Spotify reported on Tuesday that first quarter revenue jumped 20% and gross profit topped 1 billion euros ($1.08 billion), helping return the 18-year-old streaming company to profitability and putting it on track to meet its 2024 growth target.
Spotify reported 3.6 billion euros ($3.9 billion) in first quarter revenue, up from 3.04 billion euros ($3.3 billion) a year ago, and gross profit rose 31% to 1 billion euros ($1.08 million) from 766 million euros ($833 million), while operating income (profits after operating expenses) rose to a new quarterly high of 168 million euros ($180 million) from a 156 million euro loss a year ago, according to filings.
Spotify chief executive Daniel Ek said that revenue growth accelerated and the company had record-high profits in the quarter, while total monthly active users grew 19% to 615 million and premium subscribers increased by 14% to 239 million — both compared to last year’s first quarter.
“As an adult company we are now consistently profitable, which is great news,” Ek said in a video posted to LinkedIn.
Spotify raised prices by $1 — to $10.99 a month for individuals, $16.99 a month for families — in the U.S., one of its largest markets, last year for the first time, and it is reportedly considering increasing prices again later this year, Bloomberg reports. The initial round of new price hikes — $1 a month for individuals, $2 a month for duos and families — will hit the U.K., Australia, and Pakistan, among others, according to Bloomberg.
Those price increases helped Spotify reach profitability in the third quarter of last year. But in the fourth quarter it reported an operating loss of 75 million euros ($82.7 million). In the first quarter earnings reported on Tuesday, Spotify was again profitable with 168 million euros ($181 million) in operating income.
While revenue from premium subscribers of 3.247 billion euros ($3.5 billion) grew by 20% compared to the first quarter last year, it inched up just 2% from the fourth quarter. Ad-supported of 389 million euros ($419.8) revenue rose 18% from the first quarter last year, but it declined by 22% from the fourth quarter.
Monthly active users of 615 million for the quarter was up 19% from a year ago and up 2% from the prior quarter but missed the company’s target of 618 million in the quarter.
Total Revenue grew 21% year over year, or 20% to €3.6 billion on a constant currency basis.
Premium ARPU grew 7% year over year on a constant currency basis.
Gross margin was up 27.6%, and gross profit surpassed €1 billion for the first time in Spotify’s history.
Operating Income finished at a record high of €168 million ($180 million).
Monthly active users grew 19% year over year to 615 million on annual and quarterly growth in all regions.
Premium subscribers grew 14% to 239 million, led by growth in the streaming giant’s bundles–Family and Duo plans.
