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Spotify increases profits through job cuts and price increases
Spotify shares take off: Spotify returns with profits. Find out how the company got back on track in the first quarter and what its plans are for the future. Financial experts are optimistic. 📈🎶 #Spotify #Profit #Stocks #Finance
Spotify increases profits through job cuts and price increases
Spotify made a profit again in the first quarter of the year. This success resulted from measures such as job cuts and price increases for their music offering. Despite the increased prices, more users subscribed to the streaming service's paid offering in the first quarter of 2024. The number of premium users rose 14 percent year-on-year to 239 million, while total monthly active users increased to 615 million, almost a fifth more than at the end of March 2023.
The company's boss Daniel Ek is confident that Spotify will be able to win more customers in the current second quarter. He is also aiming to achieve an operating profit of around 250 million euros between April and the end of June, which is well above the expectations of industry experts. The job cuts and reduced marketing budgets announced last year had a positive effect on the balance sheet. In the first quarter, the company recorded an operating profit of 168 million euros, compared to an operating loss of 156 million euros a year ago.
Spotify's increasing profitability and margin strength have caused Spotify shares to rise. After the quarterly figures were published, shares rose to their highest level in three years. Reaching the break-even point in the first quarter led to a price jump of 11.41 percent to $303.31. Shares are currently trading above $315, reigniting a multi-month rally.
Analysts such as Batya Levi of UBS and Mark Mahaney of Evercore ISI describe Spotify's accelerated revenue growth and improved profitability as positive developments. Daniel Ek remains confident of acquiring further customers in the current quarter and plans to achieve an operating profit of 250 million euros. JPMorgan's Doug Anmuth praises the progress Spotify has made toward its medium-term financial goals. In the first quarter, operating margin increased to 27.6 percent from 26.7 percent in the previous quarter.
Spotify's successful business development in the first quarter of 2024 is reflected in the company's positive balance sheet. With a clear focus on profitability and customer acquisition, Spotify is optimistic about the future, bolstered by an increase in premium users and increasing margin strength that is driving its share price higher.