Spotify, the world’s largest music streaming service, has seen its shares rise sharply after it announced that it had more paying subscribers in the second quarter than expected.
After the results were announced, shares of the Swedish company rose by 13 percent during the morning trading session on Wall Street. Its market capitalization is now around $58 billion.
After attracting seven million new customers over the last three months, the total number of subscribers has reached 246 millions.
The profit rose by 45 percent from the previous year to €1.1 billion. This was slightly higher than analysts’ expectations.
Spotify was founded in 2006. It competes against rival streaming services such as Apple, Amazon, and Tidal. The majority of its revenue comes from its monthly subscription service that starts at £11.99. It has a free service with ads.
The total revenue for the second quarter increased by 20 percent to €3.81 Billion, a fraction below analyst estimates of €3.82 Billion.
The company failed to reach its target of 631 million monthly active users. Spotify had previously stated that it aimed to achieve 631 million active monthly users. However, the company only reached 626 million during the first quarter.
Simon Dyson, an analyst at Omdia (a media, telecommunications, and communications consulting firm), said: “In short, it was a good quarter for them.” They missed their MAU (monthly active users target), but they remain confident in their guidance that this number will increase. If they keep on track, we won’t remember about the quarter they missed.
The company stated that although it saw a growth in user numbers across all regions, it did not meet its target due to the “continued calibration” of marketing efforts.
Daniel Ek is co-founder and CEO of Spotify. He said: “This is an exciting time for Spotify. We continue to innovate and show that we’re not just a good product, but also a fantastic business.
We are achieving this in a time frame that exceeds our expectations. All of this bodes well for the future.
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