Spotify Technology SA (NYSE:SPOT) reported second-quarter profitability well above last year's results on Tuesday, as the music streaming giant crossed 300 million premium.
The Stockholm-based company posted revenue of €4.78 billion for the quarter, up 14% from a year earlier, though just shy of analyst estimates of €4.79 billion. Diluted earnings per share came in at €2.61.
Premium subscribers rose 9% year-over-year to 300 million, edging past estimates of 299 million. Monthly active users climbed 12% to 777 million, narrowly missing forecasts of 778 million.
Net income reached €545 million, a sharp reversal from an €86 million loss in the same period last year. Operating income totaled €655 million, with operating margin at 13.7%. Free cash flow rose 14% to €797 million, bringing the trailing twelve-month figure to €3.3 billion.
Premium segment revenue grew 15% to €4.33 billion, while ad-supported revenue rose just 1% to €446 million. Ad-supported monthly active users increased 14% to 494 million.
The company added 7 million subscribers in the quarter, ahead of its own guidance for 6 million additions. Monthly active user net additions came in at 16 million, slightly below guidance for 17 million.
For the third quarter, Spotify guided for revenue of €5 billion, above estimates of €4.93 billion, and 305 million premium subscribers, roughly in line with expectations of 305.3 million. The company forecast monthly active users of 788 million, below estimates of 793.52 million, and operating income of €670 million, short of the €677.8 million analysts had projected.
Gross margin guidance of 32.9% reflects a step down from the second quarter's 33.4%, a signal that profit growth may cool as user growth slows in North America and Europe.
Shares of Spotify were up 1.7% on Tuesday morning.