Spotify Technology SA (NYSE:SPOT) shares slumped as the music streaming platform’s first quarter earnings and profit forecast fell short of analyst expectations, despite strong subscriber growth.
For Q1, earnings per share of €1.07 were significantly lower than the €2.33 expected, mainly due to higher-than-expected employment taxes tied to the sharp rise in its stock price over the past year.
Revenue of €4.19 billion, up 15% year-over-year, was in line with guidance and Street estimates.
Spotify added five million net new Premium subscribers, ahead of the company’s forecast of two million for the quarter.
Spotify expects Q2 revenue of €4.3 billion, up 13% year-over-year, in line with Street estimates.
It expects operating income of €539 million, below the consensus estimate of €557.5 million, and a gross margin of 31.5%, slightly below estimates of 31.6%.
It expects to add 11 million net new monthly active users and five million new Premium subscribers.
Spotify’s US-listed shares fell 6.3% to about $559 in early trade.