Spotify has today forecast first-quarter earnings above Wall Street estimates, as the Swedish streaming company benefits from strong user growth and price hikes, sending its shares up nearly 12% in premarket trading.
The results are the first since co-CEOs Gustav Soderstrom and Alex Norstrom took the reins from founder Daniel Ek, who became executive chairman in January.
While price increases in several markets and cost cuts powered profits in the December quarter, the company's revenue growth hit the slowest since its 2018 market listing.
Spotify has rolled out an AI-powered playlist that can be generated with a simple prompt, invested in video podcasts including through a Netflix deal and expanded beyond audiobooks with physical books to ward off competition from Apple and Amazon's streaming services.
The company forecast operating income of €660m in the first quarter, compared with analysts' average estimate of €652.3m, according to data compiled by LSEG.
Its quarterly revenue forecast of €4.5 billion was slightly below the estimate of €4.57 billion. Fourth-quarter revenue rose 7% to €4.53 billion, in line with estimates.
Spotify raised the price of its monthly premium subscription plan by $1 to $12.99 in the US, Estonia and Latvia markets this year, following a similar move in more than 150 markets in 2025.
Its quarterly outlook for 759 million monthly active users was above an estimate of 753 million, while its prediction for a 3 million increase in premium subscribers to 293 million was below estimates.
Premium subscribers grew 10% to 290 million in the fourth quarter compared to an estimate of 290.9 million.
The company added record MAU net additions of 38 million, bringing the total to 751 million, thanks to Wrapped - its year-end roundup of users' listening habits - that generates social media buzz and helps draw users to the service.
Gross profit jumped 10% from a year earlier, thanks to a 10% decline in operating expenses. Gross profit margin increased to 33.1% from 31.6% in the prior quarter.
