- Third quarter revenue €3.99 billion
- Spotify shares up 122% year-to-date
- Gained 14 million total monthly active users to 640 million
Shares in Spotify (SPOT:NYSE) were up 5% to $419 in after-hours trading on Tuesday (12 Nov) despite the music streaming platform missing third quarter Wall Street estimates.
The company reported third quarter EPS (earnings per share) of €1.45 on revenue of €3.99 billion compared to Wall Street estimates of EPS of €4.02 billion.
Monthly active users grew by 11% to 640 million in the third quarter from a year earlier.
Daniel Ek, CEO at Spotify told news agency Reuters that the company was on track to deliver full-year profitability ‘which was a very important milestone for investors.’
Like other streaming giants, Spotify has been under pressure to rein in spending and cut costs. Last year the company announced that it was laying off 17% of its global workforce or 1,500 staff.
As of the end of September 2024, Spotify had 7,242 full time employees.
PRICIER THAN RIVAL APPLE MUSIC
In June this year, the music streaming platform raised prices for most of its existing plans in the US. The individual plan increased by $1 to $11.99 per month, while the family plan went up by $3 from $16.99 to $19.99 per month.
In October, Spotify launched music videos in beta in 85 new markets giving premium subscribers ‘the chance to dive into visual worlds of top artists.’
FOURTH QUARTER PROMISE
Even though Spotify missed third quarter estimates, the company was upbeat about the fourth quarter, forecasting total revenue of €4 billion, operating income of €405 million and gross margin of 30.2%.
In relation to subscribers, Spotify is expecting a net gain of eight million premium subscribers to 260 million and total monthly active users of 665 million – a net gain of 25 million.
Analysts at Phillip Securities anticipate further margin expansion into the financial year 2025 due to Spotify's ability to scale and reduce costs.
While the full-year 2024 estimates remain unchanged, the firm has increased its profit forecasts for the financial year 2025 by 9%, citing expectations of higher profitability.
