Shares of Spotify fell as much as 5% early Wednesday when the company reported earnings that showed a larger-than-expected loss and premium-subscription growth on the low end of expectations.
Here's what the company reported versus what analysts surveyed by Bloomberg expected:
Adjusted earnings-per-share: loss of 0.421 euros per share reported versus loss of 0.36 euros per share (expected)
Revenue: 1.67 billion euros reported versus 1.64 billion euros (expected)
Monthly active users: 232 million reported versus 242 million (expected)
Premium subscribers: 108 million versus 108.5 million (expected)
The streaming service said that premium subscribers grew 30% from a year earlier, but the now-108 million subscribers fell slightly short of analyst expectations. While growth is up, missing the mark on premium subscriptions is important because Spotify makes almost all of its revenue from that subscriber base.
Monthly active users also grew 29% year over year, but fell short of analyst expectations for the company. Spotify said that at the end of the second quarter, it had 232 million monthly active users, in the high end of its expectations for itself of 222 million to 228 million. Analysts, however, expected that the streaming service would end the second quarter with 242 million monthly active users.
Spotify now says that it won't reach that number until the end of the third quarter — it expects monthly active users to be between 240 million and 245 million in the third quarter and between 250 million and 265 million at the end of the fourth quarter.
Podcasting, an area that could increase revenue, is growing for Spotify. The company said that its podcast audience grew 50% over the quarter and has doubled since the start of the year.
Spotify has been putting its own money into podcasts with advertising revenue in mind. It plans to acquire Gimlet Media, an independent podcast content producer, as well as Anchor, in 2019. In a previous earnings release, it said it plans to buy more and has a total spend of $400 to $500 million for the year.
A report by Guggenheim said that advertising revenue for podcasts increased 54% in 2018 to $479 million, and that if Spotify could capture 25% of that market, it would rake in an additional $250 million in annual revenue.
But competition in the space is ramping up from companies such as Apple, who are also moving into podcasting. When Apple announced that it would fund its own podcasts exclusive to its audio service, Spotify fell 3%.
Shares of Spotify were up 37% year-to-date through Tuesday.
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