Spotify Technology SA shares experienced their biggest jump in almost two years after the audio-streaming giant reported a first-quarter profit, driven by a surge in paid subscribers and new feature additions. The Stockholm-based company saw its share price rise 16% to $314.80 in New York, marking the most significant intraday gain since July 2022.
Spotify’s paid subscriber base grew by 14% to 239 million, matching analysts’ estimates compiled by Bloomberg. The total number of active users, including those on the ad-supported tier, reached 615 million, slightly missing analysts’ expectations of 617.9 million. Despite this minor gap, the company’s positive growth trajectory has investors excited about its future prospects.
Spotify’s success in the first quarter can be attributed to its evolving business model, which extends beyond traditional music streaming. The company has shifted its focus to include other audio entertainment categories, such as audiobooks. This move comes after years of rapid subscriber growth and a recent increase in subscription prices, the first in over a decade. Spotify has also announced plans for another price hike by the end of the month and is exploring new pricing tiers, including a plan without audiobooks at a lower price and a music-only option.
Total revenue rose 20% to 3.6 billion euros ($3.8 billion) on net income of 197 million euros. Adjusted operating profit reached 168 million euros, a record high for the company. Spotify’s inclusion of audiobooks in its subscription plans has contributed to this growth, with 25% of users who have access to the offering engaging with it.
Despite internal challenges, such as staff cuts and reduced investment in podcast programs, Spotify remains committed to its core audio streaming business. In February, the company renewed its deal with comedian Joe Rogan and expanded his show to YouTube and Apple Podcasts, signaling a broader approach to content distribution.
Spotify’s forecast for the second quarter indicates continued growth, with an expected 631 million active users, including 245 million premium subscribers. This figure is slightly lower than analysts’ projections of 637.1 million, but the company remains optimistic, forecasting an operating profit of 250 million euros, exceeding analysts’ estimates.
For additional insights into Spotify’s first-quarter results and future plans, refer to the original report on Bloomberg.
