Spotify projected third-quarter profit below market expectations on Tuesday, citing increased tax expenses linked to employee compensation, despite strong demand for its premium subscription services.
Shares of the Swedish streaming platform dropped nearly 9% in early trading, even after gaining around 57% so far this year. Investors have been keeping a close watch on the company’s profitability following recent price hikes, cost-cutting measures, and rising subscriber numbers that helped Spotify report its first annual profit in 2024.
The company expects operating income of €485 million ($561 million) for the third quarter, falling short of the €562 million consensus estimate from LSEG data.
Spotify’s forecast of 710 million monthly active users (MAUs) aligns with expectations, while its premium subscriber projection of 281 million exceeds analysts’ estimates of 279 million. In the second quarter, premium subscribers rose 12% to 276 million, and total MAUs increased by 18 million to reach 696 million—both surpassing forecasts.
Despite a 10% year-over-year revenue increase to €4.19 billion ($4.85 billion) in Q2, the figure missed expectations of €4.26 billion. Spotify noted that currency fluctuations negatively impacted revenue growth by roughly 440 basis points.
Looking ahead, the company anticipates third-quarter revenue of €4.2 billion, which also falls below the market projection of €4.48 billion.
Meanwhile, Spotify’s board approved a $1 billion boost to its share buyback programme, increasing the total authorisation to $2 billion, with $1.9 billion available for repurchases through April 2026.
Rising competition from Apple and Amazon has led Spotify to ramp up marketing efforts, contributing to an 8% rise in operating expenses during the April–June period.
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A Russian missile strike killed six people in Ukraine’s Kharkiv region on Monday (4 May), as Kyiv reported fresh attacks on energy infrastructure and a sharp rise in drone strikes on ports.
A 77-year-old man and a 63-year-old woman were killed on Monday (4 May), after a man drove a car into a crowd on a pedestrianised street in the the eastern German city of Leipzig, authorities said.
Iran warned Armerican forces on Monday (4 May) not to enter the Strait of Hormuz, after the U.S. said it had launched a mission to try and reopen the sea passage. Meanwhile, Iran's Foreign Minister said there was no military solution to the Middle East conflict.
China has moved to block U.S. sanctions on five of its oil refineries, in a fresh escalation of tensions over trade and energy policy.
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Ukraine has launched a new wave of drone strikes on Sunday (3 May) across Russia, hitting key infrastructure and causing casualties in several regions, officials on both sides said.
U.S. President Donald Trump has said he will raise tariffs on cars and trucks imported from the European Union to 25% next week, up from the 15% level agreed last year, accusing the bloc of failing to comply with its trade commitments.
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