Spotify Technology SA reported monthly active users grew 1% in the third quarter, over the prior quarter, to reach 788 million while its paying subscribers increased 2% to hit 306 million, meeting analysts' expectations for total users, though slightly missing on subscribers, according to Bloomberg consensus.
Investors had been expecting 305 million paying customers and 788 million users in total.
Total revenue in the three months ending in September climbed to €4.97 billion ($5.58 billion), the company said Thursday, up 16% over the prior year and slightly missing Wall Street's projections of €4.98 billion.
Advertising-specific revenue increased more slowly to €482 million ($541.42 million), missing estimates of €484.8 million. Ad sales have long been a challenge for the company, which has struggled to turn the segment into a meaningful business despite having more free users than paying subscribers.
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During the past quarter, Spotify announced plans to expand its audiobook business. Audiobooks, which the company says drives revenue — especially for super users who pay extra to receive more hours of listening — are coming to new markets, including Spain, Mexico and Norway.
The company's podcast efforts, which are now increasingly focused on a limited number of big shows, received a boost through a deal renewal with Joe Rogan, effectively giving Spotify the rights to sell advertising on his podcast, which remains the top-rated show in the US. The company also works with Amy Poehler on her podcast and has a deal with Netflix Inc. to distribute certain shows on the streamer.
Gross margin in the third quarter came in at 33%, exactly hitting analysts' estimates for the metric.
The company has continued to sign music deals with record labels and publishers to build its forthcoming artificial intelligence-powered remixing tool, which will let users pay more to customize songs to their liking. Spotify faces growing competition from a slew of startups that are looking to build similar features.
The company forecast €5.2 billion ($5.84 billion) in revenue for the fourth quarter and 818 million monthly users, both largely in line with analysts' estimates.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
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