Spotify 18Q4 growth & margin analysis

Users

• MAU growth steady at 29.4%, with seasonal upticks in Europe and RoW.
• Guidance 19Q1: 218 million (midpoint), implies growth 25.7%.
• Premium subs growth down to 35.2%.
• Guidance 19Q1: 99 million (midpoint), implies growth 31.3%.
• Ad-supprted MAU growth 27.4%.

ARPU

• Down yoy but up qoq to EUR 4.89. Family and Student plans reduce the ARPU and so does expansion into lower GDP countries.

Usage

• Hours of consumed audio up 34% to 15 billion.
• This equals 25.1 hr/MAU/month (17Q4: 24.1).

Growth

• Revenue growth 30.2% to EUR 1.495 billion (guidance: EUR 1.45 billion).
• Split 29.7% for Premium subs and 34.6% for Ad-supported subs.
• Guidance 19Q1 revenue EUR 1.45 billion (mid-point) implies 27.3% growth.
• Guidance 2019 revenue EUR 6.575 billion (mid-point) implies 25.0% growth.

Margins

• Gross margin 26.7% (favourably impacted by non-recurring effects, otherwise 25.8%, which still includes the Google Home promotion in Q4: free Home Mini for new Family plans in the US). Guidance was 25.0%.
• Gross margin is strong in Top 5 markets, weaker elsewhere.
• Split 27.3% for Premium subs and 22.1% for Ad-supported subs.
• Guidance 19Q1 implies 23.5% (18Q1: 24.8%).
• Guidance 2019 implies 23.5%
• EBITDA margin second quarter in a row at positive level (6.8%).
• Operating margin first-time ever positive (6.3%). Positive impact from lower share price (reduces stock option and RSU costs), otherwise still higher than the guided (-0.7%).
• Guidance 19Q1 implies -5.9% (18Q1: -3.6%).
• Guidance 2019 implies -4.3%
• Second positive net result (EUR 442 million), impacted by Tencent Music IPO.

Cash flow

• Liquidity has been rising for many quarters, now at EUR 1.81 billion.

Twitter Q4 growth & margin analysis

Users

• Moving away from MAU to mDAU (monetisable), a metric that shows growth.
• US 27 million, International 99 million.

ARPU

• ARPU (from ad revenue) USD 0.822 (+26.3%).
• Growth double digit now for 4 quarters.

Growth

• Total revenue +24.2% (+26% currency neutral). Four quarters in a row of 20+ percent growth.
• On a TTM basis, an acceleration to +24.5%.
• US +24.4%, International +24.0%.
• Advertising +22.8%, also 4 quarteres of 20+ percent, but down from 18Q3
• US +24.3%
• International +21.2%
• Data licensing +34.6%. Accelerating now for 4 quarters.
• US +25.4%
• International +59.9%

Margins

• Gross margin 70.5%, highest since 14Q1.
• EBITDA (income from operations) margin 22.8% at record high and 6 quarters of positive margin.
• EBIT margin 10.6%, second positive quarter (also: 17Q4).
• Profit before tax: 5 positive quarters now.
• Net profit: same.

Cash flow

• Raised $1.15b from convertible in 18Q2.
• Liquidity has been rising for many quarters and now stands at $6.24 billion.

Guidance

• Strategic focus on: Health, Conversation, Revenue products (to grow sales teams for large & medium advertisers), Platform investments.
• Revenue 19Q1 at  midpoint a low +12.1%.
• Operating margin at midpoint a low 2.7%.

Amazon 18Q4 growth & margin analysis

In general, diversification supports growth and margins. Specifically: AWS, Prime, hardware, advertising. What's next?

Growth 18Q4

Take-aways: advertising driving a new round of growth. Physical stores (Whole Foods Market and Amazon stores) down on price reductions, footprint expansion seems inevitable.

• Overall +19.7%. Lowest level since 15Q1. Currency neutral +21%, lowest since 14Q4.
• Products +17.3%, Services +52.4%. Revenue contributions 61.8% and 38.2%.
• N-America +18.3%, International +15.5% (currency neutral +19%), AWS +45.3% (currency neutral +46%).
• Online stores +12.5% (currency neutral +14%), Physical stores -2.7%, 3rd Party sellers +27.2% (currency neutral +28%), Subscription services (Prime etc.) +24.6% (currency neutral +26%), AWS (see above), Other (advertising etc.) +95.3% (currency neutral +97%).

Growth 2018

Take-aways: highest growth in US and RoW.

• US +32.9%, Germany +17.3%, UK +27.7%, Japan +16.1%, RoW +42.9%.
• Growth acceleration in UK probably on growth of Prime.
• RoW growth down from previous years. Still high on e-commerce expansion and AWS.
• US contribution up to 68.8%, Germany down to 8.5%, UK down to 6.2%, Japan down to 5.9%, RoW up to 10.5%.

Margins

Take-aways: international still negative. AWS by far most profitable. In absolute terms, AWS contributes almost the same as N-America.

• Gross margin 38.1%. Up from 17Q4 but down from 18Q3.
• EBIT margin 5.2%.
• N-America 5.1%
• International -3.1%
• AWS 29.3%

Facebook 18Q4 growth & margin analysis

Users

Take-away: return to growth in Europe, approaching saturation in N-America.

• DAU: slight growth in N-America, return to growth in Europe. Higher growth in Asia and RoW.
• MAU: same, except stable in N-America.
• DAU/MAU ratio almost stable at 65.6%.

ARPU

Take-away: growth still high, payments making a leap in N-America.

• Advertising: highest growth in N-America, down just slightly
• Payments: big jump in N-America (+51.0%), less in Europe (+13.3%).

Growth

Take-away: growth down just slightly qoq, mobile ads still growing bigger, Oculus (and Portal) starting to become meaningful.

• Overall growth was down to 30.4%.
• By source: mobile ads up to 91.5%, desktop ads down to 6.9%, payments and other up to 1.6%.
• By geography: N-America up (49.9%), Europe up (24.5%), Asia down (16.3%), RoW down (9.3%)
• Geographic area yoy growth was down a few points from 18Q3, most of all in Europe.
• Hence yoy revenue contribution from Europe was down, but qoq it was up.
• Advertising growth (30.2%) was down from 18Q3.
• Mobile ads growth down slightly (+36.1%).
• Desktop ads growth down sharply (-17.1%).
• Mobile/desktop now 93/7.
• Geographic growth similar to overall geographic growth.
• Payments and Other Fees was up sharply (+42.0%), probably of Oculus (and Portla) sales (less on reduced desktop games).
• Sharp growth in N-America and Asia (both 54.5%). Europe much slower (+18.5%). RoW still down (-14.3%).
• Contribution to total revenue still small but up (1.6%).

Margins

Take-away: efforts directed at fake news and privacy take a toll; hardware has lower margins.

• Gross margin 83.5% (down from 87.6% last year). Probably on higher scrutiny expenses and lower margins on hardware.
• EBIT margin 46.2% (down from 56.7% last year). Mainly up from increased Marketing and Sales (14.6% of sales vs. 10.6% last year).
• Employee count at 35,587 (+1,981 qoq, +42% yoy).
• Productivity: revenue per employee $163k (down from $179k last year).