Spotify, the world’s most popular paid music streaming service, reported a modest five percent rise in premium subscribers for its third quarter. Total users rose to 191 million, including free, advertising-supported listeners while revenue and gross margins were roughly in line with market prospects.
Monthly subscribers, which deliver 90% of revenue, rose to 87 million, up from 83 million in the quarter ending June, the report said.
Spotify said it expects revenue of 1.35 billion euros ($1.54 billion) to 1.55 billion euros, compared with analysts’ estimate of 1.49 billion euros.
Spotify counted 71 million global subscribers at the end of last year, meaning that it added 16 million subscribers in the first nine months of 2018, a per-month, year-to-date addition average of 1.77 million.
Excluding the negative impact from foreign exchange rates growth in revenue would have been 33% Y/Y.
Premium revenue was €1.21billion in Q3, up 31% Y/Y. On an exchange rate neutral basis, premium revenue was up 34% Y/Y.
Operating expenses totaled €348 million in Q3, resulting in a total Operating Loss of €6 million.
Spotify’s operating loss in the first nine months of 2018 was €291 million. Its net loss in the same period was €639 million.
Average revenue per user (“ARPU”) was €4.73 in Q3. This represented a 6% Y/Y decline, but an improvement from the 12% Y/Y ARPU decline SPOT reported in Q2.
Gross Margin was 25.3% in Q3, up from 22.3% in Q3 2017, and slightly lower than Q2.
Spotify announced a partnership with Google where Spotify will offer Google Home Mini speakers to Family plan master account holders in the US. Spotify also own shares of Tencent Music Entertainment Group which are classified on their balance sheet as a long term investment.