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Spotify Achieves First Year of Profitability
On September 10, 2024, at a live panel event in San Francisco, Spotify’s Co-founder and CEO, Daniel Ek, took the stage as the company announced a significant financial milestone. The music streaming platform’s shares surged by 10% following the release of its fourth-quarter earnings report, revealing that it had completed its first full year of profitability with a net income of 1.14 billion euros.
Key figures from Spotify’s quarterly report reflected a strong performance:
Revenue: 4.24 billion euros vs. 4.19 billion euros projected by analysts
Earnings per Share: 1.76 euros vs. 1.99 euros anticipated by analysts
Monthly Active Users (MAUs): 675 million vs. 664.3 million forecasted by analysts
Based in Luxembourg, Spotify reported a remarkable 40% year-over-year increase in gross profit, marking a 10% rise from the previous quarter. However, the operating income of 477 million euros fell slightly short of the company’s guidance.
In 2024, Spotify made headlines by distributing a record $10 billion in royalties to the music industry. This trend appears poised to grow further, especially with the announcement of a new multiyear publishing agreement with Universal Music Group. This deal, revealed in January, will introduce new paid subscription options, bundle services across various content types, and facilitate a direct licensing arrangement between Spotify and Universal in the U.S. and other markets.
Additionally, the annual Spotify Wrapped event continued to play a pivotal role in driving user engagement, contributing to the platform’s year-over-year growth. The company reported a record growth of 35 million MAUs in the fourth quarter alone, representing a 5% increase from the prior quarter and a 12% rise over the year.
In terms of financial performance, Spotify recorded a fourth-quarter net income of 367 million euros, translating to $1.81 per share. This result not only indicates improvement from the previous quarter but also represents a significant contrast to the net loss of 70 million euros during the same quarter a year ago.
With fourth-quarter revenue reaching 4.24 billion euros, this reflects a considerable increase from the 3.67 billion euros earned in the corresponding quarter of the previous year.
Looking ahead, Spotify’s first-quarter projections estimate a total of 678 million MAUs, with a net addition of 3 million users, two-thirds of whom are expected to be premium subscribers. Revenue for this upcoming quarter is anticipated to be around 4.2 billion euros, surpassing the analysts’ consensus of 4.17 billion euros.
So far in 2024, Spotify’s stock has increased by over 20%, signaling a positive outlook for the company’s continued growth and profitability in the competitive music streaming industry.
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