Shares of music streaming giant Spotify Technology SA rallied as much as 16 per cent on Tuesday after it reported an increase in the number of paid subscribers and its quarterly gross profit topped 1 billion euros ($1.1 billion) for the first time.
The company posted operating profit of 168 million euros ($179 million) for the first quarter — a turnaround from a loss of 156 million euros over the same period last year.
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The Swedish company, listed on the New York Stock Exchange (NYSE), was trading at $311.01, higher $38.77, or 14.24 per cent, at 11:47 a.m. EDT.
Spotify said the operating profit, lower than its guidance of 180 million euros, had been impacted by higher-than-expected payroll taxes which are tied to share-based compensations.
Its revenue rose 20 per cent year-on-year to 3.6 billion euros, but was down 1 per cent quarter-on-quarter.
At the end of the first quarter, the music streaming giant had 615 million active users, just short of its guidance of 618 million. Some 239 million were paid users.
In 2023, it introduced audiobooks to subscription plans and has since expanded into six markets.
Spotify said the business had “performed well” in the quarter, “led by healthy subscriber gains, improved monetization and record strength in profitability.”
“Overall, we are encouraged by the strong start to the year,” the company said in its earnings report.
“We are going to add back some marketing spend over the year,” CEO Daniel Ek said in an interview. “Because we want to keep on having the growth and we saw that in some territories, we may have pulled back a little bit too much.”
For the second quarter of the year, Spotify forecast an operating profit of 250 million euros and 631 million active users, including 245 million premium subscribers.
In December 2023, Spotify had announced jobs cut by around 17 per cent in a bid to reduce costs.
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Published: 23 Apr 2024, 09:30 PM IST