Spotify falls as losses continue despite paid subscribers soaring to 100 million (SPOT)


Daniel Ek, CEO and Founder of Spotify

  • Spotify fell 1.5% in trading despite the company beating analyst expectations for first-quarter revenues and paid user growth.
  • Losses, however, continued for the company, which forecast they will continue through at least 2019.
  • Watch Spotify trade live.

Spotify fell 1.5% in Monday trading after the company reported first-quarter revenues and paid user growth that beat Wall Street expectations. The shares had traded up as high as 3.5% before falling later in the day.

Revenues grew by 33% year-over-year to 1.51 billion euros, 3% ahead of the 1.47 billion euros that was expected by the Bloomberg consensus. Paid users subscriptions accounted for 92% of revenues while advertising revenues comprised the balance. 

The Swedish-based music-streaming service also reached a key threshold of 100 million paid subscribers in the first quarter topping the 99 million that was anticipated. Spotify had double the number of users as runner-up Apple as of June 2018.

Monthly active users reached 217 million, slightly below analyst consensus expectations of 219 million. Average revenue per user totaled 4.71 euros, which was flat year-on-year. A slight decline is expected as the company expands into emerging markets.

The growth in users was partly attributed to an expanding partnership with Google, utilizing the Google Home Mini voice speaker. Spotify has identified the use of voice speakers as a critical area of growth. Competitors such as Apple Music and Amazon Prime Music have made strong inroads into music streaming with their Siri and Alexa voice speakers. Spotify also has partnerships in place with Samsung and Hulu.

Despite the growth in revenue and users, the company has struggled in reaching profitability. Spotify missed expectations of adjusted earnings per share by reporting a loss of 0.79 euros, nearly double the Bloomberg consensus. Total losses for the quarter reached 47 million euros.

Looking ahead, Spotify sees monthly-active-user growth of between 23% and 27% for next quarter and paid subscribers of 107 million to 110 million. The company predicts losses will continue through 2019, amounting to between 180 million euros and 340 million euros.

Spotify is up 21% year to date.

SPOT stock chart

Join the conversation about this story »

NOW WATCH: Here’s what ‘Game of Thrones’ stars look like in real life