Spotify’s losses are rising as costs and subscribers rise

Spotify, the world’s most popular streaming service, posted a wider loss on Wednesday due to rising costs, even as subscriber numbers beat expectations in the second quarter.

The Swedish giant posted a net loss of 125 million euros ($126 million) between April and June, compared with 20 million euros in the second quarter of 2021.

During the same period, the number of postpaid subscribers increased by 14 percent to 188 million from 433 million including postpaid subscribers.

The 19 percent increase in total customers was the largest in the second quarter, the company said.

Analysts had expected a loss of 127 million euros ($128 million) and a rise in paying subscribers to 187 million. Bloomberg reports.

The rise in paying subscribers has confounded concerns that the rising cost of living is prompting consumers to cut back on non-essential expenses such as entertainment.

Spotify’s second-quarter operating loss was 194 million euros, compared with an operating profit of 12 million euros a year earlier.

Related: Despite its popularity, the podcast industry is still searching for its economic model

Spotify blamed the loss on higher staff costs, following an expansion of the team and new acquisitions as it expands its reach into the world of podcasts.

Spotify inked a $100 million deal with controversial star podcaster Joe Rogan earlier this year.

At the end of the second quarter, Spotify listed 4.4 million podcasts on its platform, an increase of 400,000 since the end of March.

The number of users engaging with podcasts grew “substantially by double digits” year over year, and “podcast consumption rates per user increased,” it said.

Spotify expects an operating loss of 218 million euros in the third quarter due to unfavorable exchange rates.

The euro has fallen against the dollar in recent months, driven by the war in Ukraine and growing risks to the EU economy, as well as a relatively slow increase in interest rates by the ECB.

Shares of Spotify rose 16 percent in morning trading on the New York Stock Exchange.

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Spotify’s losses are rising as costs and subscribers rise

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