The audio streaming giant reported its third-quarter results.
Audio streaming giant Spotify posted a third-quarter revenue gain and ended September with 306 million paying premium subscribers, up from 300 million as of the end of June. The figure compares with the company’s 305 million forecast.
Monthly active users (MAUs) grew to 788 million, up from 777 million in the previous quarter and in line with the firm’s forecast. Spotify had guided to slower MAU growth in the third quarter, pointing to changes to products in emerging countries to help the company better monetize its user bases.
Revenue growth for the quarter came in at 16 percent, or 14 percent on a constant currency basis, to get the company to €5.0 billion ($5.6 billion), matching its forecast. Operating income hit €672 million ($754 million) in the third quarter, with management guidance having called for €670 million. The figure was up 15 percent despite a 26 percent operating expenses increase, “primarily driven by an increase in marketing alongside cloud and AI spend in support of growth initiatives.”
Spotify touted that it gross margin and operating income came in ahead of expectations.
Profitability has been in the investor spotlight after price increases and cost cuts. Spotify shares rose more than 3 percent in early pre-market trading.
“This was a quarter where we did what we said,” said co-CEO Alex Norström. “We’ve built a strong business that keeps compounding, we invest when we see a path for growth, our costs are moderating, and there is more runway ahead.”
He added: “Spotify not only enjoys industry-leading engagement, but we also have the most passionate and engaged music, podcast and book fans in the world on our platform. That’s why we continue to grow and take share. Every time we expand what’s on Spotify, we bring in new listeners and give existing ones more reasons to come back, almost every day.”
And co-CEO Gustav Söderström said: “Spotify is in one of the few categories that actually stands to thrive in the agentic age. This is because agents excel at replacing and taking care of things people would rather not do. People love getting rid of chores. But entertainment is the opposite. Nobody asks an agent to “summarize a song” for them. The whole point of getting rid of those chores is to free up even more time for the things that you actually enjoy.”
For the current fourth quarter, Spotify predicted 316 million premium subs and 818 million MAUs, as well as operating income of €820 million and revenue of €5.2 billion.
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