Spotify Technology, the music streaming giant, reported better-than-expected quarterly figures, showcasing growth across all regions. It also projected that the number of monthly listeners would reach 601 million by the end of 2023.
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The company achieved a third-quarter operating income of €32 million, marking its first quarterly profit since 2021. This was attributed to a higher gross margin and reduced marketing and personnel expenses.
In the July-September period, its gross margin increased to 26.4%, an improvement of 166 basis points from the previous year.
After a significant investment in its podcast business, exceeding €1 billion, Spotify has focused on cost control. This includes reducing its workforce by 6% earlier this year and raising prices for premium plans in various countries in July.
Monthly active users saw a 26% increase to 574 million in the third quarter, surpassing Spotify’s expectations and analysts’ consensus forecasts of 565.7 million. The number of premium subscribers, which generates most of the company’s revenue, also grew by 16% to 226 million, exceeding estimates of 223.7 million, according to data from LSEG.
Revenue rose by 11% to €3.36 billion, beating estimates of €3.33 billion. Ad-supported revenue increased by 16% compared to the previous year, with a resurgence in music advertising revenue due to growth in impressions sold and stable pricing. Podcast advertising also experienced double-digit growth.
Spotify’s monthly user projection for the fourth quarter puts the company on track to reach one billion users and annual revenue of $100 billion by 2030. This exceeded analysts’ expectations, who had anticipated a forecast of 591.2 million listeners.
Additionally, the company expects premium subscribers to reach 235 million in the last quarter of the year, with revenue projected to reach €3.7 billion. Analysts had expected a forecast of 232.4 million premium subscribers and revenue of €3.69 billion.
