Spotify Shares Close Down Despite a Beat on Top and Bottom Line in Q1

Shares of Spotify were down over 12% on Wednesday after the company reported first quarter earnings and revealed a beat on both the top and bottom line.

The losses may have been brought on by the company reporting some weakness in ad-supported revenue and because it missed estimates slightly on paid subscribers.

For the quarter, Spotify reported earnings per share of 21 euro cents. This is compared to an expected loss of 24 euro cents, per Refinitiv.

Revenue at $2.66 billion euros was also aheasd of $2.62 billion euros, per Refinitiv.

Spotify CFO Paul Vogel says this is a perfect time to invest.

The company has heavily invested in its podcasting business and is trying to grow ads in the space. Its ad-supported revenue came in at 282 million euros. That made up 11% of its total revenue. It was the largest first quarter ever for the segment. Still, it missed analyst expectations of 304.1 million euros in ad-supported revenue, per FactSet.

The company ended the quarter with 182 million paid subscribers, which is up 15% year over year but was below its original forecast of 183 million.

Spotify said exiting Russia led to a loss of 1.5 million subscribers. Revenue from subscriptions grew to 2.38 billion euros, up 23% year over year.

Monthly active users, or MAUs, reached 422 million in its first quarter, up 19% year over year and exceeding its own guidance by 4 million. It also beat analyst expectations, according to a FactSet consensus.

Spotify had 4 million podcasts on its platform at the end of the quarter, up from 3.6 million in the fourth quarter of 2021.

The company expects to post 428 million MAUs in its second quarter and expects to reach 187 million total paid subscribers.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.