 and 260 million premium subscribers by year-end.){kind=link}
Spotify fourth-quarter profit forecast Spotify, the renowned audio-streaming service, forecasts a strong fourth-quarter profit that exceeds Wall Street expectations, thanks to effective cost-cutting measures and robust user growth. With the holiday season ahead, Spotify’s strategic actions—reducing workforce, limiting podcast investments, and cutting marketing expenses—are paving the way for strong profitability. The company’s premium plan price hikes in the U.S. also leverage increased demand for high-end features, a growth strategy that has attracted keen interest from investors, who have long anticipated Spotify’s full-year profitability milestone.
Spotify expects an operating income of 481 million euros ($509.76 million) for Q4, above the analyst forecast of 445.7 million euros. Additionally, it projects 665 million monthly active users (MAUs), surpassing Visible Alpha’s estimate of 661 million. CEO Daniel Ek remarked that “the company is on track for its full-year profitability,” a significant milestone noted by GadgetsFocus.
Spotify’s shares, already up significantly this year, rose an additional 7% in extended trading. Its third-quarter performance reflected strong growth in premium subscribers, reaching 252 million—an increase of 12% and slightly above expectations.
The boost in users was further supported by Spotify’s addition of premium features, including expanding its AI-powered playlist creation tool to new markets like the U.S. Consequently, monthly active users grew by 11% to 640 million. However, while overall revenue grew by 19% to 3.99 billion euros, it narrowly missed estimates, partly due to a challenging digital advertising market.
Despite these revenue challenges, Spotify’s gross profit surged 40% to 1.24 billion euros, exceeding expectations and contributing to a gross profit margin increase to 31.1% from 29.2% in the previous quarter. Ek indicated that Spotify continues to invest heavily in automation and direct advertising amid a shift away from brand-focused ad spending in the broader industry.
Spotify’s latest quarterly update demonstrates that the company is firmly on its path to profitability, well-positioned to meet the growing demand for premium audio-streaming services.
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