Spotify has posted a surprise net loss of A$153 million for the June quarter, despite strong subscriber growth across both paid and ad-supported tiers.

The Swedish streaming giant added 18 million new users – its second-highest Q2 user gain ever – but still fell well short of profit expectations.

The loss comes amid growing criticism of the company and its CEO Daniel Ek, who recently led a €600 million (A$1.07 billion) investment in German defence technology firm Helsing, which specialises in AI-powered autonomous weapon systems.

The move has sparked backlash, with both artists and listeners leaving the platform, some migrating to rival streaming services.

These include Australian rock band King Gizzard & the Lizard Wizard who publicly announced their departure, stating “Fuck Spotify” in a social media post.

However, Spotify remains the dominant force in music streaming, and it would take a lot to knock it off its perch.

Spotify’s quarterly revenue rose 10% year-on-year to A$7.43 billion (€4.19 billion), missing forecasts of A$7.56 billion.

Analysts had expected a net profit of A$692 million, making the loss even more stark when compared to the A$400 million net income Spotify reported this time last year.

Advertising revenue dropped by 1% to A$803 million, despite more than 60% of Spotify’s 696 million monthly users being on the ad-supported tier.

Ek pointed the finger at execution failures rather than strategy flaws, calling it “an execution challenge” on the company’s earnings call.

Operating expenses jumped 8% year-on-year, driven by increased payroll and marketing spend.

Spotify also lowered its guidance for the current quarter, projecting revenue of €4.19 billion – below the prior consensus of €4.26 billion – citing foreign exchange headwinds.

Investors reacted sharply, with Spotify shares plunging more than 11% overnight, which is the platform’s worst trading day since July 2023.

However the company’s stock remains up 40% compared to a year ago, boosted by its first-ever profitable year in 2024.

Amid the financial dip, Spotify’s user growth remained a bright spot.

The platform now has 696 million monthly active users and 276 million paid subscribers – up 12% from last year.

Spotify forecasts reaching 710 million users and 5 million new premium subscribers by quarter’s end.