In its first quarterly report since becoming a public company, Spotify had disappointing news: a loss that came in much bigger than expected.

Investors sold the stock on the news. In recent after-hours trading, shares in the streaming music company were down $14.30 a share, or 8.41%, to $155.70

The streaming music company's number of paying subscribers grew to 75 million during the first three months of the year, in line with expectations and maintaining Spotify's lead in a heated battle with Apple Music, which has 40 million paying subscribers.

But diminishing revenue-per-user, as Spotify races to boost its membership through discounted family and student plans, took a toll.

Spotify announced its first-quarter results after Wednesday's closing bell. The report follows its unorthodox "direct" initial public offering last month.

Here's what the company reported and how those results compared with Wall Street expectations and its prior results.

Revenue: €1.14 billion ($1.36 billion), in line with Wall Street targets and up 26% from the €902 million of revenue in the year ago period.

€1.14 billion ($1.36 billion), in line with Wall Street targets and up 26% from the €902 million of revenue in the year ago period. EPS (GAAP): A loss of €1.01 ($1.21) a share. Wall Street was expecting a loss of €0.23 a share. In the same period a year earlier, the company lost €1.15 a share.

A loss of €1.01 ($1.21) a share. Wall Street was expecting a loss of €0.23 a share. In the same period a year earlier, the company lost €1.15 a share. Net loss: €169 million ($202 million). The company lost €173 million in the first quarter a year ago.

€169 million ($202 million). The company lost €173 million in the first quarter a year ago. Monthly Active Users : 170 million. In the fourth quarter, the company had 157 million. In the first quarter last year, it had 131 million.

: 170 million. In the fourth quarter, the company had 157 million. In the first quarter last year, it had 131 million. Premium subscribers: 75 million. That's up from 71 million in the fourth quarter and 52 million in the year-ago period.

75 million. That's up from 71 million in the fourth quarter and 52 million in the year-ago period. Revenue guidance: Spotify is expecting to post €1.1 billion to €1.3 billion for the second quarter. Analysts had forecast €1.28 billion in sales for the period. In the second quarter last year, Spotify recorded €1 billion in revenue.

Spotify is expecting to post €1.1 billion to €1.3 billion for the second quarter. Analysts had forecast €1.28 billion in sales for the period. In the second quarter last year, Spotify recorded €1 billion in revenue. Operating loss guidance: €60 million to €140 million for the second quarter. In the second quarter last year, its operating loss came in at €79 million.

The Luxembourg-based company's results were weighed down by a sequential decline in advertising revenue and slow growth in subscription revenue. Spotify saw €102 million in revenue from its ad-supported offering in the first period, which was down 22% from the fourth quarter.

Interestingly, although the total number of premium subscribers grew 7% from Q4, the revenue from subscriptions only grew 2% sequentially, to $1.04 billion. The disparity may owe to the company's popular family plans, which help Spotify increase its user base but bring in less revenue per subscriber.

Spotify did show improvement on its costs, though. Its gross profit margin, which represents the portion of its revenue it has left after paying the direct costs of providing its services, came in at 24.9% for the quarter. That was up from 24.5% in the fourth quarter and 11.7% in the year-ago period.

Many analysts and investors have bet that Spotify will become a significantly profitable company in the future and are betting that one way it will improve its bottom line is by increasing its gross margins.

But the company also kept its operating costs in line. It had €324 million in operating expenses in the period, which was down from €369 million in the fourth quarter. A big cut in marketing expenses helped the company lower its overall costs.