Spotify surpasses subscriber expectations, achieves first-ever annual profit

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Spotify Technology SA has exceeded expectations once again with strong subscriber growth, marking its first annual profit in its history. The Swedish music company reported an increase in total active monthly users to 675 million, surpassing Wall Street’s estimates. Paying customers also grew to 263 million, beating expectations.

CEO Daniel Ek’s strategic focus on cost control and diversification into new offerings has paid off, resulting in a net income of about €1.14 billion for the entire year of 2024. This achievement demonstrates Spotify’s commitment to profitability after years of expanding into audiobooks and podcasts, with shares rising by 138% last year.

Looking ahead to the first quarter, Spotify aims to add 3 million monthly active users and approximately 2 million premium subscribers. Revenue is projected to reach €4.2 billion, with a gross margin of 31.5%, driven by growth in premium subscriptions and advertising.

Following the positive financial results, Spotify’s shares surged by about 9.8% in premarket trading, closing at $549.08 in New York on Monday. The company’s recent launch of a new video-creator offering will compensate artists and contributors based on viewer consumption, directly competing with platforms like YouTube in the video podcast market.

In addition to its financial success, Spotify successfully defended itself in a legal battle against a music royalties collection service that challenged the legitimacy of its bundled subscription, which includes audiobooks and music.

Overall, Spotify’s consistent growth and commitment to profitability have positioned the company as a leading player in the music streaming industry. With innovative offerings and a focus on cost management, Spotify continues to attract new subscribers and drive revenue growth.

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