Daniel Ek says Spotify has “never been in a stronger position” because the streaming big set itself on monitor for its first full 12 months of profitability, capping a outstanding 2024 turnaround following the turmoil of final December’s mass layoffs.
Spotify beat expectations throughout a number of key metrics in its third quarter of 2024, rising month-to-month energetic customers (MAUs) by 11% year-on-year to 640 million folks, whereas subscribers rose 12% to 252 million. The group additionally expanded revenues by double digits and set a brand new document for working earnings.
Shares within the firm rose almost 7% in U.S. postmarket buying and selling on the again of the outcomes.
“We’ve never been in a stronger position, thanks to the outstanding execution by our team. I’m incredibly proud of the way we’ve delivered and the progress we’ve made,” Ek mentioned.
“We’re where we set out to be—if not a little further—and on a steady path toward achieving our long-term goals. This relentless pursuit of innovation and commitment to growth sets us up to deliver the most valuable user experience in the industry, while reinforcing the core strengths that make Spotify unique. I am very excited about what lies ahead for us.”
Ek mentioned he was as energized as he had ever been in regards to the present state of know-how and the way Spotify can leverage the explosion of AI to spice up its progress.
Spotify’s outstanding turnaround
Spotify has mounted an enormous turnaround effort following a rocky 2023, the place falling subscriber progress and shaky outcomes from a $1 billion wager on podcasting hit the corporate’s margins.
Shares within the firm skilled a protracted decline between 2021 and 2023, as traders fretted the streaming big could be eclipsed by rival platforms together with Apple Music.
As a part of main turnaround plans, final December the group laid off 17% of its workforce, or round 1,500 employees, final December, as CEO Ek mentioned workers have been doing an excessive amount of “work around the work.”
There have been teething pains following the layoffs. Talking throughout its first quarter earnings name this 12 months, Ek highlighted the surprising affect of the layoffs as one of many causes it didn’t hit its steering on profitability and MAU progress. Ek mentioned the layoffs affected day-to-day operations “more than we anticipated.”
Chatting with Raconteur in October, Spotify’s chief human assets officer Katarina Berg defined the layoffs have been a “shock to the system” for workers.
“Spotify had been in hypergrowth and this was the only thing people knew,” she provides. “A lot of people at Spotify had never seen a recession and it was a lot to absorb and digest.”
Spotify’s former CFO Paul Volger was additionally culled throughout Spotify’s mass layoffs. On its newest earnings name, Ek unveiled the arrival of Vogel’s successor, Christian Luiga, previously of the aerospace and protection group Saab AB.
The group has managed to efficiently roll out gradual value rises for its key Spotify subscription, with a subscription setting U.Okay. prospects again £11.99 per 30 days, which don’t seem to have hit on progress.
“When someone thinks we’ve reached a ceiling, we’ve found new ways to drive up engagement while driving down the churn,” Ek mentioned on his name with traders.
Regardless of the early turmoil, Spotify’s effectivity drive appears to have paid off. The corporate’s share value is up greater than 120% within the 12 months up to now because the group repeatedly exceeded its key metric targets in 2024.
