Spotify posts quarterly profit, reaches 22.60 crore paid subscribers

Spotify reported a quarterly profit on Tuesday, bolstered by price increases in its streaming services and a surge in subscribers across all regions. The company also anticipates that its monthly listeners will reach 601 million for the current quarter.

For the third quarter, Spotify posted an operating income of 32 million euros, marking its first quarterly profit since 2021. This was primarily attributed to a higher gross margin and reduced marketing and personnel expenses.

Paul Vogel, the Chief Financial Officer, expressed optimism, stating, 'We anticipate consistent growth in our operating income going forward.' The company's projection for the current quarter's operating income stands at 37 million euros.

Despite previously investing over a billion euros in expanding its podcast business, Spotify has diligently controlled costs, including a 6% reduction in its workforce earlier this year and raising prices for its premium plans in July. CEO Daniel Ek explained, 'We remain committed to enhancing efficiency, which, for us, involves not just cost-cutting, but also maximising the value of each expenditure.'

During the July to September period, Spotify's gross margin increased to 26.4%, up 166 basis points from the previous year. Paul Vogel, in an interview, remarked, “We expect further margin expansion into the coming year.”

The company's monthly active user base surged by 26% to 574 million in the third quarter, surpassing both its own projections and analysts' expectations of 565.7 million. Premium subscribers, who constitute the majority of the company's revenue, increased by 16% to 226 million, exceeding estimates of 223.7 million according to IBES data from LSEG.

Revenue climbed by 11% to 3.36 billion euros, surpassing estimated figures of 3.33 billion euros.

Spotify's monthly user forecast for the fourth quarter places the company firmly on track to attain 1 billion users and annual revenue of $100 billion by 2030. Analysts had initially expected a forecast of 591.2 million listeners.

Additionally, the company anticipates that premium subscribers will reach 235 million in the final quarter of the year, with revenue reaching 3.7 billion euros. Analysts had forecasted 232.4 million premium subscribers and revenue of 3.69 billion euros.

Also Read Spotify tests voice translation feature for podcasts with help from Microsoft-backed OpenAI