On Tuesday, Spotify (SPOT.N) revealed that its quarterly monthly active users (MAU) fell short of its own projections. The Swedish music streaming giant opted to prioritize profit over increased spending on marketing efforts to attract more listeners.
Despite a 19% rise in first-quarter MAUs, the numbers were below Spotify’s guidance and fell short of the median forecast of 618 million by analysts. Additionally, the company forecasted current-quarter MAUs at 631 million, which also missed estimates of 636.3 million, as per IBES data from LSEG.
Shares of the company were down 1.6% in premarket trading.
Premium subscribers, who account for most of the company’s revenue, rose by 14% to 239 million, in line with estimates.
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Spotify has been cutting costs, including through layoffs and its marketing budget, as it looks to increase margins and profits.
Gross margins rose to 27.6% in the quarter from 25.2% a year earlier, helped partly by higher profits in its podcast business. Its gross profit also crossed 1 billion euros in a quarter for the first time.
“We have talked about 2024 as the year of monetization and we are delivering on that ambition,” CEO Daniel Ek said in a statement.
Spotify forecast gross margin to improve to 28.1% in the current quarter.
The company’s quarterly revenue rose 20% to 3.64 billion euros ($3.89 billion), beating estimates of 3.61 billion euros.
It expects current quarter revenue of 3.8 billion euros, above expectations of 3.76 billion euros.
