Spotify Beats Q3 Earnings Estimates but Slightly Misses Q4 Revenue Forecast; Announces Leadership Changes and New Features
Spotify Technology S.A. (SPOT) reported strong third-quarter results and offered mixed guidance for the fourth quarter, along with significant leadership changes and product updates.
**Q3 Financial Performance**
For Q3, Spotify posted revenue of €4.27 billion, marking a 7% increase year-over-year and beating analyst expectations of €4.23 billion. Operating income was forecasted at €620 million for Q4, slightly surpassing Wall Street estimates of €618.6 million.
Premium subscribers grew 12% compared to the previous year, reaching 281 million in Q3, in line with market projections. Monthly active users (MAUs) rose by 17 million during the quarter to 713 million, exceeding analyst forecasts.
**Q4 Outlook**
The company expects Q4 revenue to reach €4.5 billion, which is below analyst estimates of €4.57 billion. For Q4, Spotify anticipates monthly active users will climb to 745 million, beating predicted figures of 737.3 million. Premium subscriber growth is projected at 8 million for the quarter, totaling 289 million subscribers — slightly under analyst expectations of 290.9 million.
To bolster its financials, Spotify has raised prices on its premium individual subscription plans and reduced spending on marketing and personnel.
**Leadership Transition**
In a major leadership update announced in September, founder and CEO Daniel Ek will step into the role of executive chairman starting January. The company will transition to a co-CEO structure, marking a new phase for Spotify’s management team.
**New Features and Growth Drivers**
Spotify recently introduced a lossless audio streaming option, fulfilling long-standing user requests for higher-quality sound. The company also reported substantial growth in its audiobook segment, with audiobook listeners rising 36% and consumption hours increasing by 37% year-over-year. Younger audiences have been a significant factor driving this expansion, which comes about two years after Spotify incorporated audiobooks into its paid subscriptions.
**Partnership with OpenAI and ChatGPT Integration**
In a strategic move to enhance user engagement, Spotify partnered with OpenAI to integrate its services with ChatGPT last month. Users can now connect their Spotify accounts to the chatbot, enabling music and podcast recommendations through conversational prompts. This integration is designed to support both user growth and increased platform engagement.
**Stock Performance**
Despite recent volatility and a 5.32% decline in the month leading up to the earnings announcement, Spotify’s stock has gained 40.7% year-to-date.
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Spotify’s solid user growth and operating income beat analyst expectations, while revenue forecasts highlight some caution amid competitive pressures. The company’s leadership changes and innovative features signal a commitment to evolving its platform and expanding its audience going forward.
https://blockonomi.com/spotify-spot-stock-company-projects-q4-profit-above-expectations-on-user-growth/
