Streaming giant Spotify (NYSE: SPOT) reported second-quarter results that confidently surpassed expectations both in terms of the number of active monthly users and the number of subscribers, forecasting that the number of listeners each month will reach 572 million this quarter.
However, quarterly revenues fell short of expectations, according to IBES data from Refinitiv, and the company also posted a larger-than-expected loss, leading to a 5% drop in shares in pre-market trading.
After announcing plans last year to reach 1 billion users by 2030 and achieve $100 billion in annual revenue, Spotify has been growing actively, but its costly expansion into podcasts and audiobooks has impacted profitability.
The number of active monthly users grew to 551 million in the second quarter, exceeding Spotify’s forecasts and analyst predictions of 526.8 million.
Paid subscribers, who make up the majority of the company’s revenues, increased by 17% to 220 million, surpassing forecasts of 216.6 million, according to IBES data from Refinitiv.
“For the sixth consecutive quarter, user growth continues to please us, and it’s a gift that keeps on giving,” said CEO Daniel Ek to Reuters.
However, quarterly revenue amounted to 3.18 billion euros ($3.51 billion), below analysts’ forecasts of 3.21 billion euros. This aligns with Spotify’s own expectations.
“If we have user growth, revenue growth comes over time – that’s a lesson we’ve learned at Spotify, and we’ve seen it again and again,” said Ek.
On Monday, Spotify raised prices for its paid plans in several countries, but expects these increases to have minimal impact on revenue this quarter.
CFO Paul Vogel said the increases will take effect from September, taking into account billing cycles.
“In the fourth quarter, we will have a significant price increase,” he said in an interview.
Spotify expects the number of paid subscribers this quarter to reach 224 million, with revenue of 3.3 billion euros. Analysts had expected 222.4 million subscribers and revenue of 3.40 billion euros.
