Spotify inventory jumps after reporting its first full yr of profitability, sturdy consumer metrics

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Spotify Know-how (SPOT) posted fiscal fourth quarter earnings on Tuesday, beating income expectations, and reported its first full-year revenue.

The audio large additionally posted one other sturdy quarter of subscriber positive aspects, as churn ranges stay low regardless of current worth will increase. Spotify’s inventory surged in early buying and selling consequently, rising round 10%. Over the previous yr, the corporate’s shares have surged to all-time highs, up roughly 170%.

“Spotify’s execution continues to enhance and the corporate enters 2025 with accelerating month-to-month energetic consumer development, product enhancements in audiobooks & video podcasts, and skill to proceed to drive greater gross margins and working margins,” JPMorgan analyst Doug Anmuth wrote in response to the report.

Month-to-month energetic customers (MAUs) rose by 35 million to hit a complete of 675 million, topping the 665 million anticipated by analysts polled by Bloomberg. It was the biggest fourth quarter improve in Spotify’s historical past. The corporate guided to first quarter MAUs of 678 million, additionally forward of estimates.

In the meantime, Spotify reported a fourth quarter revenue of 367 million euros, or 1.76 euros a share ($1.82). That is up from the prior-year interval’s lack of 70 million euros, or 36 euro cents a share. Analysts anticipated earnings to come back in at 1.89 euros a share, based on Bloomberg.

Just like earnings, gross margins jumped to a document 32.2% as the corporate closed out a powerful 2024 highlighted by its “effectivity” technique. General, the corporate set quarterly document highs for income, gross margin, working earnings, and free money circulate.

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“I count on 2025 to ship wholesome development alongside improved profitability,” Spotify CEO Daniel Ek mentioned on the earnings name, categorizing 2025 as “the yr of accelerated execution.”

“What that ought to imply for buyers is we expect we will choose up the tempo dramatically in terms of our product velocity,” he mentioned. “We will double down on music, and we will be very disciplined whereas doing it. And due to all of the developments in AI, due to the place our org is, we really feel actually good about having the ability to do that.”

The corporate’s colossal run-up in shares follows an intense enterprise overhaul, which has included every thing from mass layoffs and C-suite shakeups to a serious strategic shift away from podcasts, an space it had aggressively pursued. These efforts allowed the inventory to stage a comeback from the document lows it confronted in 2022.

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