Audio streaming giant Spotify (NYSE: SPOT) shares jumped 13% on February 4 after the company reported its first full year of profitability since its launch more than 16 years ago.
The company has consistently posted strong financial results throughout 2024, and the cost-cutting measures put in place starting in 2023 paid off, along with strong user growth and pricing adjustments driving the surge.
Spotify shares closed January 4 at $621.77, hitting fresh highs. In premarket trading, the stock saw a pullback of about 1.89%, yet bringing its year-to-date gain close to 39%.
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Blowout earnings and record subscriber growth
Spotify’s fourth-quarter results exceeded expectations, with the company posting €4.24 billion in revenue, a 16% year-over-year increase.
Monthly active users (MAUs) climbed to 675 million, setting a new Q4 record for user growth. Subscriptions also saw 11% year-over-year growth, reaching 263 million despite recent price hikes.
The company’s first-ever annual profit is driven by the success of its aggressive cost-cutting measures and strategic pricing adjustments, which included workforce reductions and subscription price hikes.
Beyond trimming expenses, the company has also broadened its content offerings, expanding into podcasts, videos, and audiobooks to attract a wider audience and diversify revenue streams.
For instance, in the U.S., Spotify has cemented its dominance in in-car audio streaming, ranking second only to traditional AM/FM radio—a sign of its growing market presence.
Another standout contributor to Spotify’s strong Q4 performance was its Spotify Wrapped campaign, which the company cited as a major catalyst for record user engagement, further fueling its growth momentum.
“Another huge driver behind our MAU and subscriber growth was our annual Wrapped campaign, which celebrated 10 years. Wrapped is always a big contributor to our Q4 performance, and this year was no exception” – Daniel Ek, Spotify Founder & CEO.
Spotify 2025 outlook remains strong
Looking ahead, Spotify projects first-quarter revenue of €4.2 billion. The company anticipates 678 million MAUs, a net add of 3 million, with 265 million expected to be premium paid subscribers. The company also anticipates €4.2 billion in total revenue, a 31.5% gross margin, and €548 million in operating income.
CEO Daniel Ek described 2025 as the ‘year of accelerated execution,’ with a focus on enhancing product offerings, doubling down on music, and integrating AI-driven features.
Featured image via Shutterstock
