Spotify’s revenues grew 26.3%, but Wall Street was disappointed
On May 2, music streaming company Spotify (SPOT) announced its first quarterly report since going public last month. Spotify generated revenues of ~1.1 billion euros (~$1.4 billion) in 1Q18, growing 26.3% from 1Q17. The company expects to generate 1.1 billion–1.4 billion euros in 2Q18.
The company posted a net loss of 169.0 million euros ($202.0 million) in 1Q18, slightly lower than its net loss of 173.0 million euros in 1Q17. The company is currently prioritizing growth over profit.
Spotify’s gross margin is increasing
However, Spotify’s revenues were slightly lower than Wall Street’s estimate of $1.4 billion. Its stock has declined 11.8% since declaring its results. Its stock has steadily climbed since going public on April 3.
The company’s gross margin was 24.9% in 1Q18, slightly higher than its guidance of 23.0%–24.0%. Spotify’s increasing gross margin is a sign of its increasing bargaining power with music labels.
Spotify’s operating loss stood at 41.0 million euros ($48.9 million), which improved significantly from its 1Q17 operating loss of 131.0 million euros.