Spotify’s stocks fell more than 11% following the release of its Q2 results on Tuesday.
While the music streaming platform posted a 10% rise in year-on-year revenue, it also announced a net loss of 86 million euros or a loss of 42 euro cents per share. This is down from a net income of 225 million euros or 1.10 euros per share a year ago.
According to Spotify, higher personnel, marketing and professional services costs and 115 million euros of what it called social charges contributed to the results.
Third quarter guidance also fell short of Wall Street’s forecast, with the company expecting revenues to reach 4.2 billion euros, compared to an estimate of 4.47 billion euros from StreetAccount.
While Spotify fell short in financial results, paying subscribers for the streaming platform climbed 12% year-over-year to 276 million, with streams on its Spotify AI DJ almost doubling.
However, artists are protesting the Spotify CEO, Daniel Ek and his investments in AI by pulling their music from the platform.
Artists' protests also come as a new band, Velvet Sundown, gained media attention after gaining millions of listeners and being confirmed to be mainly AI-generated after widespread speculation.
As well as investing in AI, the company continues to invest in improvements in audiobooks and growing its monthly active user base from the current 696 million users.
“By constantly evolving, we create more and more value for the almost 700 million people using our platform,” Daniel Ek, Spotify Founder & CEO, said.
“This value not only benefits users but it’s attracting more people to streaming and as a result, it’s also boosted the industries of music, podcasts, and audiobooks.”
The audiobooks feature was expanded this quarter to new countries, and listening hours jumped 35% in the U.S., the U.K. and Australia.
These results follow Spotify posting its first year of profitability in 2024 as it slashed costs and hiked prices.
The steaming giant ended the quarter with 7,3000 full-time employees and upped its share repurchase program by US$1 billion.
At the time of writing, Spotify (NYSE: SPOT) shares finished 11.55% lower at US$620.01. Its market cap is US$126.92 billion.
