On Tuesday, Spotify (SPOT.N) said that it had turned a quarterly profit, helped in part by price rises in its streaming services and growth in subscribers in all areas. The company also estimated that its monthly listeners will surpass 601 million by the end of this quarter.
The firm reported its first quarterly profit since 2021, with an operating income of 32 million euros ($34.1 million) for the third quarter. A stronger gross margin and lower staff and marketing costs made this possible.
According to Paul Vogel, the company’s Chief Financial Officer, “we believe moving forward, we should see pretty consistent growth in our operating income.”
It anticipated an operating income of 37 million euros for the current three-month period.
After investing more than a billion euros into building up its podcast business, Spotify has been keeping a tight grip on expenses by laying off 6% of its staff earlier this year and increasing rates for its premium plans in July. This comes after the company spent more than a billion euros building its podcast business.
“We are still focusing on efficiencies, but efficiencies for us don’t mean just cost-cutting; it means getting more out of each dollar,” Chief Executive Officer Daniel Ek told Reuters.
Compared to the same period a year earlier, Spotify’s gross margin increased by 166 basis points, reaching 26.4% from July to September.
“We do expect to continue to see margin expansion into next year,” said Vogel in an interview.
The company’s monthly active users increased by 26% to 574 million in the third quarter, above the company’s projection of 565.7 million and the prediction of 565.7 million by analysts.
According to statistics provided by LSEG and IBES, the number of premium members increased by 16% to 226 million, which was higher than the projection of 223.7 million. Premium subscribers provide the majority of the company’s income.
The revenue increased by 11% to a total of 3.36 billion euros, above analysts’ projections of 3.33 billion.
The monthly user prediction that Spotify released for the fourth quarter has the business squarely on track to achieve its goals of reaching 1 billion users and $100 billion in annual revenue by 2030. Analysts predicted 591.2 million listeners before the event.
Additionally, it anticipates that it will exceed 235 million premium customers in the last three months of the year and 3.7 billion euros in revenue by the end of the year. The projection of 232.4 million premium customers and income of 3.69 billion euros was what industry experts were anticipating.
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