Spotify's monthly user base grew more than expected in the third quarter, and operating profit beat expectations with a 28 percent increase, according to the streaming company's quarterly report released on Tuesday.
Spotify's forecast for the fourth quarter is also unexpectedly positive.
"Business is doing well," writes co-founder and outgoing CEO Daniel Ek in a comment emailed to TT.
"We are delivering faster than ever and have the tools we need to drive both revenue growth and increased profitability – pricing, product innovation, operational leverage and eventually a recovery in advertising," he adds.
We continue to gain market share, even in the most competitive markets, says incoming CEO Alex Norström.
Expected to continue upward in the fourth quarter
The report's forecast continues to point to an unexpectedly strong increase in both profit and user numbers in the fourth quarter. Recent price increases in several markets are likely to boost revenue.
Regarding the recently concluded third quarter, Spotify notes that subscriber growth is now double-digit and that it has passed the "milestone" of 700 million monthly active users - with record-high profitability.
According to the interim report, the number of monthly active users increased to 713 million in the third quarter. This compares to 640 million users in the same quarter last year. The number of paying premium subscribers increased from 252 million to 281 million.
One of Wall Street's winners this year
Third-quarter operating profit rose 28 percent to 582 million euros (equivalent to 6.4 billion kronor). Spotify's forecast for this profit measure was 485 million euros, while the average forecast among analysts was 499 million euros, according to Bloomberg.
Revenue in the third quarter rose 7 percent to 4.3 billion euros, compared to an expected 4.2 billion euros.
Spotify is one of the winners on Wall Street so far this year, with a price increase of 44 percent before today's initial fall.
