Spotify turned heads on Tuesday with the release of its fiscal third-quarter earnings. The music streaming giant recorded a net profit of €65 million ($69.1 million), a notable achievement considering analysts had anticipated a loss for the quarter. This marks Spotify’s first quarterly profit in over a year, a turnaround attributed to recent price hikes and significantly reduced operating expenses in the company’s podcast sector.
The company reported revenues of €3.36 billion for the quarter, an 11% increase compared to the same period last year. The figure also surpassed Wall Street’s expectations of €3.3 billion.
However, not all metrics were rosy. The average revenue per user for premium subscriptions experienced a 6% decline, falling to €4.34. The dip was partly mitigated by late-quarter price increases. The number of total monthly active users reached 574 million, exceeding estimates and showing a 26% year-over-year improvement.
The streaming service also saw its premium subscriber count grow by 16% year-over-year, hitting 226 million and beating Wall Street expectations. For the upcoming fourth quarter, Spotify projects its MAUs to reach 601 million and premium subscribers to climb to 235 million.
In the wake of a challenging 2022 marked by significant failed investments in the podcast market, Spotify appears to have defied the analysts and be plotting a course to profitability. Of course, this did come with cost-cutting measures, including more than 200 layoffs during a restructuring of its podcast division.
