Spotify Technology (SPOT) reported fiscal fourth quarter earnings on Tuesday that missed expectations. But strong guidance helped boost shares in early trading as the music-streaming platform continues to focus on profitability amid recent price hikes and changes to its podcasting strategy.
The company reported an operating loss of 75 million euros ($80.6 million) in the quarter amid severance and real estate-related charges. This was ahead of updated company guidance that Q4 operating losses would come in between 93 million euros and 108 million euros.
The audio giant also guided to a strong Q1 operating income of 180 million euros, well ahead of Wall Street consensus expectations. Spotify reported an operating loss of 231 million euros in the year-ago period.
On the earnings call, Spotify CEO Daniel Ek emphasized the company’s recent “efficiency” strategy.
“The hurdle rate for any new type of investments will be much higher than what it has been,” he said, adding Spotify will be more diligent and disciplined in shutting down previous processes that no longer serve this new mandate.
“That doesn’t mean that the company is any danger of any kind,” he said. “We’re just simply thinking about, ‘Are there better ways for us to do this?'”
The company also saw an uptick in subscriber growth, gross margins, free cash flow, and average revenue per user. Shares climbed as much as 11% shortly after the opening bell.
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Barbara Terrio is a seasoned business journalist, delving into the world of finance, startups, and entrepreneurship. With a knack for demystifying complex economic trends, she helps readers navigate the business landscape. Outside of her reporting, Barbara is an advocate for financial literacy and enjoys mentoring aspiring entrepreneurs.
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