Spotify's monthly user numbers miss estimates on lower promotions

Spotify on Tuesday reported quarterly monthly active users (MAU) below its own estimates, as the Swedish music streaming company chose to boost profit instead of spending more on marketing activities to draw in more listeners.

First-quarter MAUs rose 19%, but missed Spotify's own guidance and a median of analysts' forecasts of 618 million. It also forecast current-quarter MAUs at 631 million, missing estimates of 636.3 million, according to IBES data from LSEG.

Shares of the company were down 1.6% in premarket trading.

Premium subscribers, who account for most of the company's revenue, rose by 14% to 239 million, in line with estimates.

Spotify has been cutting costs, including through layoffs and its marketing budget, as it looks to increase margins and profits.

Gross margins rose to 27.6% in the quarter from 25.2% a year earlier, helped partly by higher profits in its podcast business. Its gross profit also crossed 1 billion euros in a quarter for the first time.

"We have talked about 2024 as the year of monetization and we are delivering on that ambition," CEO Daniel Ek said in a statement.

Spotify forecast gross margin to improve to 28.1% in the current quarter.

The company's quarterly revenue rose 20% to 3.64 billion euros ($3.89 billion), beating estimates of 3.61 billion euros.

It expects current quarter revenue of 3.8 billion euros, above expectations of 3.76 billion euros.