SPOTIFY SCORES FIRST FULL YEAR OF PROFITABILITY

Spotify enjoyed its first full year of profitability in 2024 while topping revenue expectations and adding 35m monthly active users in Q4—beating its own forecast by 10m.

Other data points sure to be music to the ears of investors included 11m new Premium Subscriber additions (3m more than internal projections), a Q4 profit of €367m and a 32.2% jump in gross margins.

The streamer's stock was up 10% this morning in the wake of the news. YTD, shares have risen more than 21%.

"I expect 2025 to deliver healthy growth alongside improved profitability," Spotify CEO Daniel Ek said on today's (2/3) earnings call. "What that should mean for investors is we think we can pick up the pace dramatically when it comes to our product velocity. We're going to double down on music, and we're going to be very disciplined while doing it. And because of all the advancements in AI, because of where our org is, we feel really good about being able to do this."

Spotify tweaked its offerings in 2024 to include a more costly bundle of music, podcasts and audiobooks, which prompted a second price increase in less than a year. That bundle was the subject of an unsuccessful lawsuit brought by the Mechanical Licensing Collective, which claimed that the streamer unfairly cut royalty rates with the new plan.

Said bundle was also reportedly at issue vis-à-vis mechanical-royalty payouts before Spotify renewed its multiyear distribution agreement with Universal Music Group.

"One of the most common misconceptions that I quite often hear from analysts is that they believe there's a 'win-lose' dynamic between us and the labels ever since starting this company 18 years ago," Ek said without commenting directly on the UMG deal. "That's not how we've looked at this. We always look at this as a 'win-win' dynamic."

Expanding on his vision for Spotify's future, Ek said it "will continue to place bets that will drive long-term impact, increasing our speed while maintaining the levels of efficiency we achieved last year," concluding, "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.”

HITS, of course, has been delivering whatever the opposite of creativity is since the Reagan administration (those were the days). And no, you can't hear our playlists.