Spotify Surges 14% As it Tops Earnings Target In First Quarter

Spotify Technology ( SPOT ), the foremost music streaming service, has reported an improvement in profitability for the first quarter of the year. During the March quarter, the company added 3 million premium subscribers, bringing the total number of paying subscribers to 239 million globally, which is in line with expectations. The number of monthly active users, however, was slightly lower than the Wall Street target at 615 million, although this still represents an increase of 19% compared to the previous year.

Spotify ( SPOT ) provides an ad-supported service in addition to a commercial-free subscription service. For the March quarter, the company reported earnings of $1.05 per share on sales of $3.95 billion in euros. Analysts polled by FactSet had expected the company to earn 67 cents per share on sales of $3.85 billion. In comparison, the company had incurred a loss of $1.27 per share on sales of $3.34 billion for the same period in the previous year.

Daniel Ek, the CEO of Spotify, stated, "We've talked about 2024 as the year of monetization, and we're delivering on that ambition. Now, as we've shifted our focus to concentrate on strong revenue growth and margin expansion, we see a clear opportunity to ensure that we are 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."

Following the announcement, Spotify's stock rose by 14%, with investors responding positively to the news of the improved profitability. The company's stock has been rising this year as it focuses on generating profits, with Morgan Stanley analyst Benjamin Swinburne stating that the company is "just beginning to inflect towards profitability and free-cash-flow generation."