Spotify has today forecast second-quarter earnings and premium subscribers below Wall Street estimates, a sign of slowing growth for the Swedish streaming giant in its major markets of Europe and North America.
Shares of the company fell around 6% in premarket trading.
Investors closely monitor the company's profitability after price hikes and cost-cutting efforts in recent years amid its growing focus on adding artificial intelligence features to improve discovery and engagement.
Spotify expects operating income of €630m for the second quarter, below LSEG-compiled analysts' average estimate of €684m.
That sharply contrasted with Spotify's record operating income of €715m in the first quarter, helped by lower payroll taxes. It beat estimates of €681.6m.
Such taxes, called social charges, are tied to the value of the company's share price, as lower stock prices can lead to a decline in charges. Spotify's shares have fallen around 15% so far this year.
The company, led by co-CEOs Gustav Soderstrom and Alex Norstrom after founder Daniel Ek became executive chairman in January, competes with music streaming offerings from Apple and Amazon.com.
Spotify rolled out AI features in recent years by adding voice interaction to its personalised music tool AI DJ and introducing AI Playlist for generating playlists using natural-language prompts.
Earlier this month, the company also expanded its Prompted Playlist feature, which lets users create playlists based on their listening habits, to include podcasts.
Its quarterly monthly active users (MAU) forecast of 778 million exceeded estimates of 773 million, while its prediction for a 6 million increase in premium subscribers to 299 million was below estimates of 302 million.
Premium subscribers rose 9% to 293 million in the first quarter, compared with estimates of 294.5 million. Its MAU net additions of 10 million brought the total to 761 million, exceeding estimates of 756.6 million.
The company said its first-quarter revenue rose 8% to €4.53 billion, in line with estimates. The revenue forecast of €4.8 billion for the second quarter was also largely in line with estimates of €4.77 billion.
