Business

Spotify Hits Profit With Rising Subscribers and Soaring Revenue

Apr 23, 2024 1 min read

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Spotify Technology has reported a notable increase in paying subscribers, achieving an operating profit of 168 million euros ($179 million) for the first quarter, which marks a significant recovery from a 156 million euro loss reported in the same quarter of the previous year. Despite this positive outcome, the profit fell short of the company's own forecast of 180 million euros. At the quarter's close, Spotify reached 615 million active users, which was slightly below the projected 618 million. The rise in operating profit is attributed to the company's "efficiency" strategy, which has included measures such as layoffs and price increases intended to enhance growth and margins.

The company's total revenue grew by 19% year-over-year to 3.6 billion euros, bolstered by a 20% growth in premium subscribers and a substantial increase in ad-supported monthly active users. Spotify's gross margin hit a record high of 27.6% during the quarter. Additionally, the company reported a strong free cash flow of 207 million euros. Despite these financial gains, Spotify has not yet achieved a full-year net profit.

Spotify is also adjusting its pricing in certain markets, with plans to increase subscription fees by approximately $1 to $2 per month in countries including the UK, Australia, and Pakistan. This move comes as the company continues to diversify its content offerings, which now encompass a broader range of media such as videos and audiobooks. The strategy aims to drive both profitability and user growth, with the CEO Daniel Ek expressing confidence in reaching the company's long-term objectives.

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