Spotify’s aggressive push for profitability may very well pay off before the year’s end, following a strong third quarter with monthly active users growing 11% year-over-year. to 640 million and paid subscribers increasing 12 percent to 252 million.
Revenue rose 19% to €4 billion, aligning with expectations, while operating income hit a record €454 million, driven by improved gross margins and reduced personnel and marketing expenses.
Premium subscriber growth and increased average revenue per user, boosted by mid-year price hikes, fueled a 21% rise in premium revenue. Ad-supported revenue, however, grew just 6 percent year-over-year, as Spotify cited a challenging brand environment and weaker pricing in music and podcast advertising.
Spotify Founder and CEO Daniel Ek commented, “We’ve never been in a stronger position, thanks to the outstanding execution by our team. I’m incredibly proud of the way we’ve delivered and the progress we’ve made. We’re where we set out to be – if not a little further – and on a steady path toward achieving our long-term goals.”
Ek also hinted at future innovations during the company’s earnings call, emphasizing opportunities in new technology starting in 2025.
Looking ahead, Spotify plans to expand its product offerings. At its Now Playing event, Spotify announced a series of new video podcast features aimed at helping creators grow their audiences and monetize their content while improving the viewing experience for fans. The platform has seen significant growth in video podcast consumption, with over 250 million users streaming video podcasts and creator activity increasing by more than 50% year-over-year.
Beginning in January, Spotify Premium subscribers in the US, UK, Canada, and Australia will gain access to uninterrupted video podcasts, free from dynamic ads. Additionally, Spotify is introducing the Spotify Partner Program, which offers creators new monetization opportunities. Through this program, eligible creators can earn revenue from premium video consumption by Spotify Premium users and dynamic ads that play on their episodes, both on and off Spotify.
Spotify for Podcasters is also evolving into Spotify for Creators to better serve multiformat content creators. This expanded platform will include enhanced analytics, monetization tools, customizable show options, creator-fan interactivity features, and seamless audio and video distribution. A new mobile app experience will further streamline the process for creators.
Short-form content is also getting a boost with the introduction of vertical podcast clips. Eligible creators can use these clips to promote their episodes and customize thumbnails to represent their content on the platform. Fans will benefit from a seamless viewing experience, with the ability to stream video content in the foreground or background without interruptions, whether using Spotify Premium or Free.
