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Author: Alan LittleDate: 2020-10-30

Spotify (SPOT) slumps 8% after top and bottom line Q3 misses

Spotify Technology (SPOT) said that it “performed at a high level” in Q3 and was encouraged by its monthly active user (MAU) numbers, despite falling short of top and bottom line estimates as shares slumped 8% on Thursday.

Spotify posted its report before markets opened in Europe, coming in with a €101m net loss for the latest three-month period, which was a huge swing from the €241m income it posted a year ago.

Revenue of €1.98bn did rise by €250m during the same time span, but this was not enough to beat the €2bn expectations as operating expenses climbed 37% to €529bn.

Ad-supported revenue was strong, rising 9% year over year to €185m as Spotify enjoyed a bounce back from the COVID-19-related headwinds earlier in the year.

MAUs also soared 29% to 320m in Q3 as the music streaming service attracted more people in Europe, India and North America.

In a statement, Spotify said: “We are particularly encouraged by our MAU strength this quarter, as it supports the long-term health of our customer acquisition funnel and gives us confidence as we continue to expand into new markets.”

Subscribers to the premium service rose almost in tandem with MAUs as a 27% spike took its paid customer base to 144 million.

However, revenue per user did fall 10% to €4.19 amid a flurry of discounted plans for new users.

A 13% rise in new music releases and high demand for podcasts from the likes of Joe Rogan and Michelle Obama did deliver high levels of engagement on the platform.

Looking ahead to Q4, Spotify says that revenue should top out at €2.2bn but that there would be another operating loss of €32m to €112m.

The Q3 misses dominated the narrative for investors on Thursday and shares fell 7.67% on the New York Stock Exchange to $255.15.

Spotify Stock

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