Spotify forecast monthly active users and premium subscribers for the second quarter above market estimates on Tuesday, signaling strong demand for its audio streaming services as it leans on AI features to drive growth.
However, the company’s operating profit forecast for the current quarter was below Wall Street estimates, dragged down by higher payroll taxes tied to employee salaries and benefits in some countries. The taxes also weighed on its March-quarter profit.
A rival to Apple and Amazon’s music-streaming offerings, Spotify has benefited in recent years from price increases and cost-cutting initiatives.
To maintain growth, it has expanded its AI Playlist feature, which lets subscribers create personalized playlists from written prompts, to more than 40 new markets.
Spotify forecast current-quarter monthly active users of 689 million, compared with the average analyst estimate of 684.9 million, according to data compiled by LSEG.
The company expects premium subscribers in the second quarter to increase to 273 million, above Visible Alpha estimates of 271.5 million.
Spotify forecast operating income of 539 million euros ($614.24 million) for the second quarter, below estimates of 557.5 million euros, according to data compiled by LSEG.
“The underlying data at the moment is very healthy. Engagement remains high, retention is strong, and thanks to our freemium model, people have the flexibility to stay with us even when things feel more uncertain,” CEO Daniel Ek said.
“The short term may bring some noise, but we remain confident in the long-term story.”
Premium subscribers rose 12 per cent to 268 million in the first quarter, beating Visible Alpha estimates of 265.3 million. The company had 678 million monthly active users, above estimates of 671.9 million.
Revenue rose 15 per cent to 4.19 billion euros, slightly below estimates of 4.20 billion euros.
Spotify forecast second-quarter revenue of 4.3 billion euros, in line with estimates.
($1 = 0.8775 euros)
