Spotify posts first annual profit, predicts strong 2025 start
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The news: Spotify reported its first-ever annual profit and said it expects first-quarter profit for 2025 to come above market estimates, thanks to user growth, price hikes and cost-cutting efforts.
The numbers: The Swedish audio streamer posted a net income of €1.14 billion ($1.90 billion) for 2024 and said operating revenue in the first quarter of 2025 will be about €548 million from €4.2 billion revenue and a 31.5% gross margin. Analysts polled by LSEG expect operating income of €450.6 million for 2025.
The company’s fourth-quarter performance also exceeded expectations, with total monthly active users (MAUs) reaching 675 million and premium subscribers growing to 263 million.
Fourth-quarter revenue rose 16% to €4.24 billion, while gross profit increased 40% to €1.37 billion, and gross margin improved to 32.2%. Spotify’s shares rose 9.8% in premarket trading.
The streamer expects to add 3 million MAUs and 2 million premium subscribers in the first three months of 2025, bringing totals to 678 million subscribers and 265 million subscribers, respectively.
The company attributed its performance to cost-cutting measures, price increases, and new features like a video-creator offering. It also expanded its music video test rollout and won a legal case defending its bundled audiobook and music subscriptions.
What they said: “I am very excited about 2025 and feel really good about where we are as both a product and as a business,” founder and CEO Daniel Ek said in a statement.
“We will continue to place bets that will drive long term impact, increasing our speed while maintaining the levels of efficiency we achieved last year. It’s this combination that will enable us to build the best and most valuable user experience, grow sustainably and deliver creativity to the world.”
The sources: Spotify statement, Spotify presentation, Bloomberg
