Spotify Raises $250 Million For a Valuation of $4 Billion

The revelation comes the same day that rival Pandora, worth $5.2 billion, reports strong quarterly earnings.

Spotify raised $250 million in a financing deal that values the Sweden-based digital music company at $4 billion, people familiar with the deal said Thursday.

The news of the investment, led by Technology Crossover Ventures, comes the same day that Spotify's chief rival, Pandora, recorded strong quarterly earnings but uninspiring guidance.

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Pandora earned six cents a share in the third quarter on revenue that rose 50 percent to $180.4 million, almost $6 million more than analysts had projected. The company said it would earn from two to four cents a share in the current quarter, while analysts expected four cents.

Shares of Pandora rose four percent Thursday to $29.68, but shed one percent after the closing bell when its results and guidance were released. At Thursday's close, Pandora's market capitalization was $5.2 billion.

The U.S.-based company reported 72.7 million active users, up from 58.3 million in the same quarter last year.

As for Spotify, its investment round was led by Woody Marshall and John Rosenberg, two general partners at TCV, a firm with a portfolio that includes stakes in Netflix, Facebook, Electronic Arts and dozens of more companies in a variety of industries.

Spotify is a private company, though documents made public in July indicated the company had 20 million active users and 5 million paying subscribers at the end of 2012. While its revenue doubled year-over-year to about $577 million, it was not yet profitable.