Spotify Stock: Spotify’s User Growth Beats Expectations, Expects Optimism for the Year
The Swedish music streaming company has taken on podcasts and audiobooks to grow its user base to 1 billion by 2030. It also raised subscriber prices and laid off thousands of employees to boost profits.
Monthly active users in the fourth quarter increased 23% to 602 million, exceeding Spotify’s guidance and analyst forecasts of 601.33 million.
Premium subscribers, which account for most of the company’s revenue, rose 15% to 236 million, compared to estimates of 235.1 million, according to LSEG’s IBES data.
But quarterly revenue rose 16% to 3.67 billion euros ($3.94 billion), missing expectations of $3.72 billion due to foreign exchange losses. Sales in the first quarter are also expected to be below expectations.
“We have a lot of leverage that we can pull, including price increases, so you will see us working with all of those levers at different times and in different markets,” CEO Daniel Ek said in an interview. “We are now much more focused on the bottom line as well.” Spotify has also been investing heavily in its podcasting business, including signing hosts with large followings like Joe Rogan, and podcast advertising grew by double digits in the quarter.
“We never stopped investing in this, but from a financial perspective, we said podcasting would be a drag on our business in 2023,” Ek said.
“And we’re going to turn that around in 2024 and achieve consistent profitability on the podcasting side, and we feel really good about our ability to do that.”
The company expects premium subscribers to reach 239 million this quarter, surpassing expectations of 238.3 million.
However, the first quarter forecast was below Wall Street expectations for total users and revenue.
Spotify’s monthly user forecast is 618 million, which is lower than the estimate of 618.8 million. The company expects an operating profit of 180 million euros this quarter, after reporting an operating loss of 75 million euros ($1 = 0.9320 euros) in the fourth quarter.
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