In the second financial report of Spotify since going public, it confirmed the expectations that the company would not be profitable any time soon.
The music streaming app directly listed on the New York Stock Exchange last April. Last Thursday, it revealed €1.27 billion (£1.13 billion) in revenue across the company’s second quarter. The result is up by 26 percent year-on-year and in line with the estimates of analysts as polled by Thomson Reuters.
The monthly subscribers of the app to its paid-for Premium service accounts for the majority of the revenue of the company at €1.15 billion this quarter. It rose to 83 million at an increase of 30 percent, exceeding the average estimate of 82 million. As a comparison, the last-reported user numbers of Apple for its premium Apple Music service was 40 million.
The total operating loss of Spotify came in at €90 million resulting to a net loss amounting €394 million, and worried its investors after reporting a loss of €2.20 on earnings per share as compared to the estimates of €0.68. This is largely because of the hefty royalties that the firm pays out to the record companies.
In a statement, Spotify said that a new data policy that was implemented during the second quarter “slowed our revenue growth,” It said that it caused the app to correct its course early during the third quarter.
It added: “We did see some GDPR disruption across our European markets during [the second quarter] but seem to be largely past that now.”
Eventhough the share price of Spotify dropped around four percent during pre-market trading as the results were released, the company’s shares has since been able to recover to a positive 1.55 percent increase.