The busiest week of first-quarter earnings season kicked off Monday with stocks rising on strong economic data, although gains were trimmed in the last hour of trading. The S&P 500 (SNPINDEX:^GSPC) had a record close for the second straight session and the Dow Jones Industrial Average (DJINDICES:^DJI) rose slightly.
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Spotify hits 100 million premium subscribers
Music-streaming specialist Spotify continued to add paying subscribers in the first quarter, but ad-supported revenue growth was below expectations, and shares edged down 0.1%. Revenue grew 33% to 1.5 billion euros ($1.7 billion), above the consensus of $1.64 billion, and the company lost 0.79 euros ($0.88) per share, exceeding the $0.39-per-share loss Wall Street was forecasting.
Spotify added 4 million premium subscribers in the quarter to bring the total to 100 million, a 32% increase year over year. Total monthly active users grew 26%. Average revenue per user (ARPU) fell 2% excluding currency effects, which is an improvement over recent quarters. The Swedish company said that ad-supported revenue growth of 24% underperformed expectations due to a pricing problem that has been corrected. A 30% increase in operating expense was partly due to accruals for stock-based compensation.
Spotify expects accelerating user growth despite growing competition, guiding to 7 million to 10 million subscription additions next quarter. Profitability is still nowhere in sight, but the company lowered its estimate for operating loss in 2019 from 200 million-360 million euros to 180 million-340 million euros.
Weakness at Tim Horton's pulls down Restaurants Brands
Restaurant Brands, parent company of Tim Horton's, Burger King, and Popeye's Louisiana Kitchen, reported disappointing first-quarter sales at its coffee shop chain, and shares slipped 1.4%. Total revenue grew 1% to $1.27 billion, above expectations of $1.15 billion, and earnings per share fell 16.7% to $0.55, missing the analyst consensus by $0.01.
Systemwide sales grew 6.4% as the number of restaurants increased 5.1%. Bad weather in Canada and an expensive promotion that failed to increase engagement were to blame for a 0.6% drop in comparable-store sales at Tim Horton's, according to company officials on the conference call. Comparable sales at Burger King were up 2.2% and Popeye's grew comparable sales 0.6%. Last quarter, those chains reported comp growth of 1.7% and 0.1%, respectively.
Restaurant Brands thinks the weak performance by Tim Horton's is temporary, saying that the chain's comparable-sales growth so far in April is "back on track" at 1.5%. The company and its new CEO, Jose Cil, are making long-term investments in Tim Horton's via all-day breakfast, a loyalty program, and expansion into China.