Spotify adds more subscribers as music streaming gets back on track

STOCKHOLM/NEW YORK (Reuters) - Spotify added more subscribers than expected in the third quarter and forecast strong growth in the current quarter as the music streaming service expands into more markets.

FILE PHOTO: A trader is reflected in a computer screen displaying the Spotify brand before the company begins selling as a direct listing on the floor of the New York Stock Exchange in New York, U.S., April 3, 2018. REUTERS/Lucas Jackson/File Photo

The company, hit at the outset of the COVID-19 pandemic by a drop in commuting when many users tune into its services, said on Thursday all regions had now fully recovered.

However its shares, which have more than doubled over the past year, slipped in pre-market trade as the company trimmed to top end of its fourth-quarter revenue forecast range.

With more than double the number of subscribers of nearest rival Apple Music, Spotify Technology SA has been expanding rapidly in markets across Europe and most recently in Russia, after launching in India and the Middle East last year.

“We’re definitely looking a lot more at accelerating launching in many more markets faster based on all the success we’ve had with both Russia and in India,” CEO Daniel Ek told Reuters.

Spotify said global listening hours had surpassed pre-pandemic levels as users tune into more music and podcasts.

Premium subscribers, which account for most of its revenue, rose 27% to 144 million in the third quarter from a year earlier. Analysts on average were expecting 142.5 million paid subscribers, according to IBES data from Refinitiv.

Spotify expects 150-154 million total premium subscribers in the fourth quarter, versus analysts’ forecast of 151.5 million.

It credited the rise in subscribers to its recent launch in new markets such as Russia, which it deemed the “most successful new market launch” to date.

The company, which earns from paid subscriptions and by showing ads to non-paying users, saw its advertising business return to growth after it was hit by the pandemic earlier this year. Executives said ad growth would accelerate this quarter.

Spotify now has 1.9 million podcasts, up from 1.5 million in the second quarter, boosted by big launches such as “The Michelle Obama Podcast” and “Mama Knows Best” by influencer Addison Rae.

Third-quarter revenue rose 14% to 1.98 billion euros ($2.34 billion). Analysts were expecting 2 billion euros.

Excluding foreign exchange rate moves, Spotify said its quarterly revenue was “slightly better than expected”.

It reported a net loss attributable to the company of 101 million euros, or 58 euro cents per share, versus a profit of 241 million euros, or 36 euros cents, a year earlier, when it benefitted from one-off gains.

Spotify lowered the top end of its revenue guidance range for the fourth quarter to 2.2 billion euros from 2.25 billion. Adjusting for currency effects, the company said the mid-point of the range was now higher than previous expectations.

Reporting by Supantha Mukherjee in Stockholm and Kenneth Li in New York; Editing by Emelia Sithole-Matarise and Mark Potter