Spotify anticipates significant profits from rising prices and a rise in users

In an attempt to capitalize on strong user growth and a boost from price rises during the critical holiday season. Spotify predicted fourth-quarter profitability above Wall Street projections on Tuesday.

The company’s first earnings report since the news in September that founder and CEO Daniel Ek would take over as executive chairman in January is these results.

According to figures provided by LSEG, the Swedish audio streaming behemoth anticipates operating revenue of $663 million in the fourth quarter, exceeding projections of $661 million. Additionally, it surpassed third-quarter earnings projections.

In recent years, the corporation has depended on price increases to boost earnings since it believes that its ubiquity will keep people coming back. In the September quarter, it increased the price of its premium individual plan in over 150 regions.

Spotify introduced features like lossless audio, a much-anticipated high-quality streaming alternative, to draw in more customers. Additionally, since its start almost two years ago, it has increased its audiobook inventory to 500,000 titles in 14 regions. Which the business claimed last month contributed to a more than one-third rise in audiobook listeners and hours of consumption.

There were 281 million premium customers in the third quarter, a 12% rise. Its monthly net additions of 17 million active users exceeded projections, bringing the total to 713 million.

Due to fierce competition from Apple and Amazon, it predicted a growth of 8 million premium subscribers to 289 million, somewhat less than the prediction of 290.9 million.

Its projected monthly active user count of 745 million exceeded an expectation of 737.3 million.

Following a 7% increase in third-quarter revenue, the company’s fourth-quarter revenue prediction of $4.815 billion was consistent with estimates of $4.890 billion.

In erratic morning trading, Spotify shares slightly declined. This year, the stock has increased by almost 44%.