Spotify Technology SA said on Wednesday music streaming demand had rebounded from coronavirus-related weakness at the start of the quarter and its paid subscribers reached 138 million, ahead of Wall Street estimates.
However, the company’s quarterly revenue missed analysts’ estimates, hit mostly by a 21% fall in ad-supported revenue as the spread of the pandemic kept advertisers at bay.
Shares of the Swedish company, which have risen about 80% since the beginning of this year, fell 3% to $253 before the market open.
Spotify, which leads the market for music streaming ahead of rivals such as Apple Inc and Amazon.com Inc, earns from paid subscriptions and by showing ads to non-paying users.
Premium subscribers, which account for most of the company’s revenue, were up 27% from a year earlier. Analysts on average were expecting the company to have 136.4 million paid subscribers, according to IBES data from Refinitiv.
The world’s largest music streaming service also assuaged investors that people no longer commuting to work would not have a deep lasting impact on its finances and it will hit its full-year targets.
Strength in North America and other areas more than offset the slow start to the quarter and the improved momentum in the back half of the quarter has continued into the third quarter, the company said in a statement.
It expects total premium subscribers in the range of 140 million to 144 million for the third quarter, above expectations of 141.4 million.
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Spotify also forecasts total revenue in the range of 1.85 billion euros to 2.05 billion for the third quarter. Analysts were expecting 2.01 billion euros.
Revenue rose 13% to 1.89 billion euros ($2.22 billion) for the three months ended June 30 but missed analyst estimates of 1.93 billion.
The net loss attributable to Spotify was 356 million euros, or 1.91 per share, compared with 76 million or 42 euro cents a year earlier. Analysts were expecting a loss of 45 euro cents.