Complete Financial data analysis of good business: Spotify Technology S.A. (NYSE: SPOT)

Financial results Spotify Technology S.A. (NYSE: SPOT) fourth fiscal quarter of 2019:

On 21 Feb 2020, Spotify Technology S.A. (NYSE: SPOT) stock changed -0.62% to recent value of $146.95. There are 184.98M shares outstanding and 128.42M shares are floated in market. SPOT over recent time; they noted that 1159639 shares changed at hands contradiction to its average trading volume of 1277.64K.

Spotify Technology S.A. (SPOT) recently stated financial results for the fourth fiscal quarter of 2019 ending December 31, 2019.

2020 OUTLOOK

With three consecutive quarters of accelerating MAU growth and another year of record net subscriber addition behind us, we are enthusiastic about the underlying trends in the business. From history, we know that MAU growth tends to be a leading indicator of future subscriber additions, which is then followed by revenue gains in both premium and ad-supported users. While we believe these trends will continue moving forward, we have been appropriately conservative regarding our 2020 guidance as our data, particularly about the benefits from podcasts, is still reasonably new.

On the cost side, we have been consistent in our messaging. Any decision to accelerate our investment in podcast and technology spend should be viewed as an indication of our belief that our strategy is having tangible results. We have gained even more confidence in the data, particularly about the benefits from podcasts, and as a result, 2020 will be an investment year.

MONTHLY ACTIVE USERS (“MAUs”)

Total MAUs grew 31% Y/Y to 271M, outperforming the high end of our guidance.

For the third straight quarter, we have outperformed the high end of our MAU guidance range as top-of-funnel growth continues to accelerate. Growth re-accelerated across our 3 largest regions (Europe, North America, and Latin America), while the Rest of World section remains our fastest growing. Of note, North America saw the fastest quarterly growth since 4Q’18. Seeing a re-acceleration in user growth, at our scale, is a strong signal to us of the health of our business. We know, from history, that strong MAU trends are a harbinger of future subscriber and financial growth.

In previous quarters, we’ve spoken about continued innovation in the product experience. Some of these improvements yield immediate results, while others can take quarters to materialize into tangible benefits. With that in mind, in the last few quarters we have seen steady improvements in retention, in some cases importantly. Importantly, each of our top 20 markets has seen improvement in retention year on year. While further improvements are not explicitly assumed in our future expectations (2020 guidance below), our belief is that continued enhancements to the product and further growth in podcasts will lead to even better retention, higher conversion, and ultimately, higher lifetime value. We are seeing this thesis play out in our results to date, and you should expect us to continue to invest in product and innovation if these trends persist.

Results in Q4 were bolstered by our promotional activity. On December 5, 2019, we released the 5th yearly year-end Spotify Wrapped campaign. The campaign ran through the end of the month and was improved in several key ways this year. Importantly, we delivered the consumer experience via the native mobile app (in addition to a website hosted on Spotify.com) for the first time, expanded the reach of the campaign to 21 markets globally, highlighted insights from the past decade (in addition to the year), and provided a personalized Wrapped experience to all Spotify creators (inclusive of podcasters). Over 60M users engaged with Wrapped content this year, spurring over 40M shares of Wrapped stories and cards and over 6.5B streams from Year/Decade Top Songs playlists.

FINANCIAL METRICS

Revenue

Total revenue of €1,855M grew 24% Y/Y in Q4. Consolidated revenue was in line with our expectations with Premium slightly better and Ad-Supported slightly weaker than forecast. Premium revenue was €1,638M, up 24% Y/Y, while Ad-Supported revenue was €217M, up 23% Y/Y.

For the Premium business, average revenue per user (“ARPU”) of €4.65 in Q4 was down 5% Y/Y (down 6% not including the impact from FX rates). A important portion of this decline was driven by the extension of the free trial period across our entire product suite in the quarter. Not Including the impact of Trials & Campaigns, ARPU would have declined 2% Y/Y as a result of continued mix shifts in product and geography.

Ad-Supported revenue growth of 23% Y/Y was an acceleration from Q3, but still fell slightly short of expectations. We had a slower start than usual in Q4, particularly in our Direct business, following some of the technical issues we had implementing a new order management system last quarter. By December, momentum in bookings had returned to normal levels but wasn’t enough to compensate for the slower start to the quarter. With that stated, we still saw double digit rates of growth across each of our Direct, Programmatic, and Ad Studio channels. During Q4 we introduced Dynamic Ad Breaks (“DAB”) in the US and UK which added important sellable inventory. We plan to expand this capability into 10 more markets in Q1 and will continue to scale these capabilities as content becomes increasingly accessible over our total geographic footprint.

Simple Moving Average:

The stock disclosed a move of -1.51% away from 50 day moving average and 4.65% away from 200 day moving average. Moving closer, we can see that shares have been trading 0.44% away off 20-day moving average. Traders and technical analysts have the ability to use volume to help measure the strength of a particular move. Investors may also view volume levels when the stock price is nearing significant support or resistance levels, in order to confirm a breakout in either direction.

Analyst Review:

Analyst recommendations as reported on FINVIZ are rated on a 1 to 5 scale. 1 is equivalent to a Strong Buy rating, 3 a hold rating, and 5 a Strong Sell rating. The consensus recommendation is the average rating on a stock by the analyst community. Analyst mean recommendation for this stock stands at 2.4. A stock rating will usually tell the investor how well a stock’s market value relates to what analysts believe is a fair value for the stock, based on an objective evaluation of the company.

SPOT’s shares are at 7.29% for the quarter and driving a -1.06% return over the course of the past year and is now at -1.74% since this point in 2019. The average volatility for the week and month was at 3.85% and -0.79% respectively.

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