Spotify has today forecast first-quarter profit above market estimates as the Swedish audio-streaming giant benefits from steady user growth, price hikes and a cost-cutting drive.
The company expects operating income of €548m in the current quarter, above analysts' average estimate of €450.6m, according to data compiled by LSEG.
It increased prices for its service in June last year and has kept a tight lid on costs including marketing efforts to boost margins.
At the same time, its focus on music and podcast video offerings has helped attract users, analysts have said.
Spotify has extended a test rollout of its music videos to new markets and unveiled new features that help improve user-engagement for content creators in certain markets.
The company forecast monthly active users (MAUs) of 678 million in the first quarter, in line with estimates of 679.4 million.
It expects to add about 2 million premium subscribers, which would take the total to 265 million, above Visible Alpha estimates of 263.2 million.
In the fourth quarter, premium subscribers rose 11% to 263 million, compared with Visible Alpha estimates of 260 million. MAUs rose 12% to 675 million and exceeded expectations.
Fourth-quarter revenue rose 16% to €4.24 billion, beating estimates of €4.19 billion, driven by subscriber gains and increasing average revenue per user.
Gross profit jumped 40% to €1.37 billion, compared with estimates of €1.32 billion. Gross profit margin increased to 32.2% from 31.1% in the previous quarter.
The company expects first-quarter revenue of €4.2 billion, slightly above estimates of €4.17 billion.
