In its first-quarter earnings report, Spotify showcased record quarterly profit and surpassed analyst estimates on both revenue and earnings. This financial success comes after the company implemented significant cost-cutting measures and streamlining efforts over the past year.
Spotify’s financial performance highlights include earnings per share of 97 cents, exceeding the LSEG analysts’ estimate of 65 cents. Revenue reached $3.64 billion, slightly above the $3.61 billion projected by LSEG analysts. Despite missing the estimated 618 million monthly active users (MAUs) by 3 million, Spotify still achieved a notable 19% year-over-year increase in MAUs and a 2% increase compared to the previous quarter.
The streaming giant’s cost-cutting strategy, which included laying off over a quarter of its headcount, has contributed to improved profitability. Spotify also scaled back its ambitions in the podcast business, except for a high-profile agreement with podcaster Joe Rogan.
For the upcoming quarter, Spotify anticipates a net addition of 16 million MAUs, bringing the total to 631 million. The company also expects to enhance its gross margin to 28.1%, supported by company-wide cost improvements.
Spotify’s financial turnaround aligns with the goals presented at its 2022 Investor Day. These positive results were influenced by ValueAct’s acquisition of a stake in the company in February 2023, which led to a public demand for spending rationalization. By the end of the year, Spotify reduced its workforce by 17%.
Despite the cost-cutting measures, Spotify’s core business continues to grow. The company’s growth in MAUs highlights the enduring appeal of its streaming services, despite facing increasing competition in the industry.
