Spotify Technology (SPOT) reported first-quarter financial results on Tuesday that beat expectations on both the top and bottom line. The audio giant also made a profit as it continues to implement its recent “efficiency” strategy.
Over the past year, Spotify has committed to several rounds of layoffs, in addition to price increases and other initiatives aimed at driving revenue growth and improving margins. The company said it would be more intentional about future investments after spending billions to enter the crowded podcast market.
The audio giant reported an operating profit of 168 million euros ($179 million), compared to a loss of 156 million euros for the same period a year earlier. This figure is lower than the company’s forecast of 180 million euros because payroll costs were higher than expected, “due to share price appreciation during the quarter”, according to Spotify.
It also led to a solid second-quarter operating profit of 250 million euros, well above Wall Street consensus expectations. Revenue forecasts for the second quarter were also higher than estimates: 3.8 billion euros versus 3.76 billion euros expected.
In addition to more deliberate spending, Spotify is reportedly raising prices again after increasing the cost of some subscription plans last summer.
According to Bloomberg, Spotify plans to increase its prices by about $1 to $2 per month in five markets, including the United Kingdom, Australia and Pakistan. The changes are expected to come in late April, with U.S. prices rising “later this year.” The report also states that Spotify is considering introducing a cheaper option that does not include audiobooks.
The stock rose 15% in early trading Tuesday following the results.
The streaming service reported net income of 197 million euros ($210 million), or earnings of 0.97 euros per share. This was higher than the expectations of analysts who expected earnings per share of 0.65 euros. This is also a loss of 225 million euros compared to the previous year, or a loss of 1.16 euros per share.
Gross margins were stronger than expected at 27.6%, beating the company’s forecast of 26.4%. The streamer said it expects its margins to reach 28.1% in the second quarter, driven primarily by year-over-year improvements in music and podcasting.
Spotify has previously said it expects this metric to be between 30% and 35% over the long term, as part of plans to further grow its podcasting and advertising businesses.
Revenue, meanwhile, amounted to 3.64 billion euros ($3.88 billion), 20% more than in the first quarter of 2023 and above Wall Street expectations of 3.61 billion euros.
User figures
Total monthly active users (MAUs) fell short of the company’s estimates of 618 million to reach 615 million in the quarter – but that was still a 19% improvement over the total from last year. The streaming service projects second-quarter MAUs to be 631 million.
Premium subscribers met Wall Street expectations of 239 million, a 14% year-over-year jump. Spotify is waiting for the subscriber…
