Spotify Adds More Users Than Expected, Posts Profit

(Bloomberg) -- Spotify Technology SA reported slightly higher subscriber growth than analysts expected, reaching 113 million paying users in the latest quarter, in a sign it’s keeping competitors in check.

• Analysts had projected about 111.2 million premium subscribers in the third quarter, with Spotify forecasting a range of 110 million to 114 million. It posted earnings of 36 euro cents a share. Analysts had forecast an 18-cent adjusted loss per share.

Key Insights

• Spotify is spending heavily to keep its lead over Apple Inc. and Amazon.com Inc. in the paid music-streaming industry. Recent data from Sensor Tower suggested its app download growth in the U.S. has been declining.
• Total monthly active users -- a figure that includes people using the free, ad-supported version -- were 248 million, compared to analyst estimates of around 243 million in a Bloomberg MODL survey.
• Spotify is going after global users more aggressively. The company’s inroads in countries such as Thailand, Japan and Indonesia have been promising, according to Raymond James research.
• Before Monday, Spotify had reported a profit in just one quarter as a public company. It’s trying to boost margins by selling tools to artists and music companies in what it calls a “two-sided marketplace.” Last week, the company said it was testing a tool by which artists could pay to promote a new release.

Market Reaction

• Spotify shares rose 1.9% to $123 in premarket trading. The stock lost more than a fifth of its value between early August and the end of last week.

Get More

• Spotify said Chief Financial Officer Barry McCarthy would retire on Jan. 15, replaced by Paul Vogel, who is currently a vice president at the company.
• Read the statement.

--With assistance from Kamaron Leach.

To contact the reporter on this story: Lucas Shaw in Los Angeles at lshaw31@bloomberg.net

To contact the editors responsible for this story: Thomas Pfeiffer at tpfeiffer3@bloomberg.net, John J. Edwards III

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