Stifel: What To Expect From Spotify's First Earnings Report As A Public Company

Streaming music provider Spotify Technology SA (NYSE: SPOT) is scheduled to report its first-ever earnings as a public company after Wednesday's market close.

The Analyst

Stifel's John Egbert maintains a Buy rating on Spotify with an unchanged $180 price target.

The Thesis

Spotify is modeling to report the following metrics, Egbert said in a Tuesday note: 

• 75 million premium subscribers.
• Total monthly active users of 169.3 million.
• Total revenue of $1.36 billion in the U.S. dollar equivalent. 
• $317.6 million in gross profit. 
• A 23.2-percent gross profit margin.
• An operating loss of $87.5 million. 

Investors should pay attention to whether the following questions are answered during the earnings call, Egbert said: 

• How will adding increased functionality for free users impact conversion to a paid subscription?
• Does increased functionality for free users hurt or help gross margins given the ad-supported model?
• Were there any notable subscriber trends per region in the quarter?
• What impact to Spotify's business is being felt from increased competition?
• Will bi-annual free trials grow in-line with gross subscriber additions?
• When will average revenue per user headwinds ease?
• What is the impact to Spotify's business from the acquisition of Loudr?
• What is management's opinion on the Music Modernization Act?
• Any commentary on Spotify's rumored in-car listening device? 

Price Action

Spotify shares were up about 1 percent at the time of publication Tuesday. 

Related Links:

Listen To The Music: Evercore Names 5 Reasons Why Spotify Is A Winner

Morgan Stanley Takes Bullish View On Spotify, Says User Base Could Reach 200M By 2022

Photo courtesy of Spotify.