By Jaspreet Singh
Feb 10 (Reuters) – Spotify forecast first-quarter earnings above Wall Street estimates on Tuesday, as the Swedish streaming company benefits from strong user growth and price hikes, sending its shares rising nearly 18%.
The results are the first since co-CEOs Gustav Soderstrom and Alex Norstrom took the reins from founder Daniel Ek, who became executive chairman in January.
While price increases in several markets and cost cuts powered profits in the December quarter, Spotify’s revenue growth hit the slowest since its 2018 market listing.
Spotify has rolled out a prompted playlist feature, invested in video podcasts including through a Netflix deal and expanded beyond audiobooks with physical books to ward off competition from Apple and Amazon’s streaming services.
Interactive DJ, Spotify’s AI-powered personalized music tool, has “over 98 million paid subscribers using it and it’s created 4 billion hours of engagement”, Soderstrom told Reuters.
“Spammy AI music is not a new problem. It’s just more scale on an existing problem,” he said in a call with analysts.
Spotify has been working with the music industry to enable creators and labels to include information in the metadata about how their music was made, which users can see.
The company forecast operating income of 660 million euros ($786.13 million) in the first quarter, compared with analysts’ average estimate of 652.3 million euros, according to data compiled by LSEG.
Its quarterly revenue forecast of 4.5 billion euros was slightly below the estimate of 4.57 billion euros. Fourth-quarter revenue rose 7% to 4.53 billion euros, in line with estimates.
Spotify raised the price of its monthly premium subscription plan by $1 to $12.99 in the U.S., Estonia and Latvia this year, following a similar move in more than 150 markets in 2025.
Its quarterly outlook for 759 million monthly active users was above an estimate of 753 million, while its prediction for a 3 million increase in premium subscribers to 293 million was below estimates.
Premium subscribers grew 10% to 290 million in the fourth quarter, versus an estimate of 290.9 million.
The company added record MAU net additions of 38 million, bringing the total to 751 million, thanks to Wrapped — its year-end roundup of users’ listening habits.
“We are seeing lots more growth coming from emerging markets,” said Norstrom.
Gross profit jumped 10% from a year earlier, thanks to a 10% decline in operating expenses. Gross profit margin increased to 33.1% from 31.6% in the prior quarter.
($1 = 0.8396 euros)
(Reporting by Jaspreet Singh in Bengaluru; Editing by Pooja Desai)
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