Spotify forecasts profit below estimates on higher taxes, shares sink
The company's shares, which have risen around 57 per cent so far this year, fell nearly 9 per cent in premarket trading.
Investors are closely monitoring the Swedish company's profitability after price hikes, cost cuts and subscriber gains in recent years helped it achieve its first annual profit in 2024.
Spotify said it expects operating income of 485 million euros ($561.05 million) in the current quarter, below an estimate of 562 million euros, according to data compiled by LSEG.
Its third-quarter monthly active users (MAU) forecast of 710 million was in line with estimates, while its prediction for a 5 million increase in premium subscribers to 281 million was above a Visible Alpha estimate of 279 million.
Its board has approved a $1 billion increase to its share repurchase program, raising the total authorization to $2 billion, with $1.9 billion available for buybacks through April 2026.
Tough competition in music streaming and podcasts from rivals from Apple and Amazon has also prompted Spotify to increase marketing, which contributed to an 8 per cent increase in operating expenses in the April-to-June quarter.
Premium subscribers rose 12 per cent to 276 million in the second quarter, compared with a Visible Alpha estimate of 273 million. Its MAU net additions of 18 million brought the total to 696 million, exceeding expectations.
Second-quarter revenue rose 10 per cent to 4.19 billion euros ($4.85 billion), but fell short of an estimate of 4.26 billion euros. Spotify said unfavorable currency movements reduced year-over-year total revenue growth by about 440 basis points in the reported quarter.
It forecast third-quarter revenue of 4.2 billion euros, below the estimate of 4.48 billion euros.
($1 = 0.8645 euros)
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Times
15 hours ago
- Business Times
Apple CEO tells staff AI is ‘ours to grab' in hourlong pep talk
[LOS ANGELES] Apple chief executive officer Tim Cook, holding a rare all-hands meeting following earnings results, rallied employees around the company's artificial intelligence (AI) prospects and an 'amazing' pipeline of products. The executive gathered staff at Apple's on-campus auditorium on Friday (Aug 1) in Cupertino, California, telling them that the AI revolution is 'as big or bigger' as the internet, smartphones, cloud computing and apps. 'Apple must do this. Apple will do this. This is sort of ours to grab,' Cook told employees, according to people aware of the meeting. 'We will make the investment to do it.' The iPhone maker has been late to AI, debuting Apple Intelligence months after OpenAI, Alphabet's Google, Microsoft and others flooded the market with products such as ChatGPT. And when Apple finally released its AI tools, they fell flat. But Cook struck an optimistic tone, noting that Apple is typically late to promising new technologies. 'We have rarely been first,' the executive told staffers. 'There was a PC before the Mac; there was a smartphone before the iPhone; there were many tablets before the iPad; there was an MP3 player before iPod.' But Apple invented the 'modern' versions of those product categories, he said. 'This is how I feel about AI.' BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up An Apple spokesperson declined to comment on the gathering. The hourlong meeting addressed a range of topics, including the retirement of operating chief Jeff Williams, increasing Apple TV+ viewership and advances in health care with features such as the AirPods Pro hearing-aid technology. It also touched on donations and community service by Apple employees, the company's goal to become carbon neutral by 2030, and the impact of regulations. 'The reality is that Big Tech is under a lot of scrutiny around the world,' Cook said. 'We need to continue to push on the intention of the regulation and get them to offer that up, instead of these things that destroy the user experience and user privacy and security.' Cook often holds town hall-style chats when visiting Apple's offices around the world, but companywide meetings from the Steve Jobs Theatre at headquarters are unusual. The remarks followed a blockbuster earnings report, with sales growing nearly 10 per cent during the June quarter. That beat Wall Street expectations and eased concerns about iPhone demand and a slowdown in China. Apple still faces myriad challenges, including Trump administration tariffs and a regulatory crackdown on its business practices. The company said on Thursday that tariffs would bring a US$1.1 billion headwind this quarter, though Apple was upbeat about sales growth. It also said that App Store revenue rose by a percentage in the double digits last quarter, despite efforts in the EU and elsewhere to further restrict that business. Echoing comments he made during the earnings conference call, Cook told employees the company is investing in AI in a 'big way'. He said 12,000 workers were hired in the last year, with 40 per cent of the new hires joining in research and development roles. Apple's chip development efforts, led by executive Johny Srouji, are key to the company's AI strategy, Cook said. Apple is working on a more powerful cloud-computing chip, code-named Baltra, to power AI features, Bloomberg News has reported. It's also setting up a new AI server manufacturing facility in Houston. The meeting included Craig Federighi, senior vice-president of software engineering, who discussed the future of Apple's Siri voice assistant. The company had planned to roll out a Siri overhaul as part of Apple Intelligence earlier this year, adding the ability to tap into user data to better fulfil requests. It was delayed, spurring management changes for the company's AI work. Federighi explained that the problem was caused by trying to roll out a version of Siri that merged two different systems: one for handling current commands, such as setting timers, and another based on large language models, the software behind generative AI. 'We initially wanted to do a hybrid architecture, but we realised that approach wasn't going to get us to Apple quality,' Federighi said. Now, Apple is working on a version of Siri that moves to an entirely new architecture for all of its capabilities. That iteration is slated for as early as spring, Bloomberg News has reported, though Apple executives have not confirmed a timeline other than a release next year. 