Snapchat parent Snap has a weak forecast for the upcoming quarter while Spotify reported a bigger loss than expected.
Days after raising the price of its premium subscription in multiple countries, Spotify has revealed its earnings for the second financial quarter of the year, making investors uneasy.
The Stockholm-based music and podcast streaming giant announced yesterday (25 July) that it has seen a 27pc surge in monthly active users to more than 550m, an all-time high for the company. Subscribers are up 17pc and total revenue grew 11pc to €3.2bn.
Even though Spotify claims its earnings for the second quarter are “in line with guidance”, multiple reports suggest the revenue came in below expectations and the company reported a bigger loss than expected, with shares falling up to 14pc in the aftermath.
“Spotify had a very strong quarter. We beat guidance and welcomed more users and subscribers than expected, with growth continuing to come from markets all over the world,” the company said in its earnings statement.
Earlier this week, the company raised the price for a single Premium subscription from €9.99 a month to €10.99 a month. The increased rate applies to 53 countries in total, including Ireland, the UK, the US, Thailand, Australia and various European countries.
Spotify attributed this price increase to a market landscape that has “continued to evolve” since the streaming service launched in 2006 and said it will use the increase in revenue to “keep innovating” new features for its platform, which is now infused with AI.
Despite steady growth in its subscriber base, Spotify has had some financial difficulties. By the end of 2022, the music streaming company managed to surpass the milestone of 200m paid subscribers, but its gross profit dropped due to investments in podcasts and other products.
At the start of 2023, Spotify revealed plans to cut roughly 6pc of its global workforce, due to the stark difference in operational expenditure compared to revenue growth.
Last month, the company said it would cut an additional 200 employees from its podcast business, as part of a wider move to “optimise” the growing division.
Meanwhile, Snapchat parent Snap also released its earnings report yesterday, with shares reportedly plunging more than 17pc because of a weak forecast for the upcoming quarter.
CEO Evan Spiegel said that the number of daily active users on Snapchat has grown 14pc over last year to 397m while subscribers to the premium Snapchat+ service number 4m a year after being rolled out. However, revenue declined 4pc from the $1.111bn to $1.068bn.
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