Spotify posts first-ever quarterly operating profit, reaches 96 million subs

Spotify reported its fourth-quarter earnings, and the streaming company closed out 2018 with a positive performance. Quarterly revenue rose 30% on-year to €1.495 billion. The total included €1.320 billion in premium revenue and €175 million in ad-supported revenue. Spotify broke down some specifics of its advertising business. The programmatic and self-serve channels accounted for about a quarter of the company’s ad sales revenue, and revenue from the two sources grew about 60% on-year. The company noted that its investments in video ad infrastructure could lead to further increases in that category, which saw more than 40% growth in Q4.

The period also included Spotify’s first ever positive result for operating income at €94 million, up from a loss of €87 million in the year-ago quarter. Net income attributable to owners of the parent reached €442 million, up from a net loss of €596 million in Q4 2017. Spotify said that changes in share price contributed to the first-ever quarterly operating profit, but noted that it would have been profitable even without that boost.

Spotify’s premium subscriber audience grew 36% to 96 million. The company credited its Google Home promotion and annual holiday campaign as reasons for reaching the higher end of its guidance for that metric. Monthly active users now number 207 million, 29% higher on-year and outperforming the previous guidance.

Spotify set out new expectations for its 2019 financial performance. The company said that it expects to see total revenue between €6.35 billion and €6.8 billion, with a likely operating loss between €200 million and €360 million. It anticipates between 117 million and 127 million premium subscribers and between 245 million and 265 million monthly active users.