Spotify Technology on Tuesday beat estimates for subscribers and users in the second quarter but posted a surprise loss in the period. The streaming music leader also came up short on revenue and with its sales outlook. Spotify stock fell on the news.
Spotify added 8 million premium subscribers in the June quarter. Analysts had expected Spotify to add 5 million subscribers. It ended the period with 276 million subscribers worldwide.
Also, Spotify tallied 696 million monthly active users in the second quarter, vs. Wall Street's target of 689 million. Spotify offers an ad-supported service in addition to its commercial-free subscription service.
The Stockholm-based company lost the equivalent of 48 cents a share on revenue of $4.75 billion in the second quarter. Analysts polled by FactSet had expected Spotify to earn $2.29 a share on sales of $5 billion. In the year-earlier period, Spotify earned $1.44 a share on sales of $4.13 billion. Spotify reports results in euros.
Its profitability in the second quarter was impacted by higher-than-expected operating expenses and "social charges." Social charges are payroll taxes associated with employee salaries and benefits in select countries where it operates.
For the current quarter, Spotify forecast revenue of $4.86 billion, vs. the consensus estimate of $5.25 billion. In the year-earlier period, it generated $4.22 billion in sales.
Further, it expects to add 5 million premium subscribers, ending the September quarter with 281 million. Plus, it is targeting 710 million monthly active users, up 14 million.
On the stock market today, Spotify stock fell 11.6% to close at 620.01.
On April 25, Spotify stock broke out of a double-bottom base at a buy point of 621.20, according to IBD MarketSurge charts. But a two-day sell-off that followed shook out many investors. Still, it rebounded to reach an all-time high of 785 on June 27. However, after hitting that record high, it retreated below its 50-day moving average line.
Spotify stock is on the IBD Tech Leaders list.
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