Spotify fails to hit the right note as subscriber numbers miss expectations
Spotify’s subscriber growth hit the lower end of its guidance in the second quarter, sending shares down in pre-market trading.
The music streaming platform said it now has 108m premium subscribers, up 30 per cent on the year before.
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However, the figure is below the midpoint of the firm’s own guidance and falls short of analysts’ estimates. Shares in Spotify dropped more than four per cent in pre-market trading.
Overall, Spotify said its results outperformed expectations, with total revenue up 31 per cent year-on-year to €1.7bn (£1.6bn).
Total monthly active users, which includes subscribers using its free ad-supported version, beat targets to hit 232m.
However, operating expenses increased four per cent to €437m (£400m), while operating loss totalled €3m.
The Swedish firm has ramped up its investment in podcasting over recent months, splashing out at least €300m to buy podcast startups Gimlet Media, Anchor and Parcast.
On-demand listening has become a key area for music streaming services, and Spotify will be hoping its multi-year deal with Barack and Michelle Obama can help draw in new subscribers.
But rival Apple is hot on its tail, and is reportedly looking to launch original programmes exclusive to iTunes users.
The two tech firms have been locked in a tussle after Spotify filed an antitrust complaint accusing the iPhone maker of using the dominant market position of its App Store to stifle competition.
Spotify also revealed it has reached agreements with two of its four major labels to extend its recording licences, with talks underway with the other two.
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The firm described the regular negotiations over its royalty payments as a “long drawn-out process”, but insisted it had become a normal part of the business.
Spotify said it expects total users to reach between 240m and 245m in the third quarter, with paid subscriber numbers of 110m to 114m.
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