Spotify reported a sharp rise in profits and record user growth in the final quarter of the year, signalling that its strategy of raising subscription prices is strengthening its financial performance while continuing to attract new listeners. The streaming group expanded its global audience to 751 million monthly active users in the three months to December, an increase of 38 million over the quarter, while paying subscribers rose by 9 million to 290 million, both exceeding the company’s guidance.
The Swedish platform generated net income of €1.17 billion for the quarter, almost triple the €367 million recorded a year earlier. Earnings per share reached €4.43, surpassing market expectations compiled by FactSet. Quarterly revenue climbed 7 per cent year on year to €4.5 billion, reflecting a combination of subscriber growth and higher pricing across several regions. Spotify’s shares rose about 15 per cent following the announcement, although the stock remains down nearly 30 per cent over the past year, underperforming the broader US market where the S&P 500 gained roughly 18 per cent.
READ – Brace For Higher Spotify Subscription Costs
Spotify has implemented a series of global price increases in an effort to achieve sustainable profitability after years of prioritising expansion over margins. The latest results suggest that subscriber demand has remained resilient despite higher fees. The quarter did not yet reflect the full effect of a recent price rise in the United States, its largest market, where the cost of a premium subscription increased to $12.99 per month from $11.99. Major record labels have encouraged streaming platforms to lift prices, arguing that music subscriptions have not kept pace with inflation and remain cheaper than many video streaming services.
The quarter also marked the first reporting period under Spotify’s new leadership structure. Co-chief executives Alex Norström and Gustav Söderström assumed operational control as founder Daniel Ek transitioned to the role of executive chair at the start of January. Management indicated that the company intends to accelerate execution in the near term while setting more ambitious growth targets for the coming year, focusing on expanding its user base and improving monetisation in an increasingly competitive global streaming market.