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What to Expect From Spotify (SPOT) This Earnings Season

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Spotify Technology S.A. (SPOT - Free Report) will report first-quarter 2019 results on Apr 29, before the bell.

The company, which went public in April 2018, delivered a positive earnings surprise of 270.8% in the last reported quarter. Shares of the company have lost 7.2% in the past six months against the 7.1% rally of the industry it belongs to.

Let’s see how things are shaping up for the announcement.

Spotify is experiencing solid growth in revenues and monthly active users (MAUs). Latin America and other emerging regions continue to witness solid growth.

Premium subscriber growth remains healthy and continue across the company’s Family and Student plans. Ad-Supported revenues are currently driven by direct and programmatic channels.

Meanwhile, average revenue per user (ARPU) is being negatively impacted by growth in family and student plans, and shift in market mix as Spotify is growing faster in relatively lower ARPU geographies like Latin America and Southeast Asia. Foreign exchange continues to be a significant headwind to Premium revenue growth.

Gross margin is expected to be lower sequentially due to impacts of seasonality. The metric remains comparatively lower in the first and third quarters due to costs of promotional campaigns that Spotify launches in the second and fourth quarters.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Zacks Rank #4 (Sell) or 5 (Strong Sell) stocks are best avoided, especially if the companies are witnessing negative estimate revisions. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Spotify has an Earnings ESP of +0.00% and a Zacks Rank #4.

Stocks That Warrant a Look

Here are a few stocks from the broader Zacks Business Services sector that investors may consider as our model shows that these have the right combination of elements to beat on earnings in first-quarter 2019:

SailPoint Technologies has an Earnings ESP of +100.00% and a Zacks Rank #1. The company is scheduled to report results on May 8. You can see the complete list of today’s Zacks #1 Rank stocks here.

EVERTEC (EVTC - Free Report) has an Earnings ESP of +3.73% and a Zacks Rank #3. The company is slated to release results on May 1.

Delphi Technologies has an Earnings ESP of +1.56% and a Zacks Rank #3. The company is scheduled to report results on May 2.

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