# Spending drive knocks Spotify shares after Q1 beat Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-04-27 Category: INVESTING Category URL: https://financedigest.com/category/investing Meta Title: Spotify Forecasting Operating Loss in Q2 Despite Revenue Meta Description: Despite a rise in first quarter revenue, Spotify anticipates an operating loss in the second quarter due to currency moves and increased hiring. URL: https://financedigest.com/spending-drive-knocks-spotify-shares-after-q1-beathtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2022-04-27t100242z1lynxnpei3q0dkrtroptp4spotify-tech-fc-barcelona-1736815812852-compressed.jpg) (Reuters) -Spotify Technology said currency moves and a big increase in hiring would push it to an operating loss in the second quarter, sending the streaming giant’s shares down 11% on Wednesday despite a forecast-beating rise in first quarter revenue. The company predicted it would make an operating loss of 197 million euros ($208 million) in the current quarter, but said investments would position it for growth in the decade ahead. “Spotify’s got to spend in order to continue attracting new users,” said Hargreaves Lansdown analyst Laura Hoy. But there’s no [way around](https://www.financedigest.com/5-time-efficient-ways-to-travel-around-the-philippines.html "5 Time-Efficient Ways to Travel Around the Philippines") the fact that such steep losses will eventually start eating into the group’s sturdy cash position. Spotify said its total number of monthly active users rose 19% to a record 422 million in the first quarter ended March 31, and it saw a [jump in advertising income](https://www.financedigest.com/abn-amros-q3-profit-jumps-as-interest-income-recovers.html "ABN Amro’s Q3 profit jumps as interest income recovers"). A service outage in March caused some users to be involuntarily locked out of the service, prompting about 3 million to create new [accounts to log back](https://www.financedigest.com/reckon-one-builds-momentum-with-strong-backing-from-accountants-joining-the-cloud-advisor-programme.html "Reckon One builds momentum with strong backing from accountants joining the Cloud Advisor Programme") in. Excluding this anomaly, [monthly active users would have reached 419 million](https://www.financedigest.com/spotifys-monthly-active-users-top-500-million-beat-estimate.html "Spotify’s monthly active users top 500 million, beat estimate"). The company has bet big on podcasts, investing over a [billion dollars in acquiring shows such as the “The Joe Rogan Experience” and other businesses in a bid](https://www.financedigest.com/eu-opens-antitrust-probe-into-broadcoms-61-billion-vmware-bid.html "EU opens antitrust probe into Broadcom’s billion VMware bid") to draw users to a growing non-music audio segment. [Spotify said listening](https://www.financedigest.com/spotify-listeners-cross-half-a-billion-mark.html "Spotify listeners cross half a billion mark") reached a record in the quarter, as members choose from among 4 million podcasts. Overall podcast consumption is strong and increasingly sticky,” said [CEO Daniel Ek during the investor](https://www.financedigest.com/bayer-hits-8-month-high-as-investors-welcome-ceo-change.html "Bayer hits 8-month high as investors welcome CEO change") call. A backlash over Rogan’s podcast, in which he was accused of spreading misinformation about COVID-19 and criticized for his use of racial epithets, did not translate to a net loss of listeners or subscribers. The Joe Rogan controversy that rocked Spotify this February now feels like a hiccup on the company’s ascension to top global streaming audio platform,” said Forrester analyst Kelsey Chickering, [noting that its share of the audio streaming market](https://www.financedigest.com/the-chelated-iron-agricultural-micronutrient-market-to-escalate-on-a-holistic-note.html "The Chelated-Iron Agricultural Micronutrient Market To Escalate On A Holistic Note") was twice the size of Apple Music. The Swedish company posted a 24% increase in first-quarter revenue to 2.66 [billion euros](https://www.financedigest.com/europes-spend-on-energy-crisis-nears-800-billion-euros.html "Europe’s spend on energy crisis nears 800 billion euros") ($2.82 billion). Analysts on average had expected revenue of 2.62 [billion euros](https://www.financedigest.com/mercedes-benz-to-buy-back-up-to-4-billion-euros-in-shares-by-2025.html "Mercedes-Benz to buy back up to 4 billion euros in shares by 2025"), according to IBES data from Refinitiv. The company now expects total monthly active users of 428 million in the second quarter, a number that reflects a [loss of about 5 million monthly](https://www.financedigest.com/investors-flee-uk-bonds-pushing-gilts-to-huge-monthly-loss.html "Investors flee UK bonds, pushing gilts to huge monthly loss") listeners because of the decision to suspend service in Russia. It [forecast second-quarter revenue](https://www.financedigest.com/shopifys-revenue-forecast-fails-to-impress-shares-fall.html "Shopify’s revenue forecast fails to impress, shares fall") of 2.8 billion euros, compared with estimates of 2.81 billion euros. Premium subscribers, who account for most of the company’s revenue, rose to 182 [million from 158 million in the first quarter, while advertisement-supported revenue rose 31% to 282 million euros](https://www.financedigest.com/amazon-grants-1-5-million-euros-to-dutch-seaweed-farm-project.html "Amazon grants 1.5 million euros to Dutch seaweed farm project"). ($1 = 0.9417 euros) (Reporting by Akash Sriram in Bengaluru and Dawn Chmielewski Editing by Shounak Dasgupta and Mark Potter) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---