Spotify’s operating profit rose to €168 million in the first quarter of the year as paying subscribers increased.
The company said its operating profit was a new quarterly high, up from a loss of €156 million over the same period last year. It disclosed this in its earnings report on Tuesday, saying the operating profit was impacted by higher-than-expected payroll taxes, which were tied to share-based compensations.
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The digital music service company said its active users grew to 615 million at the end of the quarter, just short of its projected figure of 618 million. However, its number of paid subscribers rose to 239 million, a gain of 3 million in the period.
Spotify said its business performed well in the quarter, which was led by healthy subscriber gains, improved monetisation, and record strength in profitability.
“Overall, we are encouraged by the strong start to the year,” the company said.
Further analysis of the report revealed that the company’s revenue increased by 20 percent year over year to €3.6 billion. Since its launch, Spotify has invested heavily in fueling growth by expanding into new markets and, in later years, getting exclusive content such as podcasts.
Daniel Ek, Spotify’s chief executive officer, said, “We’ve talked about 2024 as the year of monetisation, and we are delivering on that ambition.
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“Now as we’ve shifted to focus on strong revenue growth and margin expansion, we see a clear opportunity to ensure we are also continuing to grow the top of our funnel. I feel good about the changes we are implementing and remain very confident in our ability to reach the ambitious plans we’ve outlined.”
Further analysis of the company’s earnings revealed that it expects an operating profit of €250 million in the second quarter of the year. It also projected revenue of about €3.8 billion and expects to add 16 million monthly active users (to reach 631 million) and 6 million paid subscribers (to hit 245 million).
Spotify said its average revenue per subscriber increased 5 percent year over year to €4.55 in Q1, driven partly by price increases.
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