Spotify turned a profit of 168 million euros in the first quarter, with revenue of 3.64 billion euros, a year-on-year increase of 20%

Streaming music service giant Spotify Technology announced its first quarter 2024 financial results today, with both revenue and profit exceeding expectations. In addition to raising prices and making other moves, including a billion-dollar push into the crowded podcast market, Spotify has made multiple rounds of layoffs over the past year to drive revenue growth and improve profit margins.

In the first quarter, Spotify’s total revenue was 3.64 billion euros (approximately US$3.88 billion), a year-on-year increase of 20%, higher than Wall Street expected 3.61 billion euros. Net profit was 197 million euros (approximately $210 million), and earnings per share were 0.97 euros, higher than analysts’ expectations of 0.65 euros. This compares with net profit of 225 million euros and a loss of 1.16 euros per share in the same period last year.

According to Spotify's forecast, gross profit margin is expected to be as high as 28.1% in the second quarter, which is mainly driven by year-over-year improvements in the music and podcast businesses. Spotify has previously said it expects long-term gross profit margins to reach 30% to 35% as it plans to further expand its podcast and advertising businesses.

Last quarter, Spotify’s operating profit was 168 million euros (about $179 million), compared with an expected loss of 156 million euros in the same period last year. But it was slightly lower than Spotify's forecast of 180 million euros, mainly due to higher-than-expected specific charges. As for the second quarter, Spotify expects operating profit to reach 250 million euros, well above the average Wall Street estimate. Second-quarter revenue will reach 3.8 billion euros, higher than analysts’ expectations of 3.76 billion euros.

User Interface, Spotify’s total monthly active users (MAUs) in the first quarter were 615 million, below the company’s forecast of 618 million, but still up 19% year-over-year. Spotify expects MAUs to reach 631 million in the second quarter.

There were 239 million paid users, a year-on-year increase of 14%, meeting Wall Street’s expectations. Spotify expects the number of paying users to increase to 245 million in the second quarter. Average revenue per paying user (ARPU) was 4.55 euros, a year-on-year increase of 7%. Excluding the impact of exchange rates, the year-on-year increase would be 5%.

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