Spotify earned annual profit for the first time and exceeded expectations in terms of the number of users: the company’s shares jumped

Spotify Technology on Tuesday published its fourth-quarter financial report, which exceeded revenue expectations, and reported its first annual profit, UNN reports with reference to Yahoo Finance.

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At the same time, the audio giant published “strong” data on subscriber growth for the quarter, and the level of user churn remains low, despite the recent price increase. Spotify shares rose more than 8% in pre-market trading after the report. Over the past year, its shares have risen to all-time highs of about 150% as of Monday’s close.

Monthly active users (MUAs) grew by 35 million to reach a total of 675 million, exceeding the 665 million expected by analysts polled by Bloomberg. This was the largest increase for the fourth quarter in Spotify’s history. The company predicts that MAUs for the first quarter will be 678 million, which also exceeds forecasts.

At the same time, Spotify reported a fourth-quarter profit of EUR 367 million, or EUR 1.76 per share (USD 1.82). This is more than the loss of 70 million euros, or 36 euro cents per share, reported in the previous year. Analysts had expected a profit of 1.89 euros per share, according to Bloomberg.

Similarly to revenue, gross margin jumped to a record 32.2%. Overall, the company set record quarterly figures for profit, gross profit, operating income and free cash flow.

“I expect 2025 to deliver healthy growth alongside improved profitability,” Spotify CEO Daniel Ek said at the earnings conference, calling 2025 “a year of accelerated execution.

“For investors, it should mean that we think we can dramatically accelerate the pace when it comes to the speed of our product,” he said. – “We’re going to double down on music and we’re going to be very disciplined in doing so. And with all the advances in artificial intelligence, with where our organization is, we’re really excited to be able to do that.

The tremendous rise in the company’s stock followed an intensive business restructuring that included everything from mass layoffs and executive reshuffles to a major strategic shift away from podcasts, an area it had been actively promoting. These efforts allowed the stock to recover from the record lows it faced in 2022.

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Spotify said it expects gross profit in the first quarter to be 31.5%, down from the fourth quarter but still above Wall Street’s 31.2% forecast. Management cited “seasonality” as the reason for the expected slowdown, as advertising sales are “typically weaker” in the first quarter.

Last year, the company introduced a more expensive audio “package” that includes music, podcasts, and audiobooks. It also offered an audiobook-only plan and a music-only streaming tier to meet the needs of diverse consumers.

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The changes allowed the company to raise prices for the second time in less than a year. Management stated that price increases will remain “part of our toolkit” and that the company will adjust prices “when it makes sense.

The company recently signed a new multi-year distribution agreement with Universal Music Group. The deal, which was announced last week, includes compensation to artists for recorded songs and publishing rights. In return, Spotify will have access to certain future releases and specialized products such as videos.