Editor's Note: This post is breaking and will be updated
Spotify (SPOT) reported fourth quarter financial results on Wednesday that beat Wall Street expectations — although the stock plunged after the company gave weak guidance on monthly active users for Q1 2022.
Here is how Spotify performed this quarter, compared to analyst expectations, according to Bloomberg consensus estimates:
Revenue: $3.025 billion versus $2.98 billion expected (+24% Y/Y, +8% Q/Q)
Adjusted loss per share: -$0.23 versus -$0.44 expected
Premium revenue came in at $2.58 billion — up over 22% — whereas ad-supported revenue came in at $443 million.
The company is widely expected to address the public outcry over Joe Rogan during the earnings call, as musicians David Crosby and Stephen Stills announced within the last few hours that they'd be joining Neil Young in pulling their music off Spotify in an effort to oust Rogan— by far Spotify’s most popular personality, with 11 million listeners. The platform signed a reported $100 million deal with Rogan back in 2020.
For the current quarter, total monthly active users came in at an impressive 406 million— near the top end of the company's previous quarter guidance between 400-407 million. However, the stock swooned by over 15% in after-hours trading, after the company forecasted 418 million MAUs for the upcoming quarter — missing estimates of 422 million.
Total premium subscribers for Q4 totaled 180 million (+16% Y/Y, +5% Q/Q), which also came toward the top of the company's previous guidance between 177-181 million. Ad-supported MUAs settled at 236 million (+19% Y/Y, +7% Q/Q).
Spotify currently has users in more than 184 countries and markets, and is far and away the leader of the pack, capturing 31% of total U.S. subscribers, followed by Apple Music (AAPL) at 15%, and Amazon Music (AMZN) and Tencent (TCEHY) tied at 13%. YouTube Music (GOOGL) rounds out the top five at 8%.
In spite of the outcry over Rogan, however, analysts have reiterated their bullish stance on the stock with some of Wall Street's top banks citing potential, untapped upside. Citigroup (C) upgraded Spotify from "Neutral" to "Buy" earlier this week, crediting the company's ability to improve ad-supported monetization. The stock surged 12%.
And on Tuesday, Morgan Stanley (MS) said that although "technical aspects" have weighed on shares, the music streaming giant could both accelerate user growth and expand gross margin this year, based on its unique position in the market.
Morgan Stanley noted that while Spotify's Joe Rogan backlash is "clearly not a positive for shares," the debate was "not the first of its kind on a major audio platform and likely will not be the last."
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On Sunday, the streaming giant vowed to promote "rules of the road" for its content, and plans to add a content advisory to any podcast episode about COVID-19.
However, the company flatly refused calls to "take on the position of a content censor."
Amid the furor, data suggests Spotify is backed by the increasingly lucrative economics of streaming, especially as digital media continues its growth, and its massive scale. The effects of similar controversies on Netflix (NFLX), which faced similar outrage over "Cuties" and Dave Chappelle's comedy special, had a negligible impact on its stock.
"I personally don't think that paying subscribers will leave a platform because there's one program that is being disputed," Ola Sars, founder and CEO of B2B music streaming company Soundtrack Your Brand, told Yahoo Finance during a recent interview.
"[Spotify] has been through this before, so has all of the other media platforms, and consumers kept paying the bill…This is probably not the only situation where certain artists don't like other types of content," the executive continued.
He added: "This will be day-to-day business for Spotify [and they will handle] it like any other media company moving forward."
Alexandra is a Producer & Entertainment Correspondent at Yahoo Finance. Follow her on Twitter @alliecanal8193
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