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• March service outage caused around 3 million users to create new accounts to log back in
• Estimates to incur operating loss of 197 million euros in Q2
Spotify Technology SA (NYSE: SPOT) on Wednesday dropped over 13% after the music streaming giant said currency moves and a significant increase in hiring would push the company to report an operating loss in the second quarter.
Although the company is estimated to make an operating loss of 197 million euros ($208 million) in the current quarter, it said the investments would position Spotify for growth in the decade ahead.
Spotify, however, reported better-than-expected earnings for the first quarter ended March 31, with a total number of monthly active users (MAU) jumping 19% to a record 422 million, and said the company saw a jump in advertising income, which made up 11% of its total revenue.
A service outage in March caused users to be automatically logged out of the platform, and the company said it expects around 3 million users created new accounts to log back in. Excluding the anomaly, monthly active users would have reached 419 million.
The Swedish company posted a 24% increase in first-quarter revenue to 2.66 billion euros ($2.82 billion), while analysts, on average, had estimated the company to report revenue of 2.62 billion euros.
Spotify said its ad-supported revenue came in at 282 million euros, but missed analyst expectations of 304.1 million euros.
The number of paid subscribers jumped 15% to 182 million than a year earlier, but falls short of its original forecast of 183 million.
The company said pulling out operation from Russia has led to a loss of 1.5 million subscribers.
Revenue from subscriptions grew to 2.38 billion euros, up 23% year-over-year.
Picture Credit: Engadget
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