Spotify (SPOT) stock soared Tuesday after the company reported strong user metrics and its first full-year profit.
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Users flocked to the music and audio books streaming platform in the fourth quarter as it beat estimates on revenues and subscribers, sending SPOT stock up 9% in the pre-market trading session on Wall Street.
SPOT said monthly active users (MAU) grew by 12% year-on-year to 675 million, while paying subscribers rose by 11% to 263 million in its Fiscal fourth quarter. The increase in MAUs was its biggest Q4 increase in its history. For the Fiscal first quarter 2025 the company guided MAUs ahead of estimates to 678 million.
SPOT Subscribers Stick Around Despite Price Hikes
The growth in users and paying subscribers helped SPOT to finally turn a profit, The firm reported a fourth-quarter profit of €367 million, or €1.76 a share ($1.82).
It seems that its move last year to roll out a higher-priced audio “bundle” featuring music, podcasts and audiobooks, is paying off. Spotify, which recently struck a multi-year licensing deal with Universal Music Group (UMGNF), also launched an audio-books only plan and music-only plan, which has enabled it to raise prices twice in a year.
In turn this helped the company to deliver record gross margins, which climbed 555bps to 32.2% and a record high operating income of €477 million, or $493 million. This drove Spotify’s first full year of operating profit to €1.4 billion.
“I am very excited about 2025 and feel really good about where we are as both a product and as a business,” said Daniel Ek, Spotify Founder & CEO.
Is SPOT a Good Stock to Buy?
After a 145% rally for SPOT in the last 12 months, analysts on Wall Street are bullish. Based on 28 analysts who have set a 12-month price target in the last three months, SPOT is rated a Strong Buy.
