Spotify announced its fourth-quarter monthly active users and subscribers on Tuesday, which exceeded expectations. The company observed growth in all regions and stated that revenue and profitability trends looked promising for this year. Consequently, its shares rose by 8%.
The Swedish music streaming company’s goal is to expand its user base to 1 billion by 2030. As part of this effort, it has ventured into podcasts and audiobooks. To increase profits, it has also raised prices for its subscribers and laid off thousands of employees.
In the fourth quarter, the number of monthly active users rose by 23% to 602 million, surpassing Spotify’s guidance and analysts’ forecasts of 601.33 million. Premium subscribers, who generate the majority of the company’s revenue, rose by 15% to 236 million, beating estimates of 235.1 million, according to IBES data from LSEG.
However, despite quarterly revenue rising 16% to 3.67 billion euros ($3.94 billion), it missed estimates of 3.72 billion due to foreign exchange losses. Its first-quarter revenue is also expected to fall below expectations.
In an interview, CEO Daniel Ek said, “We have plenty of levers to pull, including price increases, so you will see us work with all of these levers at various times and in various markets. We are now a lot more focused on the bottom line as well.”
Spotify has invested heavily in its podcast business, including signing hosts with large followings like Joe Rogan. In the quarter, podcast advertising grew by double digits.
Ek said, “We never stopped investing in it, but from a financial point of view, what we did say was that podcasting was a drag on the business in 2023. And that we would turn it around and achieve consistent profitability on the podcasting side in 2024, and I feel really good about our ability to do just that.”
The company expects premium subscribers in the current quarter to reach 239 million, above estimates of 238.3 million. However, the first-quarter forecast was below Wall Street expectations for total users and revenue.
Spotify’s monthly user forecast for the quarter of 618 million undershot estimates of 618.8 million. It expects operating income of 180 million euros in the current quarter after posting a fourth-quarter operating loss of 75 million euros.
($1 = 0.9320 euros)