Spotify Reports Record Operating Profit In Q3 2024 As Premium Subscribers Surge

Spotify’s Q3 2024 financial results reveal significant growth, with the platform reaching 252 million premium subscribers and 402 million ad-supported users by the end of September. This marks a year-on-year increase of 12% for premium subscribers and 11% for free users, bringing Spotify’s total monthly active users (MAUs) to 640 million, up 11% from the previous year.

Revenue for the quarter rose 19% to €3.99 billion ($4.24 billion), with subscription revenue up 21% at €3.52 billion, while ad-supported revenue grew by 6% to €472 million. Spotify’s operating profit hit €454 million, a notable rise from €266 million in Q2 2024 and €32 million in Q3 2023.

For the quarter, Spotify exceeded its MAU guidance, hitting 640 million, and surpassed its premium subscriber forecast of 251 million by an additional million. Quarterly revenue also aligned with Spotify’s forecast of €4 billion.

In its executive summary, Spotify expressed confidence in its performance: “The business delivered strong Q3 results, as all of our KPIs met or exceeded guidance and profitability reached record levels. We are very pleased with our performance heading into year-end and view the business as well-positioned to sustainably grow towards our long-term goals.”

A rise in Average Revenue Per User (ARPU), driven by subscription price increases, fueled the 21% increase in premium revenue. However, Spotify noted “softness in pricing” and “a challenging brand environment” in its ad-supported music and podcast sectors. The company’s ongoing dispute with U.S. publishers over mechanical royalties, due to its classification of its premium service as a "bundle," has also drawn attention, though it only marginally affects Spotify's overall profitability.

Regionally, Spotify’s strongest growth came from the “Rest of World,” which now comprises 33% of its MAUs, up from 26% a year ago. Latin America also saw growth, now at 22% of MAUs. Europe and North America remain key for premium subscribers, accounting for 38% and 27% of paid users, respectively.

Spotify projects ending Q4 2024 with 665 million MAUs, including 260 million premium subscribers, and forecasts revenues of €4.1 billion, with an expected operating profit of €481 million.