The company posted a total user base of 170 million, with 75 million paid subscribers, in line with expectations.
But the company is still losing money, as it invests in research and development staffers, which made up almost half of new hires during the quarter. It also gave guidance for the current quarter that was slightly lighter than estimates.
Here’s how the company did:
- Revenue in line: 1.14 billion euros vs. 1.14 billion euros expected by Thomson Reuters
- Paid subscribers in line: 75 million vs. 75.1 million expected by a FactSet consensus estimate
- Ad-supported monthly active users, slight beat : 99 million vs. 98 million expected by a FactSet consensus estimate
A year ago, Spotify reported revenue of 902 million euros.
Guidance for the current quarter:
- Revenue: 1.1 billion euros to 1.3 billion euros vs. 1.29 billion euros midpoint expected by a Thomson Reuters consensus estimate
- Subscribers: 79 to 83 million vs. 82.1 million expected by a FactSet estimate
Some of the numbers weren’t a big surprise, given the company’s financial forecast in March, when the company said it expects to hit as high as 96 million subscribers this year. Spotify maintained its outlook for the year on Wednesday, saying it plans to lose up to 330 million euros this year.
But Spotify faces steep expectations for rapid growth, given formidable competition from rivals like Apple and Amazon.
And the company forecast year-over-year growth of 10 percent to 29 percent in the current quarter, which is not a big jump from the 26 percent growth rate it hit during the first three months of the year (some of that can be blamed on foreign exchange rates).
In addition to research and development staff, Spotify has invested in several new initiatives, including expansion into Asia and Africa, a new advertising platform, and a new free app. It has also expanded its reach in the podcast market.
Deals like family plans and student plans have been a source of strength, reducing the rate that people leave the platform, Spotify said. In that vein, Spotify recently announced a new bundle with video service Hulu.
Spotify posted a solid public offering last month, despite the unconventional process, where no banks underwrote the offering and no price was set ahead of the debut.
Rival Apple Music also said last month that it had 40 million paid subscribers, hinting at its fast growth. Last June Apple Music had 27 million paid subscribers, and a year ago Spotify said it had more than 50 million subscribers.
But Spotify has emphasized its wide availability — free memberships, compatibility with multiple operating systems and speakers — as a competitive advantage. Some analysts have compared Spotify to Netflix, which pays a lot for content but has achieved long-term success.
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