Spotify exceeded expectations in Q3, with revenue of €4.27bn (+12% y-o-y) and EPS of €3.28, compared with €4.23bn and €1.97 respectively. The number of premium subscribers grew by 12% to 281 million, slightly below estimates. Advertising revenue, which fell 6% to €446m, also disappointed. The increase in subscription revenue (+9%) reflects the impact of price increases during the summer in several regions around the world.
The platform also confirmed a change in leadership: Daniel Ek will become executive chairman in January, leaving operational duties to Gustav Söderström and Alex Norström, who have been appointed co-presidents. Total monthly active users reached 713 million (+11%), exceeding expectations thanks to improvements to the free version of the app. Spotify is continuing its shift towards artificial intelligence, with recommendations via ChatGPT and new partnerships with the major players in the music industry to develop AI-integrated tools.
For Q4, Spotify forecasts revenue of €4.5bn and 289 million premium subscribers, both indicators falling short of market expectations. However, the company is forecasting operating income of €620m and 745 million monthly active users, both of which are above consensus estimates. These announcements come amid ongoing controversy surrounding Daniel Ek's involvement in the defense startup Helsing, which has led to the withdrawal of certain artists from the platform.
