Spotify beat Wall Street’s sales and earnings targets for its second quarter, but added fewer paying subscribers than forecast. Its earnings report sent the stock downward.
Spotify lost the equivalent of 47 cents a share on $1.87 billion in revenue in the June quarter. Spotify reports financial results in euros. Analysts expected Spotify to lose 51 cents a share on revenue of $1.83 billion, according to Zacks Investment Research.
The company added 8 million new paying subscribers in the second quarter, ending the period with 108 million premium subscribers. It had forecast adding 8.5 million subscribers.
Spotify reported 232 million total monthly active users in the June quarter, up 7% from the previous quarter and up 29% year over year. Total monthly active users includes premium subscribers and users of its free, ad-supported music tier.
Spotify expects to add 4 million paying subscribers in the third quarter. It expects to have 240 million to 245 million monthly active users worldwide in the September quarter. It guided to third-quarter revenue of $1.86 billion, based on the midpoint of its outlook. Analysts were modeling sales of $1.90 billion, Zacks said.
For the current quarter, it forecast a gross profit margin of 24.2% at the midpoint. The company’s gross margin in the second quarter was 26%, despite heavy investments in podcasting. That’s up from 24.7% in the first quarter and 25.8% in the year-ago quarter.