Spotify profit forecast exceeds Wall Street expectations, boosted by user growth and strategic price hikes
Spotify Technology SA projected first-quarter operating income above Wall Street estimates on Tuesday, driving premarket gains as the streaming giant continues to benefit from growing user numbers and recent subscription price increases.
Also read: Asake headlines Spotify African heat for NYE 2026
The forecast is the first issued under co-CEOs Gustav Soderstrom and Alex Norstrom, who succeeded founder Daniel Ek in January when he became executive chairman.
Spotify expects operating income of €660 million ($786 million) for Q1, slightly above analyst consensus of €652.3 million.
Total revenue is forecast at €4.5 billion, marginally below expectations of €4.57 billion.
Fourth-quarter revenue rose 7% to €4.53 billion, meeting analyst estimates, though the growth rate marked the slowest since the company’s 2018 market debut.
Monthly active users (MAUs) reached 751 million, surpassing projections, while premium subscribers grew 10% to 290 million. First-quarter projections anticipate 759 million MAUs and 293 million premium subscribers.
Spotify attributed improved profitability to price increases across multiple markets, including a $1 rise to $12.99 in the U.S., Estonia, and Latvia, alongside operating cost reductions that boosted gross profit margin from 31.6% to 33.1%.
Expanding beyond music, Spotify has invested in AI-powered playlists, video podcasts through Netflix collaborations, and book content, aiming to stay competitive against rivals such as Apple and Amazon.
Growth in Europe and North America has slowed, highlighting the importance of expansion in other regions.
Also read: Wizkid makes history with 10 billion Spotify streams
CEO Gustav Soderstrom noted the company’s ongoing efforts to balance revenue growth with disciplined cost management while navigating a competitive streaming landscape.
Mariam Balogun is a contributor to Freelanews.com, covering news, business, and public affairs.