'The work we have done on this end-to-end revamp of Siri has given us the results we needed,' the engineering executive told employees. 'This has put us in a position to not just deliver what we announced, but to deliver a much bigger upgrade than we envisioned. There is no project people are taking more seriously.' Federighi cited leadership changes, including putting Vision Pro creator Mike Rockwell and his headset software leadership team in charge of Siri, as a driving force in improving the product. He said Rockwell and his group have 'supercharged' the company's work in the area. In his speech, Cook also pushed employees to move more quickly to weave AI into their work and future products. 'All of us are using AI in a significant way already, and we must use it as a company as well,' Cook said. 'To not do so would be to be left behind, and we can't do that.' Employees should push to deploy AI tools faster, and urge their managers and service and support teams to do the same, he said. Cook also addressed the company's retail strategy, stressing that the current plan is to focus on opening new stores in emerging markets and upping the investment in Apple's online store. The iPhone maker is opening outlets in India, the United Arab Emirates and China this year, and is preparing to add its first location in Saudi Arabia next year. 'We need to be in more countries, and you will see us go into more emerging markets in particular,' Cook said. That doesn't mean Apple will ignore other places, he said, but a 'disproportionate amount of growth' will be in new areas. The CEO also shared his enthusiasm about upcoming products, though he did not get specific. 'I have never felt so much excitement and so much energy before as right now,' he said. Bloomberg News has previously reported that Apple plans to launch its first foldable iPhone next year and is also working on a stream of smart home devices. New headset products, smart glasses, a push into robotics and a redesigned iPhone for the two-decade anniversary are also underway. 'The product pipeline, which I can't talk about: It's amazing, guys. It's amazing,' Cook said. 'Some of it you will see soon, some of it will come later, but there's a lot to see.' BLOOMBERG
International Business Times
21 hours ago
- International Business Times
Wall Street Falls Sharply After Donald Trump's New Tariff Announcement and Weak Job Data
U.S. stock markets plummeted sharply on Friday following President Donald Trump's new tariffs on imports from Canada, India, Brazil, and Taiwan. The Dow Jones fell 542 points (1.2%) and closed at 43,588.58. The S&P 500 dropped by 1.6% to 6,238.01, marking its worst performance since May. The Nasdaq also performed poorly, dropping 2.2% to 20,650.13, its largest decline since April. Freepik Over the week, the S&P 500 dropped 2.36%, while the Nasdaq and Dow declined 2.17% and nearly 3%, respectively. Other market-centric fears also surged, evidenced by the volatility index (VIX) increasing to 20.38, its peak over the last month. Amazon Sinks, Apple Warns of Tariff Cost: The sharp fall of Amazon's shares by 8.3% brought all of the major indexes down alongside it. Amazon's quarterly cloud computing revenue results negatively impacted the consumer discretionary sector, which fell by almost 3.6%. Apple shares also fell by 2.5% despite the strong revenue forecast. Tim Cook, the CEO, stated that tariffs from the US would add $1.1 billion in costs this quarter. Meanwhile, trading volume rose, with 19.51 billion shares changing hands. On the NYSE, the number of declining stocks was greater than the number of gaining stocks by more than two to one. The number of new lows on the NASDAQ outpaced new highs, sitting at 202 new lows compared to 29 new highs. Weak Job Data Puts Pressure on Feds for Rate Cuts The weaker July job data reveals that the US economy added fewer jobs than expected, leading to anxieties regarding the nonfarm payroll market. Nonfarm payroll data now seems to predict a positive shift toward a Federal Reserve rate cut in September. FedWatch now shows an 86.5% chance of a 25-basis-point cut, up from 37.7% the day before. Analysts believe the Federal Reserve may have waited too long—just like last year—before cutting rates, and might now be forced to act quickly Trump Gets Opportunity to Replace One Fed Official as the Pressure Mounts Fed official Adriana Kugler has also announced her resignation. She will vacate her position on August 8, which means President Trump has the opportunity to select someone for the position. Trump has been urging the Fed, and in particular its chief, Jerome Powell, to lower the interest rates. Now all eyes are on how this change will impact the Fed's decisions in the face of political and economic strain. Kugler's resignation as Fed Change Grows Fed official Adriana Kugler will leave her job on August 8, which means President Trump has the opportunity to select someone for the position. Trump has been urging the Fed, and in particular it's chief Jerome Powell, to lower the interest rates. Now all eyes are on how this change will impact the Fed's decisions in the face of political and economic strain.
CNA
2 days ago
- CNA
Mistral in talks with VC firms, MGX to raise funds at $10 billion valuation, FT reports
French artificial intelligence startup Mistral is in talks with investors, venture capital firms and Abu Dhabi's MGX to raise $1 billion at a valuation of $10 billion, the Financial Times reported on Friday, citing people familiar with the matter. The company launched in June Europe's first AI reasoning model, which uses logical thinking to create a response, as it tries to keep pace with American and Chinese rivals at the forefront of AI development. The funding would accelerate the commercial rollout of Mistral's Le Chat chatbot and support continued development of its large language models, the report said. MGX and Mistral did not immediately respond to Reuters requests for comment. The startup raised 600 million euros in a Series B funding round that valued the company at 5.8 billion euros last year. Industry observers consider Mistral as Europe's best-positioned AI company to rival Silicon Valley leaders, though the French firm has yet to achieve comparable market traction or revenue scale.
