Spotify hit all the right notes in reporting Q4 and full-year 2024 earnings, with the audio streamer turning in its first annual net profit since it was founded in 2006.
Shares of Spotify surged more than 10% on the solid earnings report in early trading Tuesday.
For 2024, Spotify posted net income of €1.138 billion (versus a net loss of €505 million a year prior) on revenue of €15.673 billion, up 18.3%. The company gained 35 million total monthly average users in Q4 — its highest-ever fourth quarter net adds — to reach 675 million at year-end, and paid subscribers grew by 11 million (matching the record gain in Q4 2019) to hit 263 million.
“Spotify is not only a great product — it’s now also a great business, which we’re really happy about,” Daniel Ek, Spotify’s founder and CEO, said in announcing the results. “We’re gonna double down on music in 2025, and I’m personally very excited about that.”
Popular on Variety
For Q4, Spotify’s total revenue increased 16% to €4.2 billion, and operating income hit a record high of €477 million (up from €454 a year prior). Gross margin rose by 555 basis points year over year to reach 32.2%, which is also a record high.
A key reason for Spotify’s swing into the black: It cut headcount by 20.4% over the course of the year. At the end 2024, the company’s workforce comprised 7,261 full-time employees globally, down from 9,123 at the end of 2023.
“I am very excited about 2025 and feel really good about where we are as both a product and as a business,” Ek said in his prepared remarks. “We will continue to place bets that will drive long-term impact, increasing our speed while maintaining the levels of efficiency we achieved last year. It’s this combination that will enable us to build the best and most valuable user experience, grow sustainably and deliver creativity to the world.”
For Q1 2025, Spotify anticipates smaller user gains than in the most recent quarter, with 3 million net new MAUs overall and 2 million net new Premium subscribers. It forecast revenue of €4.2 billion (which would be up about 13%) and operating income of €548 million (compared with €168 million in Q1 2024).
The guidance for Q1 paid-subscriber net adds “was conservative,” which reflected the large Q4 beat and “seasonality,” Pivotal Research Group analyst Jeff Wlodarczak wrote in a research note. He added that Spotify execs reiterated that they anticipate 2025 monthly active user growth to be in line with last 4-5 years, “which we view quite positively coming off such a strong ‘24,” while they also expect the company to expand operating margins further “despite investments to improve the platform.”
At the end of 2024, Spotify hosted about 6.5 million podcast titles; of those, about 330,000 are video podcast shows. In January, the company launched the Spotify Partner Program, which pays video-podcast creators based on the amount of time Premium users watch their shows. According to Spotify, more than 70% of eligible shows have enrolled in Spotify Partner Program.
Last week, the company announced that it paid out $10 billion to the music industry in 2024 (up $1 billion from the year prior), with a cumulative payout of around $60 billion to the music industry since its founding.
On Jan. 26, Spotify announced new multiyear agreements with Universal Music Group, the world’s biggest music company, for recorded music and music publishing. Variety reported that the deal improves at least some of the payment structure of Spotify’s controversial music-audiobook “bundling” deal, announced last year, which meant a lower mechanical royalty for songwriters. Separately last week, Spotify prevailed in a lawsuit filed by the Mechanical Licensing Collective that accused the streamer of unfairly cutting royalty rates as part of the music-audiobook bundling terms, with a federal judge ruling that Spotify’s move was supported by “unambiguous” regulations.