Shares of Spotify (NYSE:SPOT) jumps 10% in premarket trading Tuesday after the audio streaming company posted better-than-anticipated earnings, revenue and gross margin for the fiscal Q1 2024.
The company reported earnings per share of EUR 0.97, beating the consensus estimates of EUR 0.64. Revenue was reported at EUR 3.64 billion for the quarter, slightly above the consensus estimate of EUR 3.61 billion.
Premium revenue contributed EUR 3.25 billion, surpassing the expected EUR 3.22 billion.
In terms of user metrics, Spotify's monthly active users (MAUs) reached 615 million, slightly missing the estimated 617.89 million.
The total number of premium subscribers stood at 239 million, just below the forecast of 239.26 million.
However, the company outperformed expectations with a gross margin of 27.6%, compared to the projected 26.5%.
Looking forward to the second quarter, Spotify anticipates revenue of EUR 3.8 billion, which is marginally below the consensus forecast of EUR 3.85 billion.
MAUs are anticipated to increase to 631 million, though still below the expected 637.06 million. Total premium subscribers are projected to rise to 245 million, also slightly under the forecast of 246.06 million.
Moreover, Spotify predicts a gross margin of 28.1% for the second quarter, while analysts were looking for 26.7%.
"Given the gross margin beat and better-than-anticipated 2Q24 operating income and gross margin outlook, we would expect to see shares trade higher today," Citi analysts said in a note.
"User metrics were a bit soft. But, better ARPUs allowed revenues to come in a bit above the Street. The most notable upside came from expense controls where 1Q24 gross margins and operating income came in above consensus," they wrote.