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Spotify Technology SA SPOT

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Morningstar’s Analysis

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Spotify Posts Strong User Growth; Beats on Sales, Misses on the Bottom-Line; Raising FVE to EUR 174

Ali Mogharabi Senior Equity Analyst

Analyst Note

| Ali Mogharabi |

Spotify reported mixed fourth-quarter 2020 earnings with the top line exceeding our projections and the FactSet consensus estimate, but the bottom line missing both. Management provided 2021 guidance below the consensus. However, we remain confident that with continuing growth in podcast, lower churn in users and subscribers due to the firm’s subscription and ad-supported streaming music and podcast, Spotify can generate revenue above management’s guidance in 2021. On the bottom line we expect operating losses to shrink as scaling of the ad-support business, which includes podcast, will lead to operating leverage and profitability in 2023.

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Company Profile

Business Description

Spotify, headquartered in Stockholm, Sweden, is one of the world’s largest music streaming service providers, with over 150 million total listeners. The firm monetizes its users through both a paid subscription model, referred to as its premium service, and an ad-based model, referred to as its ad-supported service. Revenue from premium and ad-supported services represented 90% and 10% of Spotify’s 2017 total revenue, respectively.

Contact
42-44, Avenue de la Gare
Luxembourg, L-1610, Luxembourg
Sector Communication Services
Industry Internet Content & Information
Most Recent Earnings Dec 31, 2020
Fiscal Year End Dec 31, 2021
Stock Type
Employees 5,584

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