Stock market newbie Spotify hits targets in race with Apple Music

LONDON (Reuters) - Music streaming leader Spotify's paid subscriptions rose 10 percent in the second quarter, thanks to family plans that attracted new users and kept them loyal as the Swedish company races to stay ahead of Apple Music.

Spotify said on Thursday it had 83 million paid subscriptions at the end of June, slightly ahead of the 82 million expected on average by analysts in a Reuters poll, and more than double Apple's last-reported 40 million paying users.

In a closely-watched financial release that is only its second since its April stock-market debut in New York, Spotify said it expected a further slight rise to between 85 million and 88 million premium subscribers in the current quarter.

Spotify, which launched its service a decade ago, has seen a surge in subscriber growth in recent years as the previously sceptical music industry warmed to streaming as a means to return to health after struggling to adapt to the digital age.

The still loss-making company is under increasing pressure, however, from Apple, which has the advantage of a huge customer base, especially in the lucrative U.S. market. Apple will report second-quarter results next week.

Spotify said its average monthly revenue per user (ARPU) fell 12 percent year on year to 4.89 euros ($5.73), diluted by family and student plans as well as faster growth in emerging markets such as Latin America and Southeast Asia, where it charges less.

The decline was less marked than expected, and total revenue - including entry-level, advertising supported services - rose 26 percent to 1.27 billion euros ($1.49 billion).

Spotify said revenue growth was slowed by new European data privacy rules that require users to give explicit consent for certain uses of their information.

"We did see some GDPR disruption across our European markets during Q2 but seem to be largely past that now," the company said in a statement, referring to the European Union's General Data Protection Regulation that came into effect in May.

"We course corrected early in Q3 and are seeing a recovery in the business."

The company said its operating loss widened to 90 million euros from 41 million in the first quarter, largely due to costs related to its stock-market listing.

Spotify's $26 billion stock market debut in April was the most highly scrutinised technology IPO since that of Snapchat owner Snap last year.

Its shares had a wobbly start but have now gained just over 10 percent from their initial offering price. The stock closed at $187.99 on Wednesday, ahead of the results.

($1 = 0.8529 euros)

(Reporting by Eric Auchard in London; editing by Adrian Croft and Jon Boyle)