Spotify Stock Surges Over 13% Following Record Q2 Earnings Report
Spotify (NYSE: SPOT) has reported its financial results for the second quarter of 2024, marked by significant subscriber growth and record profitability. The Swedish audio-streaming giant revealed that the number of paying subscribers has risen to 246 million, a 12% year-over-year increase, surpassing analyst expectations.
Daniel Ek, Spotify’s Founder and CEO, expressed his enthusiasm about the company’s performance: “It’s an exciting time at Spotify. We keep on innovating and showing that we aren’t just a great product, but increasingly also a great business. We are doing so on a timeline that has exceeded even our own expectations. This all bodes very well for the future.”
The company reported a 20% year-over-year increase in total revenue, reaching €3.8 billion ($4.1 billion), just shy of analysts’ estimates of €3.82 billion. The gross profit margin improved to a record 29.2%, up from 27.6% in the previous quarter, and operating income soared to €266 million, reflecting Spotify’s effective cost management and revenue growth strategies. Net profit rose 45% year-over-year to €1.11 billion ($1.21 billion), slightly exceeding analysts’ expectations of €1.07 billion.
Spotify’s stock surged over 13% in premarket trading following the earnings announcement.
Spotify’s subscriber base added 7 million premium subscribers in the second quarter, bringing the total to 246 million. This growth was slightly above analysts’ expectations of 6.2 million new subscribers.
However, the company fell short of its target for monthly active users (MAUs), reporting 626 million against a goal of 631 million. Despite this shortfall, analysts remain optimistic. Simon Dyson, an analyst at Omdia, commented, “In a nutshell, it was a very good quarter for them. 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.”
Ek acknowledged the importance of meeting their targets but expressed confidence in future growth: “It’s definitely something we take very seriously, if we miss our own forecasts. For me, it’s a question of when, not if. We will return to strong MAU growth, I feel good about it.”
Spotify’s growth is also attributed to its continuous innovation and expansion of services. The company now offers a basic plan in the U.S. at $10.99 per month, providing an ad-free music experience with additional features.
The platform has also introduced new features like countdown pages for audiobooks, allowing listeners to pre-save titles before publication. Additionally, Spotify has expanded its video podcast offerings, with over 250,000 video podcast shows and 170 million users watching video content.
Spotify’s influence continues to grow globally, with notable impacts in markets like Brazil and India. Brazilian artists, for instance, have seen a 600% increase in royalties generated from Spotify since 2017. In India, the platform has become a significant medium for discovering new artists, with nearly 10 billion streams by first-time listeners.
The company also celebrated its 10th year at Cannes, showcasing its creativity and innovation. Spotify’s new in-house creative agency, Creative Lab, enables partners to leverage the platform’s extensive reach to create engaging brand experiences.
Looking ahead, Spotify forecasts adding 5 million new subscribers in the third quarter, aiming for a total of 251 million. The company also expects to reach 639 million MAUs in the upcoming quarter.
Information for this story was found via Reuters, Investor’s Business Daily, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
