Spotify Outlines Strong Quarterly Revenue View After Reporting First Profitable Year

Spotify Technology S.A. (NYSE: SPOT) has reported its first full year of profitability, driven by strong user growth and cost-cutting measures. The music streaming giant reported a record operating income of €477 million in the fourth quarter of 2024, leading to an annual operating income of €1.4 billion. This significant milestone comes after years of investment in growth and innovation, as well as strategic cost reductions.



Spotify's user base continues to expand, with Monthly Active Users (MAUs) reaching 675 million in the fourth quarter, a 12% increase year-over-year. Premium subscribers also grew by 11% to 263 million, reflecting the company's success in converting free users to paid subscriptions. This growth in users contributed to a 16% increase in total revenue, which reached €4.2 billion in the quarter.



Spotify's strategic focus on cost reduction and efficiency has played a crucial role in its financial performance. The company has implemented various cost-cutting measures, including layoffs and reduced marketing spend, which have helped to improve profitability. In the fourth quarter, operating expenses declined by 16% year-over-year, contributing to the record operating income.

The company's gross margin also improved significantly, climbing by 555 basis points year-over-year to 32.2%. This improvement was driven by a 16% decline in operating expenses and a 5% increase in Average Revenue Per User (ARPU) at constant currency.

Looking ahead, Spotify expects to maintain its strong financial performance. The company forecasts an operating income of €548 million for the first quarter of 2025, well above analysts' estimates of €439 million. Total revenue is anticipated to reach €4.2 billion, in line with analysts' expectations.

Spotify's CEO, Daniel Ek, expressed optimism about the company's future trajectory. "I am very excited about 2025 and feel really good about where we are as both a product and as a business," he stated. The company's market value surged to a record $124 billion on Tuesday, February 4, after its stock reached an all-time high, fueled by its first-ever full year of operating profit.

Spotify's first full year of profitability is a testament to the company's ability to balance growth and efficiency. As the music streaming market continues to evolve, Spotify's strategic focus on cost reduction and innovation will be crucial in maintaining its competitive edge and driving long-term success.