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Streaming platform Spotify posted its first annual profit since its launch more than 16 years ago after it grew the number of paying subscribers and cut costs.
Shares in the Stockholm-based company rose 10 per cent after it forecast higher operating income for the first quarter. Operating income was slightly below the company’s guidance in the fourth quarter at €477mn. That left the annual number at €1.4bn, the first yearly profit since Spotify was launched in 2008.
Annual revenue jumped 16 per cent to €4.2bn as the company increased paying subscribers by 11 per cent to 263mn. Record growth in premium customers helped increase revenue per user by 5 per cent to €4.85 from the previous year, as Spotify also benefited from increasing prices.
Monthly active users jumped to 675mn in the fourth quarter, beating a 664.9mn forecast of analysts in a Bloomberg survey. It increased the number of users by 35mn in the quarter.
Spotify’s first annual profit marks a culmination of efforts to cut costs and improve profitability, including through lay-offs and price increases. It has also been diversifying towards podcasts, videos and audiobooks, helping it attract new customers and reduce reliance on music streaming.
The company expects operating profit in the first quarter of 2025 to advance to €548mn and the number of monthly average users to reach 678mn, helped by a 2mn gain premium subscribers.
“We will continue to place bets that will drive long-term impact, increasing our speed while maintaining the levels of efficiency we achieved last year,” chief executive Daniel Ek said. “I am very excited about 2025 and feel really good about where we are as both a product and as a business.”
Spotify’s “wrapped” feature — in which the company compiles a list of users’ most streamed songs and collates them into a personalised end-of-year recap — drove double-digit growth in user engagement, especially in Europe, North America and Latin America.
Last year, the group also unveiled uninterrupted video podcasts for premium subscribers in the US, the UK, Australia and Canada, to give fans “a new way to experience video podcasts”.
Ek said there would be “many more versions of Spotify in [the] future”, pointing to the opportunity for different tiers and products. Spotify was also moving exploring “deeply personal AI products”, he said.
“Looking into 2025, we view the business as well positioned to deliver another year of continued growth and improving margins,” Spotify said.
