Spotify (NYSE:SPOT) projected a fourth-quarter operating profit well above analyst forecasts, citing robust user engagement and continued momentum in its premium subscription business. The company said it is “well positioned” heading into year-end, following a period of steady operational improvements and expanding user activity.
Analysts have closely monitored Spotify’s path to profitability since the Swedish streaming giant achieved its first full-year profit in 2024, thanks to a mix of price increases and cost-cutting measures.
The platform, which features music, podcasts, and audiobooks, continues to diversify its offerings to attract new subscribers — most recently by adding more video content to its lineup. This broader strategy has supported a more than 40% rise in Spotify’s stock price so far this year. However, the surge has also increased payroll-related taxes tied to employee compensation, slightly pressuring profits.
That said, the company noted that these tax-related costs were smaller this quarter, as share price movements were less volatile. The expenses totaled 16 million euros, which was 41 million euros lower than internal projections, compared to 53 million euros in the same period last year.
Overall operating expenses declined 2% in the third quarter, supported by the lower tax burden and favorable exchange rate movements. Without those factors, however, expenses rose 11%, driven by increased marketing efforts and higher personnel spending.
Revenue from Spotify’s premium tier, which offers ad-free listening for paying users, climbed 9% to 3.83 billion euros, surpassing Wall Street expectations thanks to double-digit subscriber growth. Total company revenue grew 7.1% to 4.27 billion euros, also exceeding analyst estimates.
Operating income for the quarter ended September 30 surged to 582 million euros, above the 499.1 million euros expected.
Looking ahead, Spotify — which recently enjoyed a boost from the launch of Taylor Swift’s latest album — said it expects further growth and improving margins in 2025, as it plans to “reinvest to support our long-term potential.”
The company forecasts monthly active users for the fourth quarter to reach 745 million, beating expectations, driven by expansion in all markets. Premium subscriber growth has been especially strong in Latin America and North America, Spotify added. The company also anticipates operating income of 620 million euros, above analyst projections of 605.3 million euros.