Key facts
- Spotify forecasts third-quarter operating income of €670 million, below analyst estimates of €677.8 million.
- Second-quarter operating income was €655 million, beating estimates.
- Second-quarter revenue rose 14% to €4.78 billion, slightly below estimates.
- Third-quarter revenue is forecast to be €5 billion, slightly above estimates.
- Monthly active users forecast for the third quarter is 788 million, below estimates.
- Premium subscriber increase forecast for the third quarter is 5 million, largely in line with estimates.
Spotify forecast third-quarter profit below Wall Street estimates on Tuesday, as the streaming giant reported slowing user growth in its major markets of Europe and North America. This outlook caused the company's shares to drop around 5% in premarket trading.
For the third quarter, Spotify expects operating income of €670 million ($770.97 million), falling short of analysts' average estimates of €677.8 million. In the second quarter, the company's operating income was €655 million, surpassing estimates of €639.2 million, boosted by strong revenue growth and reduced payroll taxes.
Spotify's quarterly revenue increased by 14% to €4.78 billion, slightly missing LSEG-compiled estimates of €4.80 billion. However, the revenue forecast for the third quarter of €5 billion was slightly above estimates of €4.93 billion. The company's forecast for monthly active users in the third quarter was 788 million, below Visible Alpha's estimates of 793.6 million. The outlook for a 5 million increase in premium subscribers, reaching 305 million, was largely in line with expectations.
The company has introduced AI features like "Personal Podcasts" and new offerings such as "Reserved" to attract users and compete with rivals including YouTube, Netflix, and AI music startups like Udio and Suno. Spotify's shares have declined approximately 16% year-to-date.