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Spotify Technology (NYSE:SPOT) Q3 Earnings: What Can You Expect?

in EARNINGS/INVESTING IDEAS by

Spotify Technology S.A. (NYSE:SPOT) is scheduled to report Q3 earnings results before markets open for trading on October 29, 2020.

The company is expected to report earnings of -€0.44/share on revenue of €2.002 billion. The consensus earnings per share (EPS) of -€0.44/share is based on a poll of 11 analysts and represents a decline in eps of −221.2% over the same quarter last year, when the company reported earnings of €0.36/share.

The revenue forecast of €2.002 billion based on a poll of 21 analysts implies a year-over-year (YoY) growth in revenue of 15.7%. Last year the company reported €1.731 billion in revenue for the quarter.

Expected to report EPS of -€0.44/share for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue €2,002.06 €1,731.00 15.7%
EPS -€0.44 €0.36 −221.2%

Earnings Call Trends

Historically, management has exceeded analyst expectations 4 out of the last 8 tracked quarters, and missed expectations 4 quarters.

What are your expectations from Spotify Technology S.A. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 -€0.36 -€1.91 -425.0% Missed
Q1, 2020 -€0.36 €0 -100% Missed
Q4, 2019 -€0.28 -€1.14 -310.7% Missed
Q3, 2019 -€0.33 €0.36 208.4% Beat
Q2, 2019 -€0.45 -€0.42 5.8% Beat
Q1, 2019 -€0.47 -€0.79 -67.4% Missed
Q4, 2018 -€0.20 €0.36 276.5% Beat
Q3, 2018 -€0.15 €0.36 337.4% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by falling −2.0%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 29, 2020 $267.12 $261.79 −2.0% Decline
April 29, 2020 $139.78 $151.57 8.4% Increase
February 5, 2020 $154.31 $154.37 0.0% Increase
October 28, 2019 $120.69 $135.99 12.7% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.91, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.91 implies a 0.2% chance of earnings manipulation.

Fundamentals And Technical Analysis

Spotify Technology S.A. is currently trading at $284.96/share, up 0.5% for the day. The company is trading at approximately 95.1% of its 52-week high of $299.67/share. The company’s stock price is up 8.9% since the last earnings report and up 9.2% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 73.80 suggests the company is trading in technically overbought territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:SPOT Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of −139.97 and a forward P/E multiple of −88.31.

Spotify Technology S.A.’s current share price also implies a price-to-book (P/B) multiple of 21.30. The following table summarizes some other key fundamental ratios:

Data as of October 27, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $284.96
P/E Ratio −140.0x
P/E Ratio (Fwd) −88.3x
PEG Ratio 0.6
Total Debt / Total Capital 1.4%
Levered Free Cash Flow €220 million
EV / EBITDA −263.8x

Finbox

Spotify Technology S.A. is a large-cap stock with a market capitalization of $53.383 billion and a total enterprise value of $52.181 billion. The company operates in the Communication Services sector and the Entertainment industry.

Spotify Technology S.A., together with its subsidiaries, provides audio streaming services in the United States, the United Kingdom, Luxembourg, and internationally. It operates through two segments, Premium and Ad-Supported. The company offers unlimited online and offline high-quality streaming access to its catalog of music and podcasts without commercial breaks to its subscribers. It also provides on-demand online access to its catalog of music and unlimited online access to the catalog of podcasts to its subscribers with no subscription fees; and sales, marketing, contract research and development, and customer support services. As of March 31, 2020, the company’s platform included 286 million monthly active users and 130 million premium subscribers in approximately 79 countries and territories. Spotify Technology S.A. was founded in 2006 and is based in Luxembourg, Luxembourg.

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