Spotify Technology SA reported lower-than-expected number of new paid subscribers but revenue, gross margins and user engagement increased in the second quarter.

"On balance, the business outperformed our expectations in 2Q19, with Gross Margin up slightly Y/Y, despite our investments in podcasting, and with revenue growing more than 2.5x faster than the growth in operating expenses , Operating Margin was near breakeven for Q2," Spotify said.

The company's total monthly active users (MAUs) grew 29% Y/Y to 232 million, outperforming the high end of its 222-228 million MAU guidance range.

The world’s most popular paid music streaming service said premium subscribers rose 30% from a year earlier to 108 million.

Revenue from premium subscribers, which accounted for nearly 90% of its overall revenue, rose to 1.50 billion euros ($1.67 billion) in the second quarter.

To fuel its next stage of growth, Spotify launched its service in South Africa, the Middle East and India in recent months even as it continues to price aggressively in the developed world.

It faces competition from Apple, which trails Spotify with more than 60 million subscribers as of June.

On a conference call with analysts, Spotify executives said the company delivered 31% year-over-year subscriber growth, “which we believe is roughly twice the rate of growth of our next closest competitor.”

Spotify now expects between 240 million and 245 million monthly active users in the third quarter.

Net loss attributable to the company narrowed to 76 million euros from 394 million euros a year earlier.