The music streaming company’s growth into more markets has helped Spotify Technology SA cross the half billion barrier for monthly active users for the first time, it announced on Tuesday, sending its shares up 5%.
According to IBES data from Refinitiv, the number of monthly active users increased to 515 million in the first quarter, surpassing Spotify’s projection and analysts’ prediction of 500 million.
The majority of its revenue comes from premium members, who increased 15% to 210 million, above projections of 206 million.
Its forecast of 217 million premium subscribers for the current quarter exceeded projections of 212 million. The business anticipated 530 million monthly active users.
Spotify announced goals to reach one billion subscribers and $100 billion in yearly income last year. Additionally, it guaranteed that its costly expansion into podcasts and audiobooks would provide substantial profits.
“Spotify is not sort of one silver bullet, but rather it’s 100 or 1,000 things that we are doing that sort of compounds and adds to the story,” CEO Daniel Ek said to Reuters.
However, the company’s 3.04 billion euro ($3.35 billion) quarter’s revenue fell short of analyst expectations of 3.08 billion euro, and it reported a larger loss than anticipated.
We are slightly impacted by the Q1’s “kind of a lot of macro choppiness,” according to Ek.
Many new customers join on free trials or as part of family plans, and Spotify doesn’t start making money straight away; it takes a quarter.
Because of decreased prices brought on by prolonged economic uncertainties, Spotify’s margins have been hurt.
From 25.3% a year ago to 25.2% this quarter, the gross margin decreased.
Additionally, Spotify’s projected 3.2 billion euro current-quarter revenue fell short of analysts’ forecasts of 3.26 billion euro.