In a remarkable performance for the second quarter, Spotify Technology has reported a profit higher than anticipated, showcasing its continuing strength in the audio streaming market. The company's net income stood at 1.33 euros per share, translating to approximately $1.44. This represents a significant rebound from the previous year's loss of 1.55 euros per share, defying the consensus from Capital IQ, which anticipated earnings of 1.05 euros per share.
Revenue surged 20% year-over-year, reaching 3.81 billion euros, aligning closely with market forecasts. Driving this growth was a 21% increase in premium revenue, totaling 3.35 billion euros, fueled by an 8% rise in average revenue per user and a notable 12% increase in subscribers, which now numbers 246 million.
This figure slightly outstripped the estimate of 245.2 million subscribers provided by Visible Alpha. Additionally, revenue from ad-supported services saw a 13% rise, bringing in 456 million euros. In response to these results, Spotify's shares, listed on the New York Stock Exchange, experienced a 13% uplift during Tuesday's trading session.
The total monthly active users (MAUs) also reflected positive momentum, growing by 14% to reach 626 million, although this figure fell short of Spotify's own forecast by 5 million users and the consensus estimate of 631.4 million from Visible Alpha. A spokesperson from Spotify emphasized that the robust performance in the second quarter was primarily driven by strong subscriber growth, enhanced monetization strategies, and record profitability.
"Our business continued to perform well in this quarter, led by healthy subscriber gains and improved monetization arrangements. Nonetheless, we experienced some variability in our MAUs, but the funnel conversion remained solid, especially in developed markets where we have recently adjusted our pricing strategy." Looking ahead, Spotify anticipates adding approximately 13 million net new MAUs in the upcoming third quarter, which would increase the total to about 639 million.
The expectation is also set for premium subscribers to grow by an additional 5 million, reaching 251 million, while the market consensus on Visible Alpha edges closer at 250.6 million. During an earnings call, interim Chief Financial Officer Ben Kung noted, "We are continuing to make adjustments to our marketing activities and are exploring potential product enhancements, both of which should lead to improved MAU growth in the latter half of the year." For the current quarter, Spotify projects a revenue forecast of 4 billion euros, accounting for a foreign-exchange headwind of 100 basis points, a slight deviation from the Street's expectation of 4.06 billion euros.
With such substantial growth metrics and only upward trajectories anticipated, Spotify remains a key player in the audio streaming landscape, as they continue to innovate and adapt to the dynamic market environment..