Spotify forecasts fourth-quarter profit above estimates on AI bets
· CNA · JoinRead a summary of this article on FAST.
Get bite-sized news via a new
cards interface. Give it a try.
Click here to return to FAST Tap here to return to FAST
FAST
Oct 22 : Spotify forecast fourth-quarter profit above Wall Street estimates on Thursday, as the Swedish music streaming company bets on its AI-powered features to drive user growth in the crucial holiday season.
Shares of the company rose nearly 4 per cent in premarket trading.
Investors have closely watched the company's profitability as it spends on AI to improve discovery and engagement to attract more users and fend off emerging music-generation rivals such as Suno and Udio.
Spotify expects operating income of €820 million ($920.53 million), compared with analysts' average estimate of €813.4 million, according to data compiled by LSEG.
CNA Games
Guess Word
Crack the word, one row at a time
Buzzword
Create words using the given letters
Mini Sudoku
Tiny puzzle, mighty brain teaser
Mini Crossword
Small grid, big challenge
Word Search
Spot as many words as you can
Show More
Show Less
The company's AI-powered features include AI DJ, which curates personalized music mixes with spoken commentary, and prompt-based playlists that let users describe a mood or listening preference to generate tailored selections.
"We've built a strong business that keeps compounding, we invest when we see a path for growth, our costs are moderating, and there is more runway ahead," co-CEO Alex Norstrom said in a statement.
In the third quarter, Spotify's operating income of €672 million came in line with Visible Alpha-compiled analysts' average estimate of €671.8 million.
It posted revenue of €4.97 billion in the three months ended September 30, compared with an LSEG-compiled estimate of €4.98 billion. It reported earnings per share of €2.48, compared with estimates of €2.80.
Spotify's monthly active users forecast of 818 million for the fourth quarter was marginally below Visible Alpha estimates of 819 million, while its outlook for about 10 million increase in premium subscribers to 316 million was above expectations of 314.7 million.
Its monthly active users grew 1 per cent sequentially in the third quarter to reach 788 million.
Earlier this week, Spotify announced a licensing deal with music distributor Believe for its upcoming paid tool for fan-made AI covers and remixes. It has also signed licensing deals with Universal Music Group, Merlin and Kobalt for the tool.
($1 = 0.8908 euros)
Newsletter
Week in Review
Subscribe to our Chief Editor’s Week in Review
Our chief editor shares analysis and picks of the week's biggest news every Saturday.
Sign up for our newsletters
Get our pick of top stories and thought-provoking articles in your inbox
Get the CNA app
Stay updated with notifications for breaking news and our best stories
Get WhatsApp alerts
Join our channel for the top reads for the day on your preferred chat app