Spotify Technology SA, the global audio-streaming powerhouse, experienced a substantial leap in share value, marking its largest single-day increase in nearly two years, following the company’s impressive first-quarter results. This surge comes as Spotify reported a significant increase in paid subscribers and announced plans for business model diversification.
Spotify’s Paid Subscribers Climb 14% to 239 Million
The number of Spotify’s paid subscribers rose 14 percent year over year to 239 million, meeting analysts’ expectations. This growth was part of a broader increase in user engagement, with total active users—including those on the ad-supported plans—reaching 615 million, slightly below the forecast of 617.9 million. The news of this growth led to a 16 percent increase in Spotify’s shares, hitting $314.80 in New York, the largest intraday gain since July 2022.
Revenue Rises and Business Model Evolves
In its Q1 2024 earnings report, Spotify announced that total revenue rose 20 percent to 3.6 billion euros ($3.8 billion), while adjusted operating profit reached a record high of 168 million euros. The company also noted a net income of 197 million euros, indicating a solid financial performance.
Spotify has been evolving its business model to encompass more than just music streaming, venturing into other audio entertainment categories like audiobooks. After years of steady subscriber growth, Spotify raised prices last year for the first time in over a decade and has plans for additional increases. The company is also exploring new pricing tiers, including a music-only plan and another that excludes audiobooks at a lower monthly price.
Spotify’s Audiobook Expansion and Podcast Strategies
Since including audiobooks in its subscription plans, Spotify has expanded to six markets, with 25 percent of users engaging with audiobook content at least once. This move aligns with the company’s efforts to diversify its offerings, despite recent cuts to staff and podcast programs. Spotify’s renewed deal with comedian Joe Rogan and its broader distribution on platforms like YouTube and Apple Podcasts signal a continued commitment to its podcast segment.
Spotify’s Q2 2024 Outlook
Looking ahead, Spotify forecasts 631 million active users in the second quarter, including 245 million premium subscribers, slightly below analysts’ expectations. However, the company’s revenue forecast of 3.8 billion euros surpasses the average estimate, and its operating profit projection of 250 million euros is well above the analysts’ forecast.
For more information on Spotify’s Q1 2024 results and future prospects, read the full report on Bloomberg https://www.bloomberg.com/news/articles/2024-04-23/spotify-boosts-paid-subscribers-in-first-quarter-beating-estimates
