Spotify Hits 75 million Paid Subscribers As It Releases First Earnings

Spotify’s first earnings report as a public company hit the wrong note for investors.

The first earnings report as a public company which was released by the company, contains an updated insight on how many people are using the music service. In all, Spotify has 170 million monthly active users and 75 million paid subscribers. That latter total is up from the 71 million marker where Spotify ended Q4. By contrast, Apple Music recently crossed 40 million subscribers. There are now 99 million people listening to Spotify through its ad-supporter free tier. Spotify’s revenue (€1.14 billion) was in line with expectations. It’s operating loss for the quarter fell to 41 million euros, or about $49 million, down from 139 million euros in the same period a year earlier.

The streaming music service with its 75 million paying subscribers and A trimmed losses in the first three months of the year, but the outcome wasn’t enough to impress investors. As Shares fell 7% in afterhours trading as investors scrutinised the newly public company.

Last month, Spotify unveiled a revamped experience for free users that will give them on-demand access to 15 curated playlists. The refreshed app will also feature immediate personalisation for music tastes after a customer signs up for the service and a new mode designed to optimise data usage for people on capped mobile data plans. But some key features and functionality remain exclusive to paying subscribers.

Premium subscribers will jump up to somewhere between 79 and 83 million users by the end of the next quarter, according to Spotify’s earnings outlook. And the company’s prediction for how it’ll fare through the rest of 2018 remains unchanged from guidance it provided in March ahead of its IPO; it’s expecting to wind up with between 92 and 96 million subscribers.

Spotify’s letter to investors also mentions the new app it made for Cadillac vehicles and its expanded Hulu partnership. Right now, that $12.99 combo subscription is only available to existing subscribers, but Spotify reiterated that it will be available to new customers this summer.

During the earnings call, CEO Daniel Ek said he hasn’t seen any significant impact from increased promotion by its competitor Apple Music. In fact, churn hit an all-time low of 4.7 percent, and lifetime value to customer acquisition cost ratio is holding firm at 2.7:1. But overall, “We don’t see this as a winner takes all market” Ek says.

Spotify opened at $165.90 a share on its first day of trading and ended trading Wednesday at about $170.