Streaming music leader Spotify Technology (SPOT) added more subscribers than expected in the third quarter but came up short on sales and earnings. The Spotify earnings news pushed SPOT stock lower on Thursday.
The Stockholm-based company lost the equivalent of 68 cents a share on sales of $2.31 billion in the September quarter. Spotify reports financial results in euros. Analysts expected Spotify to lose 61 cents a share on sales of $2.36 billion. In the year-earlier quarter, Spotify earnings were 40 cents a share on sales of $1.93 billion.
Spotify added 6 million new paying subscribers in the third quarter, ending the period with 144 million premium subscribers. It had forecast adding 4 million subscribers, based on the midpoint of its guidance. Wall Street was looking for 5 million new subscribers.
The company also reported 320 million total monthly active users, up 29% year over year. In addition to a paid tier, Spotify offers an advertising-supported service.
Spotify Earnings News: Flywheel Accelerating
“Spotify’s flywheel is accelerating faster with every new user and creator that comes on our platform,” Chief Executive Daniel Ek said in a statement. “We’re building the world’s largest audio network and it’s clear that our strategy is working.”
Foreign exchange rates created a headwind for revenue in the third quarter, the Spotify earnings news release said. Also, average revenue per premium subscriber fell 10% year over year in the period as more users chose lower-priced plans.
Advertising revenue came in better than forecast, returning to growth following the impact of the Covid-19 pandemic in the second quarter.
During the quarter, Spotify launched its service in Russia and 12 surrounding markets.
Expects To Add 8 Million Subscribers In Q4
Based on the midpoint of its guidance, Spotify expects to lose $84 million on sales of $2.46 billion in the fourth quarter. Analysts were modeling Spotify to lose $103 million on sales of $2.56 billion, according to Zacks Investment Research.
Spotify expects to add 8 million premium subscribers in the December quarter.
On the stock market today, SPOT stock fell 3.4% to 266.87. On Wednesday, ahead of the Spotify earnings report, SPOT stock dropped 3.9% to 276.14.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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