Spotify beat Wall Street estimates for second-quarter revenue on Wednesday, as the music streaming company reported a 20-percent jump in paid subscribers for its premium service driven by demand in Europe and North America.
Revenue rose to EUR 2.33 billion (roughly Rs. 20,460 crores) for the quarter, from EUR 2.15 billion (roughly Rs. 18,875 crores) a year earlier. Analysts were expecting revenue of EUR 2.29 billion (roughly Rs. 20,105 crores), according to IBES data from Refinitiv.
Premium subscribers, that account for most of the company's revenue, hit 165 million in the quarter, matching analysts' expectations.
Total monthly active users (MAUs) rose 22 percent to 365 million.
In its note to shareholders, Spotify said, "Most of our major metrics - Subscriber growth, Revenue, Gross Margin, and Operating Income - performed better than expected this quarter. The exception was MAUs, where we fell short of our guidance range. The quarter was led by improving ARPU, decreased churn, a return to per user consumption growth, and significant advertising strength. We did see a second quarter of greater MAU variability mainly due to ongoing COVID-19 headwinds and a temporary issue related to user intake on a third-party platform. However, trends improved in the back half of the quarter."
Explaining more on the COVID-19 roadblock, the company added: "MAU performance was slower than expected due primarily to lighter user intake during the first half of the quarter. COVID-19 continued to weigh on our performance in several markets, and, in some instances, we paused marketing campaigns due to the severity of the pandemic. Separately, a user sign-up issue associated with a global third-party platform created unexpected intake friction, which also impacted MAU growth. This issue has since been resolved."
"Overall, we saw a return to better growth patterns in the back half of the quarter. Although we continue to face near-term uncertainty with respect to COVID-19, we remain confident in the underlying health of our user funnel, and our existing user retention activity remains consistent with historical trends," the company said.
© Thomson Reuters 2021