Shares of music streaming platform Spotify were up 5 percent in premarket trading on the company’s earnings results. The company’s second-quarter revenue surpassed the expectations of analysts thanks to a 14 percent increase in paying subscribers. The company also announced that it will bring the production of its dashboard accessory, Car Thing to a stop.
In the quarter, monthly active users grew by almost 20 percent to 433 million, surpassing the expectation of 428 million. Monthly active users for the third quarter are expected to hit 450 million.
The company generates revenue from paying subscribers and from ads that it displays to users who use the service for free. In the second quarter, ad-supported income grew by 31 percent.
Investors did wonder how the company would fare as revenue derived from advertisers has reduced in response to economic challenges. “We did see a little bit of softness in the last two weeks of the quarter,” Spotify’s Chief Financial Officer Paul Vogel did say adding that “While we do expect advertising to become a much bigger part of our business over the long term … it’s still a reasonably small amount of our revenue at only 13%.”
The company saw an increase in its premium subscribers which make for most of its revenue. Premium subscribers grew to 188 million, surpassing estimates of 187 million.
The company reported a 23 percent increase in revenue to 2.9 billion euros, surpassing analysts’ expectation of 2.8 billion, according to Refinitiv.
Like many other companies trying to salvage the effects of the looming economic reality, Spotify has also slowed hiring. Its CEO Daniel Ek said that the wise thing to do was to slow hiring because it is a decision that cannot be easily reversed.
For the third quarter, the company expects paid subscribers of 194 million and this goes in line with analysts’ expectations. While analysts expect 2.95 billion euros for revenue in the third quarter, the company expects 3 billion euros.
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Ibhadojemu Lucky Emmanuel is a graduate of Education and Economics from the University of Benin. He has a passion for tech and business and has been writing professionally for over a period of five years. He's written across various topics and segments and knew tech-business was it when he first stumbled on it. He has a great passion for music and arts, and wants to visit as many countries as he can someday.
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