Shares of Spotify jumped to all-time highs Thursday, reversing losses from early in the morning, after the music-streaming service added more users than expected in the second quarter.

In its second earnings report since going public in April, the company said paying users grew 40 percent from a year ago to 83 million, slightly better than the 82 million that analysts were expecting. It said it expects paying subscribers to grow to 97 million by the end of the year.

Those numbers are still well above Apple's service, which at last count had 40 million users. Recent reports suggest the iPhone maker is gaining groundーand may have actually surpassed Spotifyーin the U.S. But CFRA analyst Scott Kessler, who initiated coverage on the stock with a "Buy" rating this month, isn't worried.

"Spotify is the only independent play here," he said. "We like the fact that Apple Music is doing a lot of innovative and exciting things, but the reality is that they're focusing on the iOS platform. Spotify is very globalーalthough it looks like they have about half of the country and region exposure that Apple Music doesーbut they're also available on any platform."

But new EU data privacy rules did take a bite out of revenue in Spotify's latest quarter. The company said the General Data Protection Regulation (GDPR), which went into effect in late May, slowed growth in its European business for "about two weeks", but it's since corrected for the issue and expects a return to growth.

The company said revenue for the quarter rose 34 percent on an adjusted basis to about $1.5 billion. Operating losses expanded to $105 million from $92 million the year before.

Spotify, which made history by eschewing a traditional IPO and listing shares directly on the New York Stock Exchange this spring, has seen shares rise fairly steadily since its debut. As of Wednesday's close, the stock was up about 11 percent since going public.

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