Spotify shares rises by 16% as Q1 gross profit surpasses one billion euros

The market leader in music streaming, Spotify Technologies SA, saw a 16% surge in its shares on Tuesday following the company’s announcement of a rise in paying subscribers and the first-ever quarterly gross profit of more than one billion euros ($1.1 billion).

After losing 156 million euros at the same period previous year, the company reported an operating profit of 168 million euros ($179 million) for the first quarter. At 11:47 a.m. EDT, the Swedish firm, which is listed on the New York Stock Exchange (NYSE), was trading at $311.01, up $38.77, or 14.24%, from its previous trading price.Although revenue decreased by 1% on a quarterly basis, it increased by 20% on an annual basis to 3.6 billion euros.

Despite having 615 million active users at the end of the first quarter, the massive music streaming company fell short of its 618 million prediction. 239 million users paid for their access. Following the addition of audiobooks to subscription plans in 2023, it has now grown into six markets.

“Overall, we are encouraged by the strong start to the year,” the venture mentioned in its earnings report.

“We are going to add back some marketing spend over the year,” CEO Daniel Ek said in an interview. “Because we want to keep on having the growth and we saw that in some territories, we may have pulled back a little bit too much.”

Spotify projected an operating profit of 250 million euros and 631 million active users, including 245 million premium customers, for the second quarter of the year. In an effort to save expenses, Spotify revealed in December 2023 that it will be cutting positions by about 17%.