Spotify surpasses revenue expectations, hits record subscriber growth
Spotify Technology (SPOT) exceeded revenue expectations and posted its first full-year profit in its fiscal fourth-quarter earnings report on Tuesday.
The audio giant also posted another strong quarter of subscriber gains, as churn levels remain low despite recent price increases, News.Az reports, citing foreign media.
Monthly active users (MUAs) rose by 35 million to hit a total of 675 million, ahead of the 665 million analysts polled by Bloomberg had expected. It was the largest fourth quarter increase in the company's history. The company guided to first quarter MAUs of 678 million, also ahead of estimates.
Meanwhile, Spotify reported a fourth-quarter profit of 367 million euros, or 1.76 euros a share ($1.82). That's up from the prior-year period's loss of 70 million euros, or 36 euro cents a share. Analysts had expected profits to come in at 1.89 euros a share, according to Bloomberg.
Similar to earnings, gross margins jumped to a record 32.2% as the company closed out a strong 2024, highlighted by its recent "efficiency" strategy. Shares rose in premarket trading immediately following the report, up around 8%.
Over the past year, shares have surged to all-time highs, up roughly 150% as of Monday's close.
The company's colossal run-up in shares follows an intense business overhaul that has included everything from mass layoffs and C-suite shakeups to a major strategic shift away from podcasts, an area it had aggressively pursued. Those efforts allowed the stock to stage a comeback from the record lows it faced in 2022.
At the company's 2022 Investor Day, Spotify set seemingly lofty objectives that included long-term gross margin targets between 30% and 35%. At the time, the company had been struggling to turn a profit, with its gross margin stuck at around 25%.
Spotify said it expects first quarter gross margins to hit 31.5%, a slowdown from Q4 but still ahead of Wall Street's 31.2% projection. Analysts have warned that the pace of margin expansion may slow in 2025 after the metric jumped by over 400 basis points in 2024.
Similar news
