Spotify Technology SA SPOT surged more than 10% Monday as investors took stock of the company’s profitable third quarter.
The term brought accelerated expansion in monthly active users (MAUs) and exceeded expectations for subscriber growth, gross margins and operating profit. Premium subscriptions grew 31% and total MAUs 30%, while churn improved 19 basis points.
Earnings came in at 39 cents per share, which may not compare to the consensus estimate of a 32-cent loss. Sales came in at $1.89 billion.
Management touted its metrics and model as superior to those of streaming rivals, including Apple Inc. AAPL and Amazon.com, Inc. AMZN.
“We continue to feel very good about our competitive position in the market,” the earnings report read. “Relative to Apple, the publicly available data shows that we are adding roughly twice as many subscribers per month as they are. Additionally, we believe that our monthly engagement is roughly 2x as high and our churn is at half the rate.
"Elsewhere, our estimates imply that we continue to add more users on an absolute basis than Amazon. Our data also suggests that Amazon's user base skews significantly more to ‘Ad-Supported' than ‘Premium', and that average engagement on our platform is approximately 3x.”
Spotify attributed its quarterly success partly to podcasts. An increase in podcast hours streamed correlated with increased engagement and conversion of paid users.
The report also announced the January retirement of CFO Barry McCarthy, who is expected to be reappointed to the board of directors. Paul Vogel, vice president of FP&A, Treasury and Investor Relations, will succeed McCarthy as CFO.
Spotify's stock traded higher by 10.8% to $133.93 per share at time of publication.
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