Here are some sample widgets you could interact with from this dashboard:
The divergence between Spotify's Free Cash Flows and Net Income are due to higher Non-Cash expenses such as finance costs and the growth of its current liability accounts - namely Accounts Payables and Deferred Revenues. We believe the company's positive Free Cash Flows are sustainable keeping in mind the fact that its profitability is improving thanks to a growing Revenue base and better cost management.
While Spotify remains in the red, posting a Net Loss of Euro 80 million over 2018, the company has been cash flow positive over the last 3 years, with Free Cash Flow for 2018 standing at Euro 209 million.In this analysis, we break down some of the reasons for the company's rising cash flows and what's driving the divergence in the two metrics by looking at the key reconciling items from the company's cash flow statement.
Free Cash Flows have grown from Euro -92 Mil in 2015 to Euro 209 Mil in 2018, while Net Loss has declined from around Euro 230 Mil to Euro 80 Mil
Free Cash Flows
[A] Positive Impacts
Spotify's Cash flows are higher due to 1) Non-Cash Finance Costs, 2) Share Base Compensation 3) Increase In Deferred Revenues 4) Increase In Other Non-Cash Expenses & 5) Higher Accounts Payable
The company's Finance Costs, which include fair value adjustment losses on financial instruments etc are a key non-cash expense that have contributed to a lower Net Income. Share-Based Compensation , which reduce Net Income have also increased modestly from Euro 28 Mil to Euro 88 Mil. Separately, Deferred Revenues, which refers to the payments the company has collected on Revenue that has yet to be earned, have also been trending slightly higher. This is because the company typically bills Premium subscribers before they use the service. Spotify also offers an annual subscription in some regions, helping to boost Deferred Revenue. The Increase in the company's Accounts Payable, net of Accounts Receivables (the amount the company owes its vendors, net of the amount it has to collect from its customers) have also risen from Euro 130 million to Euro 230 million. This is also a net source of cash. This could mean that the company is paying its vendors later than it is collecting from its customers (advertisers in this case).