Spotify Technology SA shares experienced a significant surge, recording the most considerable increase in nearly two years, following the audio-streaming giant’s announcement of a first-quarter profit. The Swedish-based company attributed the strong results to a growing number of paid subscribers and the addition of innovative features to its platform.
The number of paid subscribers climbed by 14% year-on-year, reaching 239 million, Spotify noted in a statement released on Tuesday. This figure aligned with analysts’ expectations compiled by Bloomberg. The total number of active users, including those with ad-free plans and those with ads, rose to 615 million, which was slightly below analysts’ forecast of 617.9 million. Despite this minor discrepancy, the market responded positively, driving the company’s shares up 16% to $314.80 in New York, the most significant intraday gain since July 2022.
Spotify’s continued expansion involves more than just music streaming. The company is extending its reach into other audio entertainment categories, such as audiobooks. After years of consistent subscriber growth, Spotify implemented price increases last year, the first in over a decade, with plans for another hike by the end of this month. The company, known for its free-with-ads and paid-without-ads models, is now exploring various pricing tiers, including options without audiobooks for a lower monthly fee and a music-only plan.
Total revenue increased by 20%, reaching 3.6 billion euros ($3.8 billion), with a net income of 197 million euros. Adjusted operating profit was recorded at 168 million euros, setting a new record for the company. Spotify included audiobooks in its subscription plans last year, entering six new markets. The company reported that 25% of users with access to audiobooks have engaged with the content at least once.
Spotify’s shift toward audiobooks is part of its broader strategy amid staff cuts and reductions in podcast programming. In February, the company renewed a deal with comedian Joe Rogan, further expanding the reach of his shows to YouTube and Apple Podcasts.
Spotify’s forecast for the second quarter includes 631 million active users, with 245 million premium subscribers, which falls slightly below analysts’ forecast of 637.1 million. The company projects sales of 3.8 billion euros, compared to the average forecast of 3.76 billion euros. Operating profit is expected to reach 250 million euros, surpassing analysts’ projections of 175.3 million euros.
For more information, you can read the full report on Bloomberg.