Streaming giant Spotify forecast third-quarter profit and monthly active users below Wall Street estimates on Tuesday, underscoring the streaming service\u2019s challenges in maintaining growth despite expanding its offerings of AI-based features to fend off competition.<\/p>\n
Shares of the company were down around 4 per cent in premarket trading.<\/p>\n
The company has launched\u00a0AI features like \u201cPersonal Podcasts\u201d and new offerings such as \u201cReserved\u201d to attract more users and fend off competition from rivals including YouTube and Netflix, and AI music startups like Udio and Suno.<\/p>\n
Separately on Tuesday, Spotify announced a new agreement with digital music licensing firm Merlin for the Swedish company\u2019s upcoming paid tool for fan-made covers and remixing. It will allow artists on labels under Merlin\u2019s Spotify agreement to participate.<\/p>\n
The company said it expects operating income of \u20ac670 million (US$770.97 million) in the third quarter, below analysts\u2019 average estimates of \u20ac677.8 million, according to data compiled by Visible Alpha.<\/p>\n
In the second quarter, its operating income came in at \u20ac655 million, beating estimates of \u20ac639.2 million, driven by strong revenue growth and lower payroll taxes.<\/p>\n
Such taxes, called social charges, are tied to the value of the company\u2019s share price. The company\u2019s stockhas\u00a0fallen about 16 per cent so far this year.<\/p>\n
Spotify\u2019s\u00a0quarterly revenue rose 14 per cent to \u20ac4.78 billion, slightly below LSEG-compiled estimates of \u20ac4.80 billion. The revenue forecast\u00a0of \u20ac5 billion\u00a0for\u00a0the third\u00a0quarter was slightly above estimates of \u20ac4.93 billion.<\/p>\n