Music streamer Spotify reported results for the third quarter that surpassed Wall Street expectations, but issued weak guidance for the current quarter.
Total revenue for the quarter climbed 12% to 4.3 billion euros, topping Wall Street expectations of 4.27 billion euros.
Earnings per share also topped expectations of 1.97 euros, coming in at 3.28 euros.
While premium subscribers climbed 12% to 281 million, this was still below SteetAccount's expectations of 281.24 million.
This came after the streaming platform hiked prices in August to 11.99 euros from 10.99 euros on multiple markets like South Asia, the Middle East, Africa, Europe, Latin America and the Asia-Pacific region.
Revenue from premium subscriptions still grew 9%, or 13% on a constant currency basis, but fell 6% in ad-supported revenue to 44 million euros and was flat on a currency basis.
Operating income for the quarter reached 582 million euros.
In the earnings release, Spotify CEO and founder Daniel Ek said the business is healthy.
“We’re shipping faster than ever. And we have the tools we need – pricing, product innovation, operational leverage, and eventually the ads turnaround – to deliver both revenue growth and profit expansion,” he said.
“It all comes back to user fundamentals and that’s where we are: 700 million users who keep coming back, engagement at all-time highs.”
Ek is set to step down as CEO at the beginning of January and transition to the position of executive chairman.
The company received backlash when Ek led a 600 million euro funding round for defence technology startup Helsing, leading many musicians to remove their music catalogues in protest.
Other successes for the business this quarter include monthly active listeners growing 11% to 713 million, jam listening hours reaching 100 million, and Taylor Swift’s The Life of a Showgirl breaking records as the most streamed album in a single day and most pre-saved album in Spotify’s history.
The streamer also made multiple improvements to its free tier and leaned more into AI, announcing that it would partner with multiple music labels and agencies to develop AI products.
The company forecasted revenue of 4.5 billion euros and total premium subscribers to reach 289 million in the fourth quarter, both falling short of StreetAccount’s expectations of 4.56 billion euros and 291.1 million subscribers.
The streaming giant expects fourth-quarter operating income of 620 million euros and MAU of 745 million. Both were ahead of StreetAccount's expectations of 610.2 million euros and 739.5 million MAU.
At the time of writing, Spotify (NYSE: SPOT) shares have fallen 2.19% to US$629.60. The company’s market cap is US$128.88 billion.
