[Global] Higher than expected payroll taxes help Spotify swing into profit

Shares in music and podcast streaming platform Spotify soared this week after it reported an increase in paying subscriber numbers and a rare, though lower-than-expected, operating profit for the first quarter, France 24 reports.

Spotify posted a "new quarterly high" operating profit of €168 million ($179 million), a dramatic 180 from a loss of €156 million over the same period last year.

Despite the figure reportedly being lower than its guidance of €180 million, investors were encouraged. Shares in Spotify - which is listed on the New York Stock Exchange - jumped by more than 13 per cent in the early hours of trading.

The company said the operating profit had been impacted by higher-than-expected payroll taxes that are tied to share-based compensations.

In addition, Spotify announced it had 615 million active users at the end of the quarter, just shy of its guidance of 618 million. Of these, 239 million were paying subscribers, just in line with its projections.

 in its earnings report, Spotify said the business had "performed well" in the quarter, "led by healthy subscriber gains, improved monetization and record strength in profitability."

"Overall, we are encouraged by the strong start to the year," it said.

Revenue reportedly grew 20 per cent year-on-year to €3.6 billion, down one per cent compared to the preceding quarter.

Since its launch, the streaming giant has invested heavily in fuelling growth with expansions into new markets. In later years it incorporated exclusive content such as podcasts. Despite success in the online music market, it has never posted a full-year net profit and only occasionally quarterly profits.

On April 23, Spotify reportedly said it expected an operating profit of €250 million in the second quarter of the year.

In December, plans to reduce its staff by around 17 per cent in a bid to reduce costs were announced. The move followed earlier cuts announced in January and June of 2023.

In July 2023, Spotify announced a hike in prices for premium subscribers "across a number of markets around the world," following the example of music services from its competitors Apple and Amazon.

Source: France 24

(Quotes via original reporting)

Shares in music and podcast streaming platform Spotify soared this week after it reported an increase in paying subscriber numbers and a rare, though lower-than-expected, operating profit for the first quarter, France 24 reports.

Spotify posted a "new quarterly high" operating profit of €168 million ($179 million), a dramatic 180 from a loss of €156 million over the same period last year.

Despite the figure reportedly being lower than its guidance of €180 million, investors were encouraged. Shares in Spotify - which is listed on the New York Stock Exchange - jumped by more than 13 per cent in the early hours of trading.

The company said the operating profit had been impacted by higher-than-expected payroll taxes that are tied to share-based compensations.

In addition, Spotify announced it had 615 million active users at the end of the quarter, just shy of its guidance of 618 million. Of these, 239 million were paying subscribers, just in line with its projections.

 in its earnings report, Spotify said the business had "performed well" in the quarter, "led by healthy subscriber gains, improved monetization and record strength in profitability."

"Overall, we are encouraged by the strong start to the year," it said.

Revenue reportedly grew 20 per cent year-on-year to €3.6 billion, down one per cent compared to the preceding quarter.

Since its launch, the streaming giant has invested heavily in fuelling growth with expansions into new markets. In later years it incorporated exclusive content such as podcasts. Despite success in the online music market, it has never posted a full-year net profit and only occasionally quarterly profits.

On April 23, Spotify reportedly said it expected an operating profit of €250 million in the second quarter of the year.

In December, plans to reduce its staff by around 17 per cent in a bid to reduce costs were announced. The move followed earlier cuts announced in January and June of 2023.

In July 2023, Spotify announced a hike in prices for premium subscribers "across a number of markets around the world," following the example of music services from its competitors Apple and Amazon.

Source: France 24

(Quotes via original reporting)