Spotify is on track to achieve a groundbreaking $1.5 billion annual operating profit, marking its first profitable full year.
According to its Q3 2024 financial report, released on November 12, the streaming giant disclosed key metrics that illustrate a robust performance, driven largely by a rise in premium subscriptions and ad-supported revenue.
Spotify’s global Premium Subscriber base reached 252 million by the end of Q3 2024, a 12% increase year-on-year (YoY) and up by 6 million from the prior quarter.
This growth surpassed Spotify’s own guidance by 1 million net new subscribers, underscoring sustained momentum. Spotify has added a total of 16 million net paying subscribers year-to-date as of September, building on its Q4 2023 figure of 236 million.
The platform’s Monthly Active Users (MAUs) also experienced an 11% YoY increase, reaching 640 million by Q3’s close. This growth was largely fueled by new user additions in Latin America and the Rest of the World, where Spotify continues to expand aggressively. The company’s MAUs grew by 14 million since Q2 2024, another metric that outpaced internal guidance.
What we know
Financially, Spotify’s Premium revenue reached €3.516 billion ($3.86 billion) for Q3, up 24% YoY on a constant currency basis.
- The company credited its performance to premium growth across all regions, with Europe and Latin America leading at 38% and 22% growth, respectively.
- North America saw a robust 27% increase, bolstered by steady subscriber additions and Spotify’s stronghold in the region.
- On the advertising front, Spotify’s ad-supported revenue reached €472 million ($518.4 million) in Q3, up 7% YoY.
- The company’s investor presentation noted that music ad revenue grew due to increased impressions sold, though pricing softness remained a headwind. Despite a challenging environment, Spotify has demonstrated resilience in the advertising sector, maintaining steady revenue gains.
- Spotify’s gross margin for Q3 finished at 31.1%, with quarterly operating income nearly reaching €454 million ($499 million).
For the first three quarters of 2024, the company reported an operating profit of €888 million ($975 million), setting it firmly on course to meet its full-year profit forecast of €1.37 billion ($1.5 billion).
Backstory
Three weeks ago, Nairametrics reported that Spotify had announced a 44% price hike for its Premium subscription in Nigeria starting from November 24, 2024, the monthly fee will increase from N900 to N1,300.
The audio streaming giant explained that the adjustments are necessary to support ongoing innovations in its product offerings and enhance user experience.
Spotify communicated the change to its subscribers via email, stating, “Thank you for being a Premium subscriber. As of your billing date on November 24, 2024, your subscription price will change from NGN 900.00/month to NGN 1,300.00/month. We’re increasing the price of Premium Individual so we can continue to innovate on our product offerings and features and bring you the best experience.”
More insight
Looking ahead, Spotify has set Q4 2024 guidance, projecting MAUs to grow to 665 million, with approximately 25 million net new users in the quarter. The company anticipates its Premium Subscriber base to reach 260 million, with an expected 8 million new subscribers. Spotify is also forecasting an operating income of €481 million for Q4 and a total revenue of €4.1 billion, solidifying its path toward achieving a record-breaking profitable year.
As Spotify founder and CEO Daniel Ek noted, the company’s execution has positioned it well to reach its long-term goals, establishing a solid foundation for continued growth. Spotify’s progress in both premium and ad-supported segments signals sustained demand and a promising trajectory for the streaming platform in 2024.
