Spotify (NYSE: SPOT) added 13 million monthly active users (MAUs) and 4 million paying subscribers last quarter, per the newly public music streaming company’s first quarterly earnings report.
The new users bring its total MAUs to 170 million and its total paid users to 75 million. The growth puts the Swedish company in a good spot to hit its year-end goal of roughly 200 million MAUs overall, though it’ll have to work a little harder to reach the goal of 96 million premium subscribers.
Spotify continues to pull ahead of Apple Music, its largest competitor in the music streaming biz, in terms of its user base. On the earnings call Wednesday, Spotify co-founder and CEO Daniel Ek said the success of Apple Music—which boasts 40 million subscribers—hasn’t had an impact on Spotify.
“We don’t think this is a winner-takes-all market,” Ek said. “We think multiple services will exist. We are just focused on growing that market and capturing more of that market.”
Spotify completed its NYSE direct listing on April 3 and though there was much uncertainty at the time as to how its stock would fare, the share price has continued to climb.
Spotify hits targets, still manages to upset Wall Street
Despite positive user growth, Spotify’s stock dropped nearly 9% in after-hours trading. Why? Although Spotify’s 1Q performance met expectations, the company’s 2Q and full-year 2018 predictions came in lower than analysts had hoped—a big deal for a company characterized by rapid growth.
Key takeaways:
Revenue: Spotify generated €1.14 billion (about $1.37 billion), up 26% YoY
Operating loss: €169 million, down 71% YoY
Gross margin: Spotify surpassed its own estimate, hitting a 24.9% gross margin in 1Q
Free cashflow: €74 million, down from €75 million last quarter
Net cash flow from operations: €84 million, down from €95 million last quarter
Churn: The average monthly premium churn rate hit a record low, falling below 5% for the first time
Looking forward: Spotify’s year-end predictions remain unchanged. The company expects to end the year with revenues of €4.9 billion to €5.3 billion, with operating losses of €230 million to €330 million
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