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(Bloomberg) -- Spotify Technology SA posted another quarter of better-than-expected subscriber growth in the fourth quarter, helping the Swedish music company record its first-ever annual profit.
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Total active monthly users increased to 675 million, Spotify said in a statement on Tuesday. That compared with the average Wall Street estimate of 664.9 million, according to analysts surveyed by Bloomberg. The company also posted record-high subscriber additions, with paying customers increasing 11% to 263 million, also surpassing expectations.
Chief Executive Officer Daniel Ek has been pushing Spotify to expand beyond its dominant position in music streaming, adding audiobooks, podcasts and video, luring more paying subscribers despite two rounds of price increases in a little more than a year. Combined with eliminating some 1,500 jobs, that has helped deliver Spotify’s first full-year profit since it launched in 2008. The company reported net income of €1.14 billion ($1.2 billion) for all of 2024.
Ek acknowledged the company’s transformation, noting that for its first 16 years, Spotify was focused on “driving meaningful scale. We did not worry about profitability,” he said on a conference call with analysts. “Through cost reductions, but then also through the year of monetization, I think we’re now proving that we’re a great business too.”
Ek expects the company to continue on its profitable growth trajectory this year, coining 2025 “the year of accelerated execution.” Spotify can “pick up the pace dramatically when it comes to our product velocity,” he said. “We’re going to double down on music, and we’re going to be disciplined doing it.”
In the first quarter, the company expects to add 3 million monthly active users and about 2 million premium subscribers, the company said. Revenue is expected to rise from a year ago to €4.2 billion and gross margin will hit 31.5%, driven by increasing premium subscriptions.
Spotify shares, which gained 138% last year, rose as much as 11% to a record high of $606.95 as trading got underway in New York.
Earlier this year, Spotify launched a new video-creator offering that will compensate contributors based on how much content viewers consume rather than having to rely on ads. The move pits Spotify even more directly against YouTube in the growing market for video podcasts.