Price hikes in streaming services and lower personnel costs pay off
24 October 2023 - 19:29
by Supantha Mukherjee
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Spotify's logo on a beach in Cannes, France, June 20 2023. Picture: ERIC GAILLARD/REUTERS
Stockholm — Spotify on Tuesday swung to a quarterly profit aided by price hikes in its streaming services and growth in subscribers in all regions, and forecast that its number of monthly listeners would reach 601-million in this quarter.
The company posted a third-quarter operating income of €32m, its first quarterly profit since 2021, helped by a higher gross margin and lower marketing and personnel costs.
“We believe moving forward, we should see pretty consistent growth in our operating income,” its CFO Paul Vogel said.
It forecast operating income of €37m in the current quarter.
After spending more than a billion euros in building up its podcast business, Spotify has been keeping a tight lid on costs, laying off 6% of its employees earlier this year and in July raising prices for its premium plans.
“We are still focusing on efficiencies, but efficiencies for us doesn’t mean just cost cutting, it means getting more out of each dollar,” CEO Daniel Ek said.
Spotify’s gross margin rose to 26.4% in the July to September period, up 166 basis points from a year earlier.
“We do expect to continue to see margin expansion into next year,” Vogel said in an interview.
The company’s number of monthly active users rose 26% to 574-million in the third quarter, beating its own guidance and analysts’ forecast of 565.7-million.
Premium subscribers, who account for most of the company's revenue, rose 16% to 226-million, topping estimates of 223.7-million, according to IBES data from LSEG.
Revenue rose 11% to €3.36bn, beating estimates of €3.33bn.
Spotify’s monthly user forecast for the fourth quarter sets the company firmly on target to reach 1-billion users and €100bn in revenue annually by 2030. Analysts had expected a forecast of 591.2-million listeners.
It also expects premium subscribers to reach 235-million in the final three months of the year and revenue to reach €3.7bn euros. Analysts were expecting a forecast of 232.4-million premium subscribers and revenue of €3.69bn.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Spotify posts first quarterly profit in two years
Price hikes in streaming services and lower personnel costs pay off
Stockholm — Spotify on Tuesday swung to a quarterly profit aided by price hikes in its streaming services and growth in subscribers in all regions, and forecast that its number of monthly listeners would reach 601-million in this quarter.
The company posted a third-quarter operating income of €32m, its first quarterly profit since 2021, helped by a higher gross margin and lower marketing and personnel costs.
“We believe moving forward, we should see pretty consistent growth in our operating income,” its CFO Paul Vogel said.
It forecast operating income of €37m in the current quarter.
After spending more than a billion euros in building up its podcast business, Spotify has been keeping a tight lid on costs, laying off 6% of its employees earlier this year and in July raising prices for its premium plans.
“We are still focusing on efficiencies, but efficiencies for us doesn’t mean just cost cutting, it means getting more out of each dollar,” CEO Daniel Ek said.
Spotify’s gross margin rose to 26.4% in the July to September period, up 166 basis points from a year earlier.
“We do expect to continue to see margin expansion into next year,” Vogel said in an interview.
The company’s number of monthly active users rose 26% to 574-million in the third quarter, beating its own guidance and analysts’ forecast of 565.7-million.
Premium subscribers, who account for most of the company's revenue, rose 16% to 226-million, topping estimates of 223.7-million, according to IBES data from LSEG.
Revenue rose 11% to €3.36bn, beating estimates of €3.33bn.
Spotify’s monthly user forecast for the fourth quarter sets the company firmly on target to reach 1-billion users and €100bn in revenue annually by 2030. Analysts had expected a forecast of 591.2-million listeners.
It also expects premium subscribers to reach 235-million in the final three months of the year and revenue to reach €3.7bn euros. Analysts were expecting a forecast of 232.4-million premium subscribers and revenue of €3.69bn.
Reuters
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