Spotify SPOT-N posted a record quarterly profit slightly ahead of analyst expectations on Tuesday, pushing its shares up more than 14% in premarket trading.
The Swedish audio-streaming giant sought to reduce costs through layoffs and cuts to its marketing budget last year, while trying to grow its user base through promotions and new investments in podcasts.
In the second quarter of 2024, the number of paying Spotify subscribers rose to 246 million, slightly above expectations.
“It really comes down to the number of subscription offerings we have now. We’re moving from one-size-fits-all to having something for everyone,” CEO Daniel Ek said in an interview with Reuters, citing the company’s various plans for students and shared households.
Profit rose 45% from a year earlier to 1.11 billion euros ($1.21 billion), slightly above analysts’ expectations for 1.07 billion euros. Earnings per share of 1.33 euros also beat estimates of 1.06 euros, according to IBES data from LSEG. Revenue rose 20% to 3.81 billion euros for the second quarter of 2024, fractionally below analysts’ estimates of 3.82 billion euros. The company did fall short of its own target for monthly active users (MAUs). Spotify previously said it aimed to reach 631 million monthly active users (MAUs), but only reached 626 million for the quarter.
“In a nutshell, it was a very good quarter for them,” said Simon Dyson, an analyst at Omdia, a consultancy firm which focuses on media, telecoms and communications.
“They did miss their MAU, but within their guidance they are still confident that number will go up, and if they stay on track we’ll all forget about them missing it this quarter.”
The company said it had seen user numbers grow across all regions, but that it had not met its MAU goal due to “continued recalibration” of marketing activities.
“It’s definitely something we take very seriously, if we miss our own forecasts,” said Ek. “For me, it’s a question of when, not if. We will return to strong MAU growth, I feel good about it.”
Spotify’s gross profit margin widened to 29.2% from 27.6% in the previous quarter.