Spotify lifts profit forecast on subscriber growth, price hikes
Company expects rise in first quarter revenue
04 February 2025 - 14:07
byJaspreet Singh
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A screen displays the logo of Spotify on the floor at the New York Stock Exchange in New York City, US. File photo: BRENDAN McDERMID/REUTERS
Spotify forecast first quarter profit above market estimates on Tuesday as the Swedish audiostreaming giant benefits from steady user growth, price hikes and a cost-cutting drive.
Shares of the company rose more than 9% in premarket trading.
Spotify expects operating income of €548m in this quarter, above analysts’ average estimate of €450.6m, according to data compiled by LSEG.
It increased prices for its service in June last year and has kept a tight lid on costs including marketing efforts to boost margins.
At the same time, its focus on music and podcast video offerings has helped attract users, analysts have said. Spotify has extended a test rollout of its music videos to new markets and unveiled new features that help improve user-engagement for content creators in certain markets.
The company forecast monthly active users (MAUs) of 678- million in the first quarter, in line with estimates of 679.4-million. It expects to add about 2-million premium subscribers, which would take the total to 265-million, above Visible Alpha estimates of 263.2-million.
In the fourth quarter, premium subscribers rose 11% to 263-million, compared with Visible Alpha estimates of 260-million. MAUs rose 12% to 675-million and exceeded expectations.
Fourth quarter revenue rose 16% to €4.24bn, beating estimates of €4.19bn, driven by subscriber gains and increasing average revenue per user.
Gross profit jumped 40% to €1.37bn compared with estimates of €1.32bn. Gross profit margin increased to 32.2% from 31.1% in the previous quarter.
The company expects first quarter revenue of €4.2bn, slightly above estimates of €4.17bn.
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 lifts profit forecast on subscriber growth, price hikes
Company expects rise in first quarter revenue
Spotify forecast first quarter profit above market estimates on Tuesday as the Swedish audiostreaming giant benefits from steady user growth, price hikes and a cost-cutting drive.
Shares of the company rose more than 9% in premarket trading.
Spotify expects operating income of €548m in this quarter, above analysts’ average estimate of €450.6m, according to data compiled by LSEG.
It increased prices for its service in June last year and has kept a tight lid on costs including marketing efforts to boost margins.
At the same time, its focus on music and podcast video offerings has helped attract users, analysts have said. Spotify has extended a test rollout of its music videos to new markets and unveiled new features that help improve user-engagement for content creators in certain markets.
The company forecast monthly active users (MAUs) of 678- million in the first quarter, in line with estimates of 679.4-million. It expects to add about 2-million premium subscribers, which would take the total to 265-million, above Visible Alpha estimates of 263.2-million.
In the fourth quarter, premium subscribers rose 11% to 263-million, compared with Visible Alpha estimates of 260-million. MAUs rose 12% to 675-million and exceeded expectations.
Fourth quarter revenue rose 16% to €4.24bn, beating estimates of €4.19bn, driven by subscriber gains and increasing average revenue per user.
Gross profit jumped 40% to €1.37bn compared with estimates of €1.32bn. Gross profit margin increased to 32.2% from 31.1% in the previous quarter.
The company expects first quarter revenue of €4.2bn, slightly above estimates of €4.17bn.
Reuters
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