Spotify Technology (NYSE: Spot) witnessed its shares sharply on Tuesday after its results were issued in the second quarter of 2025. Despite the growth of the strong user, the company erred in profits and revenue expectations and issued cautious expectations, which rocked the investor’s confidence.
Wall Street analyzes returned the stock after the quarterly results. Jp Morgan Analyst Doug Animouth has repeated the weight gain classification on Spotify, indicating constant confidence in the company’s long -term prospects despite the opposite winds in the near term.
Similarly, Goldman Sachs Analyst Eric Sheridan maintained a purchase classification, which confirms his positive outlook on the expectations of a reassurance price of $ 775.
Also read: Spotify user base grows, but profitability is related to survival
While these analysts indicate the basic belief in the Spotify business model, the immediate market reaction highlights the street sensitivity to the deviations of financial performance.
Anmuth noticed that Spotify is well implemented on its medium-term financial goals to achieve a total margin of 30-40 % and 10 %+ running margin.
The analyst has strengthened product improvements and effective marketing to lead strong growth for both distinguished users and subscribers, while Spotify continues to invest in its basic offers, including audio books, podcasts for video, and music.
However, the results of the second quarter and the third quarter directions were mixed. Animoth said that Spotify has provided stronger growth than MAUS and MacIUM Premium, but the opposite winds of foreign work coin (FX) and social fees were weighing on revenues, total margin and operation.
The analyst said that the company published a total margin in the second quarter by 31.5 %, which was in line with both guidance and consensus. But he pointed out that the total margin expectations in the third quarter by 31.1 % came just less than JPMorgan estimates by 31.3 %, in the evaluation in an organizational charge of about 40 ps.
Anmuth noted that Spotify is directed to the growth of FX-Renuration revenues in the third quarter by 10 %, indicating the slowdown of about 500 matters, although this number may not reflect a potential price increase. It is worth noting that Spotify has doubled the re -purchase of shares to two billion dollars. He will see to see if this represents a transformation towards more consistent or still opportunistic capital.
In the second quarter, Spotify established 700 million euros of free cash flow, overcoming the estimates of JPMorgan amounting to 641 million euros, and obtained operating income of 406 million euros. This included 116 million euros on social charges, but it is still less than the forecast of the administration of 539 million euros. JPMorgan estimates and consensus are 457 million euros and 490 million euros, respectively.
On the side of the user, Spotify added 18 million Maus in the second quarter, thus reaching a total of 696 million, above 689 million guidelines. Strong marketing campaigns and confabred dynamics supported this growth in all regions. Excellent subscribers rose to 276 million and 8 million net additions, overcoming the company’s 273 million guidelines.
Quarter revenues amounted to 4.19 billion euros, an increase of 15 % of FX-NUTARAR on an annual basis, but less than the management guidelines of 4.3 billion euros and JPMorgan estimate 4.27 billion euros. FX’s opposite winds were much stronger than expected, about 440 -bit per second compared to 170 bits per second expected by the company. Distinguished revenues grew by 16 % of a neutral FX, driven by 12 % in subscribers and 3 % in ARPU. Advertising revenues increased by 5 % neutral, as JPMorgan expected by 6 %.
Spotify directed MAUS in the third quarter of 710 million subscribers and a group of 281 million, before JPMorgan estimates and consensus. However, revenue instructions, which amounted to 4.2 billion euros, estimated 4.5 billion euros, reflecting again a great pressure from FX (~ 490 amputations per second) and indicates a slowdown ~ 500 -bit per second in the growth of FX neutral revenue.
Spotify expects a total margin in the third quarter of 31.1 % and operating income of 485 million euros, less than JPMorgan expectations by 31.3 % and 524 million euros, respectively. Expectations destroy 25 million euros of the opposite winds of social charges. In general, although the user’s growth remains strength, I watched closely for improvements in revenue momentum, cost structure, and long -term margin implementation.
Sheridan expects that the negative market reaction will be a little to Spotify in the second quarter of 2025. The analyst indicated that the company reported revenues and operating profits without its previous guidance, while the total margin fell in line with expectations.
He attributed the deficiency to a mixture of unfavorable revenues, FX’s opposite pioneers are higher than expected, high social fees, partially driven by estimating stock prices. Despite these opposite winds, Spotify continued to show a strong growth of the user, indicating that external factors had a greater impact than the basics of weak business, as Sheridan pointed out.
The analyst pointed out that the results of this quarter reflect a continuation of Spotify for the year 2025, which gave priority to long -term growth investments on the expansion of the margin after performing a strong margin in 2024.
It also highlighted the newly statement of Spotify, with a value of one billion dollars, in addition to the remaining $ 896 million from a previous program.
In the profit call, Sheridan will be monitored for clarity in the pricing strategy, the total margin expectations, and Spotify’s ability to balance investment in growth with operation efficiency.
Price work: Immediate shares are trading by 11.6 % to $ 619.96 in the last selection on Tuesday.
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March 2022
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Deutsche Bank
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Hold
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February 2022
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B from securities
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Preserve
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He buys
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February 2022
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Wales Vargo
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Preserve
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Underweight
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