Spotify stock rises 8% amid profit growth
Spotify stock soars as company posts first full-year profit
Spotify exceeded revenue expectations in Q4, reporting its first-ever full-year profit and record-breaking user growth. The company’s focus on efficiency, coupled with price hikes and strategic shifts, fueled its financial turnaround.
Key Takeaways
- The company posted a Q4 profit of €367 million, reversing a prior-year loss.
- Monthly active users (MAUs) rose by 35 million, reaching 675 million, surpassing analyst expectations.
- Spotify's cost-cutting measures, layoffs, and focus away from podcasts contributed to a 150% stock price rally over the past year.
Spotify Achieves First Full-Year Profit
Spotify reported a full-year profit for 2024, marking a significant milestone for the audio streaming giant. The company posted a Q4 profit of €367 million ($1.82 per share), a sharp contrast from the previous year’s €70 million loss, reports Yahoo!Finance.
Additionally, gross margins climbed to a record 32.2%, reflecting improved operational efficiency. This financial turnaround follows Spotify's aggressive cost-cutting measures and price hikes, demonstrating that the company's profitability strategy is yielding results.
Record User Growth
Spotify’s user base continued expanding at an unprecedented rate. Monthly active users (MAUs) jumped by 35 million in Q4, bringing the total to 675 million—exceeding analyst forecasts of 665 million. This marks the largest Q4 increase in Spotify’s history.
Spotify Technology SA (SPOT) share price dynamics (Jul 2023 - Feb 2025) Source: Investing.com
Despite recent price increases, user churn remained low, highlighting strong customer retention. Spotify projects further growth in Q1, guiding for 678 million MAUs, once again ahead of expectations.
Stock Surges on Strategic Shift
Spotify’s stock has been on an impressive rally, soaring 150% over the past year. Following the earnings report, shares jumped another 8% in pre-market trading.
This surge follows a significant restructuring effort, which included mass layoffs, leadership changes, and a shift away from heavy investments in podcasts. Once a major priority, Spotify has scaled back its podcast ambitions after overspending in the space. These moves helped the company recover from record-low stock prices in 2022, setting the stage for continued growth.
Spotify’s Q4 results reinforce its successful turnaround strategy. With record user growth, improved profitability, and a focus on efficiency, the company has positioned itself for sustained success in the competitive streaming market.
Recently we wrote, that Universal Music Group (UMG), the world’s largest music label, and Spotify, the leading streaming platform, announced the renewal of their multi-year agreement for recorded music and publishing rights.
