Spotify surpassed the 250 million subscriber milestone and saw its net income more than quadruple during the third quarter, the music streaming heavyweight reported on Tuesday.
Spotify’s stock jumped 9% on the news in after-hours trading.
“We’re on track for our first full year of profitability,” Spotify CEO Daniel Ek said on the company’s Q3 earnings call.
Here are the top-line results:
Revenue: 4 billion euros ($4.25 billion), which represented a 19% year-over-year increase. That came in below an estimate of $4.37 billion in sales from analysts from Zack’s Investment Research.
Net Income: 300 million euros ($318.72 million), which shot up 361% from Q3 2023, when Spotify reported 65 million euros in net income.
In its report, Spotify said “free cash flow was 711 million euros in Q3, a record high as a result of higher net income adjusted for non-cash items and favorability in net working capital.”
Spotify reported gross profit of 1.12 billion euros, up 40% annually.
Subscribers: Spotify added another 6 million customers during the quarter to hit 252 million subscribers. That’s up 12% compared to Q3 2023, when Spotify had 226 million customers.
Monthly Active Users: Increased 11% annually to 640 million.
The Stockholm-based company reported operating income of 454 million euros, a quarterly record for the company — “solidly positioning the company to deliver its first full year of operating income profitability,” Spotify said.
Ek said he sees “substantial runway to grow margins and income over the long run, which will be driven by continuing focus on improving our product and business via targeted investments, discipline, management, and improving monetization.”
Spotify’s stock price has more than doubled since the start of the year, moving from $188.80 per share to $419.39 per share on Tuesday afternoon. Following its after-hours move, the company topped $450 per share.
This was the company’s first report to fully reflect its June price hikes on premium subscribers in the U.S.
It was the second price hike in a year for premium customers, with their plan increasing by $1, from $10.99 to $11.99 per month. The Premium Family plan, which allows at least six members, also increased by $3, from $16.99 to $19.99 per month.
When asked on the company’s earnings call if Spotify needs to focus more on sports content to drive ad revenue, Ek pointed to Bill Simmons’ The Ringer, which he said was already a “great driver” for ad sales.
Looking ahead to next quarter, Spotify said it anticipates hitting 260 million subscribers.
