TLDR
- Spotify reports Q3 revenue of 4.27 billion euros, beating analyst estimates of 4.23 billion euros by 1%.
- Premium subscribers grew 12% to 281 million while monthly active users reached 713 million, exceeding forecasts.
- Q4 operating income projected at 620 million euros, above Wall Street’s 618.6 million euro estimate.
- Daniel Ek transitions to executive chairman in January as Spotify implements co-CEO leadership structure.
- Audiobook listeners jumped 36% and company partnered with OpenAI for ChatGPT integration.
Spotify delivered better-than-expected third-quarter results on Tuesday. The streaming platform posted revenue of 4.27 billion euros, topping analyst projections.
The 7% revenue increase beat Wall Street estimates of 4.23 billion euros. Premium subscribers reached 281 million, matching analyst forecasts with 12% year-over-year growth.
Monthly active users climbed to 713 million, surpassing expectations. The platform added 17 million users during the quarter.
The company raised prices on premium subscriptions while cutting marketing and personnel expenses. These moves aim to improve profitability heading into the holiday season.
Q4 Guidance Mixed on Revenue and Profit
Spotify forecasts Q4 operating income of 620 million euros. The projection edges out analyst estimates of 618.6 million euros.
However, the company’s Q4 revenue forecast disappointed investors. Spotify expects 4.5 billion euros, below the 4.57 billion euro consensus.
The platform projects 745 million monthly active users for Q4. This estimate beats analyst projections of 737.3 million.
Premium subscriber additions are expected to reach 8 million in Q4. This would bring the total to 289 million, slightly below the 290.9 million estimate.
Leadership Changes and Product Expansion
These earnings mark the first since Spotify announced a major leadership shift. Founder Daniel Ek will become executive chairman in January.
The company transitions to a co-CEO structure next year. This represents a new approach to managing the streaming platform.
Spotify recently launched lossless audio streaming. The high-quality feature had been requested by users for years.
The audiobook segment shows strong growth. Listeners increased 36% while consumption hours rose 37% over the past year.
Younger audiences drive most of the audiobook growth. Spotify added audiobooks to paid plans about two years ago.
Last month, Spotify partnered with OpenAI. Users can now link accounts to ChatGPT for music and podcast recommendations through conversational requests.
The integration aims to increase user engagement. It also provides a new way for listeners to discover content on the platform.
Spotify shares have gained 40.7% year-to-date. The stock dropped 5.32% in the month leading up to the earnings report.
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