(Reuters) – a Spotify Technology SA, the world’s leading streaming platform said on Monday it had hit 100 million paid subscribers as well as the report of a better-than-expected rise in first-quarter sales.
The global market leader in the sector, with a doubling of the number of subscribers of the next largest competitor Apple Music, Spotify launched in India, the Middle East and North Africa in the past few months, looking for fuel for the next stage of development if it continues to price aggressively in the developed world.
The results helped ease concerns Spotify was under severe pressure from rivals such as Apple Inc, of which 28 million U.S. paying subscribers of the music service has surpassed Spotify is 26 million in the previous April. Amazon.com Inc has also started an advertising-supported free music tier to the service.
“The competition is not only a big factor for us, it’s really all about growth,” Spotify Chief Executive Officer Daniel Ek, said on a conference call after the release of the quarterly results. Ek cited the company planned to “continue to grow at more than 30 percent per year,” referring to the revenue and the users.
Shares of Spotify were largely flat at $138.30.
The growth in the fourth quarter also had less of an impact than what analysts had expected on average revenue per user – 4.71 euros, or about flat with the same period last year as the company expanded to the markets where the prices are lower, and relied on promotions to find new subscribers.
“There was a concern that Spotify, the forecast for strong subscriber net adds (in 2019) would be at the expense of ARPU (Average Revenue Per User) as it relied more heavily on promotions and pushed into the lower ARPU regions such as India, but these results should go some way to alleviating that concern,” Atlantic Equities analyst James Cordwell said.
Spotify said it had 217 million monthly active users (mau’s) in March, with an increase of 173 million in the same quarter a year earlier. Analysts on average had expected the company 218.6 million subscribers, according to research firm FactSet.
Premium or paid subscribers at the end of the quarter amounted to 100 million, an increase of 75 million euros a year earlier. Analysts had expected the company to have 99 million paying subscribers.
The revenue increased by 33 percent to 1.51 billion euros ($1.69 billion), beating analysts ‘ estimates of 1.47 billion euros, according to the IBES data of Refinitiv.
The gross margin for the quarter was 24.7 percent, above Spotify guidance from 22.5 percent to 24.5 percent, when there are more paying customers and gave away less promotional Google Home Mini smart speaker devices.
Europe contributed 40 percent of the total paid subscribers, followed by North America with 30 percent.
Spotify said that it is expected that about 107 million to 110 million premium subscribers by the end of the current quarter and 117 million euros to 127 million subscribers at the end of the year.
FILE PHOTO: A trader is reflected in a computer screen with the Spotify brand before the company begins with the sale of a direct placement on the floor of the New York Stock Exchange in New York, USA, 3 April 2018. REUTERS/Lucas Jackson
Spotify also said that it is expected that the total turnover of 1.51 billion to 1.71 billion euros for the second quarter, and 6.35 billion to 6.8 billion euro in 2019. Analysts expected that the forecast of the total sales of 1.62 billion euros in the quarter to 6.67 billion for the year.
The company reported a loss attributable to shareholders of 0.79 euros per share. Analysts had expected a loss of 0.35 euro per share.
Spotify said it has spent 308 million euros to buy podcast companies Gimlet Media and Anchor FM and the other 50 million buy Cutler Media LLC, the parent company of Parcast.
Reporting by Akanksha Rana, Bengaluru and Kenneth Li in New York; Editing by Mark Kuber, Anil D’silva and Paul Commented