MW Spotify's cites 'innovative' culture, video podcast success in user boost

By Steve Gelsi

User growth of 12% powers revenue past estimates

Spotify Technology S.A. cited early success with video podcasts and its internal culture of innovation as the media-streaming service reported better-than-expected monthly active users.

Spotify's stock (SPOT) was up 9.6% in midday trading on the heels of its latest profit update.

Chief Executive Daniel Ek credited "countless improvements and tweaks we made over the past two years in a continuous system of innovation," as the company reported its first-ever profitable year.

"We set quarterly record highs for revenue, gross margin, operating income, and free cash flow," Ek told analysts on the company's fourth-quarter conference call.

Spotify also said it's "incredibly pleased" with its early results in video podcasts, said Gustav Soderstrom, co-president and chief product and technology officer.

"When we saw higher engagement happening on video podcasts and received feedback from creators that they were looking for new monetization opportunities, we moved really fast to launch our new Spotify Partner program," he said. "Video podcasts are seeing enormous spikes in popularity on Spotify."

Spotify said it counted more than 330,000 video podcasts globally on its platform.

Spotify is also offering premium users the ability to watch podcasts uninterrupted by dynamic ads, while launching new tools to help video creators turn shows into a "sustainable business."

Spotify said it expects to add 3 million net new monthly active users (MAUs) to 678 million by the end of the first quarter. That's a little bit above the FactSet consensus estimate of 677 million.

Spotify ended the fourth quarter with about 675 million monthly active users, up 12% from the year-ago period and ahead of the previous quarter by 5%.

Spotify's monthly active user figure of 675 million also beat the Wall Street analyst consensus estimate of 664 million.

Spotify also swung to a profit of EUR1.76 a share from a loss of EUR0.36 in the year-ago quarter. The company was expected to earn EUR1.99 a share.

The company said its fourth-quarter revenue rose to EUR4.24 billion, ahead of the FactSet consensus estimate of EUR 4.15 billion.

Looking ahead, Spotify projected first-quarter revenue of EUR4.2 billion, slightly below the analyst estimate of just under EUR4.3 billion.

-Steve Gelsi

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February 04, 2025 12:47 ET (17:47 GMT)

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