Spotify has warned of weaker than expected user growth after its profits were held back by heavy spending on marketing and artificial intelligence, as the music streaming giant races to keep paying subscribers onside.
The company, whose platform features artists such as Olivia Dean and Taylor Swift, predicted that monthly active users would grow to 788 million over the next three months, below the 794 million forecast by Wall Street analysts.
Spotify's user numbers for the three months to June also fell short of expectations, reaching 777 million, while profits for the quarter came in at £467million, missing predictions of £503million.
The company blamed the shortfall on what it called "temporary investments" in marketing and AI, including new features that let users remix songs and generate customised podcasts. That spending drove up group costs by 19 per cent in the period, to £806million.
Company defends AI spending
Co-chief executive Gustav Soderstrom told analysts that Spotify's spending was "under our control" and that the company would "continue to invest in AI on our terms".
Spotify is hoping the extra features will persuade more users to sign up to its pricier subscription tiers. The Stockholm-based company, one of the world's largest music streaming services, makes most of its money from subscribers who pay to listen without adverts, alongside advertising revenue from its free tier.
Shares under pressure
Spotify shares have dropped 27 per cent over the past 12 months as the company grapples with a flood of AI-generated tracks appearing on its platform.
