Benzinga | Jul 28, 2021 09:40AM EDT

Spotify Stock Falls On Q2 ARPU Drop, MAU Growth; Predicts Operating Loss For Q3 And Q4

* Spotify Technology SA (NYSE:SPOT) reported second-quarter FY21 revenue growth of 23% year-on-year to (euro)2.33 billion, helped by advertising strength and subscriber performance. The Q2 revenue of $2.81 billion beat the analyst consensus of $2.72 billion.

* FX headwinds of 430 basis points were higher by 230 basis points than expected, primarily driven by US dollar weakness against the Euro.

* Total MAUs (Monthly Active Users) rose 22% Y/Y to 365 million. The MAU performance was slower than expected, primarily due to lighter user intake during the first half of the quarter.

* Premium Subscribers increased 20% Y/Y to 165 million. Ad-Supported MAUs grew 24% to 210 million.

* Premium Revenue grew 17% Y/Y to (euro)2.06 billion. Within Premium, the average revenue per user (ARPU) was down 3% Y/Y at (euro)4.29. Ad-Supported revenue rose 110% to (euro)275 million.

* The gross margin expanded by 308 bps to 28.4%. It posted a positive operating margin of 0.5%.

* Premium gross margin expanded 261 bps to 30.8%. Ad-Supported gross margin expanded by 2,321 bps to 11.3%.

* Loss per share of $(0.23) beat the analyst consensus for a loss of $(0.45).

* Spotify held (euro)3.1 billion in cash and equivalents at the end of Q2 and generated (euro)54 million in operating cash flow.

* Outlook: Spotify sees Q3 revenue of (euro)2.31 billion-(euro)2.51 billion, gross margin of 24.4%-26.4%, Total MAUs of 377 million-382 million, Total Premium Subscribers of 170 million-174 million, and an operating loss of (euro)(80) million - (euro)0 million.

* It sees Q4 revenue of (euro)2.48 billion-(euro)2.68 billion, gross margin of 24.1%-26.1%, Total MAUs of 400 million-407 million, Total Premium Subscribers of 177 million-181 million, and an operating loss of (euro)(152) million-(euro)(72) million.

* Price action: SPOT shares traded lower by 5.98% at $222.77 on the last check Wednesday.

* Photo by Photo Mix from Pixabay