Spotify Technology
stock rose Tuesday after the audio-streaming company posted subscriber growth ahead of expectations and a narrower-than-expected loss. A focus on prices and cost-cutting looks to be paying off.
Spotify reported a fourth-quarter loss of 36 cents a share on revenue of €3.67 billion ($3.94 billion), compared with expectations among analysts surveyed by FactSet for a loss at 40 cents a share on revenue of $3.99 billion.
Monthly active users, a closely watched metric, grew 5% from the previous quarter to 602 million, above analysts’ expectations of less than 601 million. The number of subscribers to Spotify’s premium service rose 4% from the previous quarter to 236 million, above Wall Street’s forecast of less than 235 million.
Spotify said that it expects monthly active users to climb to 618 million in the current quarter with premium subscribers rising to 239 million, which should help it reach a first-quarter revenue forecast of €3.6 billion.
“With revenue and profitability trends both inflecting favorably heading into 2024, we view the business as well positioned to deliver improving growth and profitability,” the company said in a statement.
Spotify looks to be reaching its goal of becoming more profitable, helped by price increases instituted last year alongside multiple rounds of layoffs and adjustments to its investments in podcasting. The company’s gross margin rose to 26.7% in the fourth quarter, up 1.4 percentage points year over year, which Spotify said reflected improved profitability in podcasts and music. Meanwhile, the reported operating loss was largely a function of severance payments.
It looks like Spotify shareholders like what they see—or, rather, hear, with the stock advancing 6.2% in Tuesday premarket trading. The results could be buoying shares in other companies with streaming businesses.
Netflix
stock traded just above flat while
Roku
advanced 0.5% in the premarket. But
Apple
stock was less than 0.1% lower, and
Amazon
shares slid 0.7%. Futures tracking the wider
S&P 500
were just below flat.
Write to Jack Denton at jack.denton@barrons.com
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