Spotify, in its financial result, has explained the growth in subscribers and revenue and focus on AI-driven customer experience.
Daniel Ek, Spotify Founder & CEO, said: “This relentless pursuit of innovation and commitment to growth sets us up to deliver the most valuable user experience in the industry, while reinforcing the core strengths that make Spotify unique.”
Spotify projects an operating income of 481 million euros ($509.76 million) for the fourth quarter of 2024.
Spotify has focused on cost reductions, including layoffs, decreased marketing spending, and fewer podcast investments, all to boost profitability. Spotify’s gross profit surged by 40 percent to 1.24 billion euros, with an improved gross profit margin of 31.1 percent, up from 29.2 percent in the previous quarter.
Spotify aims to grow its premium subscribers by 8 million, reaching a total of 260 million. Monthly active users (MAUs) are expected to hit 665 million.
Spotify said third-quarter revenue rose by 19 percent to 3.99 billion euros.
The company has been expanding premium features and added a generative AI playlist tool to more markets to enhance user engagement.
CEO Daniel Ek emphasized Spotify’s focus on profitability as it hits a critical milestone, citing ongoing investments in ad automation despite challenges in the ad industry.
Spotify’s monthly Active Users (MAUs) increased by 11 percent to 640 million, with consistent growth across all regions. The quarterly growth was driven by significant gains in the Rest of World and Latin America regions, supported by adjustments in Spotify’s marketing strategy.
Premium subscribers rose by 12 percent to 252 million. Europe and Latin America led the growth, with the quarter’s success bolstered by effective promotional campaigns and strong engagement at the top of the funnel.
Premium revenue grew 21 percent to €3.52 billion.
Premium Average Revenue per User (ARPU) increased by 9 percent to €4.71, mainly due to price increases, although this was partially offset by market mix effects.
Ad-Supported revenue grew 6 percent, with expansion driven by increased impressions in music and podcast advertising. However, there was some softness in pricing. The Spotify Audience Network experienced high single-digit quarterly growth in publisher participation.
Spotify has expanded features, launching AI DJ for Spanish-speaking fans, expanding AI playlists, enabling podcast comments, rolling out music videos to 85 more markets, and adding over 200,000 audiobooks to Premium users in several European countries.
Spotify’s strategic focus on targeted marketing and promotions appears to be paying off, with substantial growth in both user engagement and subscriber base across regions.
Spotify has rolled out several AI-powered and interactive features, enhancing its user experience and further cementing its position as a leading digital audio platform.
Premium subscribers in 85 new markets (now totaling 97) can now access music videos in the app, providing fans with a more immersive, visual connection to their favorite artists.
AI DJ, which curates a tailored listening experience, is now available to Spanish-speaking users in 18 new markets. Additionally, Spotify expanded its Daylist feature into 14 new languages, giving more fans access to personalized playlists.
Following the launch last quarter, Spotify expanded its AI Playlist in Beta to Premium subscribers in the U.S., Canada, Ireland, and New Zealand. This feature allows users to create playlists by typing prompts, offering a new level of control over curation.
Spotify introduced a comments feature for podcasts, enhancing audience engagement by enabling listeners to interact with podcast creators and build community.
Celebrating the first anniversary of its audiobook offerings, Spotify expanded this service to France, Belgium, the Netherlands, and Luxembourg, with access to over 200,000 titles, marking a significant addition for non-English speakers.
Spotify, which gives special focus on innovation, is spending on AI capabilities, interactive features, and multilingual offerings demonstrates its commitment to providing personalized, immersive experiences for users.
