2.2 million podcasts on the platform in Q4, up from over 1.9 million in Q3. A quarter of total MAUs engaged with podcasts last quarter, up from 22% in Q3, Ek said, and consumption hours doubled from Q4 2019.