Why did SPOT's Q4 2023 EPS fall short of forecasts?

Spotify's Q4 2023 EPS fell short of forecasts due to several key factors:

1. Revenue Mix and Pricing: Spotify's revenue was boosted by a 16% year-on-year increase, reaching €3.67 billion ($3.95 billion). However, this was slightly below the consensus of $4.06 billion. The company's pricing strategy, including recent price increases, has been effective in boosting revenue, but it seems to have had a negative impact on user growth and retention.
2. User Growth and Retention: Despite strong user growth, with a 23% year-on-year increase in Monthly Active Users (MAUs) reaching 675 million, the company faced challenges in retaining users. The net addition of 35 million subscribers in Q4 marked the largest quarterly increase in the company's history, but it seems that some users may be sensitive to price increases, leading to churn.
3. Operating Expenses: Spotify's operating expenses saw a 16% increase year-on-year. Although the company has been successful in reducing its operating expenses by 16%, this has not yet led to a significant improvement in profitability.

In summary, while Spotify's Q4 performance showed strong user growth and revenue rise, the company's pricing strategy and operating expenses contributed to the shortfall in EPS. These factors, along with the impact of price increases on user retention and the need for continued investment in growth initiatives, are likely to influence the company's future financial performance.