Spotify makes its first net profit in 2024

“Better than expected,” says Spotify founder Daniel Ek, pleased with his company's financial results. Although the operating profit has fallen, the operating cash flow is more than three times as high and for the first time there is a net profit for the year. What began as a music streaming service in 2008 is now a bouquet of music, videos, podcasts, and audiobooks. That's a draw. Spotify had 675 million active users in December.

That's twelve percent more than a year earlier. There are even more registered users, namely 688 million (as at the end of the year, +12%), according to the financial figures published on Wednesday. 263 million of them pay for their subscription (+11%), 425 million are exposed to advertising (+12%). Although paying customers only account for just under 39% of subscribers, they generate far more revenue: 13.8 billion euros in 2024, an increase of 17%. Advertising revenue amounts to a comparatively modest 1.9 billion euros (+7%).

In total, Spotify generated revenue of 15.7 billion euros (+18%), of which 3.4 billion euros remained as operating profit. This is an eighth less than in 2023, but this does not dampen Ek's joy. After all, Spotify increased its operating cash flow by 238% to 2.1 billion euros. Pre-tax profit (1.3 billion euros) and net profit (1.1 billion euros) were achieved for the first time in the streaming service's 17-year operating history. Spotify's legal royalty trick also helped.

More money than debt

The Swedish company now has 7.5 billion euros in cash and short-term investments (as at the end of the year). This exceeds liabilities for the first time, at least, since Spotify's IPO.

Ek has largely withdrawn from day-to-day business. Although he is CEO, he leaves the day-to-day decisions to two Co-Presidents, Chief Business Officer Alex Norström and Chief Product & Technology Officer Gustav Söderström. Ek revealed this in the usual telephone conference following the announcement of the financial figures on Wednesday: The changeover “has allowed me to work more on Spotify's future”. The company founder believes that this is where he can make the biggest impact.

On the one hand, the train is moving in the direction of music videos, podcasts, video podcasts and audiobooks. The royalty structure is likely to be much more business-friendly than for pure music streams. On the other hand, Spotify is planning to introduce a second, higher-priced paid subscription option and is talking about “new ways to bring fans and artists closer together.” For the current quarter, management expects slower growth, with two million net paying subscribers to be added, which is less than one percent. Spotify shares rose to a similar extent on Wednesday.

(ds)