Spotify Technology SA sank as a flat margin outlook failed to energize investors who have stuck with the stock through a rough start to the year amid its controversy with podcast host Joe Rogan. 

Gross margin is expected to stay the same this quarter relative to last, the company said in a statement Wednesday. Analysts honed in on the outlook for margins on Spotify’s earnings call and in research reports.

Read more: What Spotify's Joe Rogan uproar means for brands

In addition, the company’s paid subscriber forecast for the current quarter fell just short of analyst estimates. Spotify projected it will have 187 million premium subscribers at the end of the second quarter, compared with analyst estimates of 189.4 million. The streaming company said it will lose another 600,000 subscribers in the current period due to its withdrawal from Russia after the company suspended service in the country last month.

Over the first quarter, paid subscribers totaled 182 million, in line with the 182.7 million projected by analysts. This includes a loss of 1.5 million customers from Russia. Ad-supported users totaled 252 million, also above projections of 243.4 million.

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Controversy had little impact on Spotify’s financial results. Neil Young and other artists pulled their music from the service earlier this year, claiming Rogan’s Spotify-exclusive show was spreading misinformation about the pandemic. But the company exceeded Wall Street forecasts in almost every category, including sales, monthly active users and operating profit.

First-quarter revenue reached 2.66 billion euros ($2.8 billion), exceeding the 2.61 billion euro average of analysts’ estimates compiled by Bloomberg.

Spotify generated 282 million euros in advertising sales in the quarter, an increase of 31% from a year ago.

Advertising now accounts for 11% of Spotify’s revenue, part of an effort by the Stockholm-based company to make that a larger component of its business, especially in podcasting. Last quarter, Spotify said advertising represented 15% of sales, and since then, it acquired two podcast ad tech companies: Podsights and Chartable.

The stock fell as much as 13% before paring its decline to 8.8% at 10:04 a.m. in New York. The shares had fallen 53% so far this year through Tuesday’s close.

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—Bloomberg News