Video streaming service Spotify posted a dramatic profit in first quarter in more than a year. The net income was 6.5 billion euros through earnings of 33.33 euros per share, instead of the possibility of a loss of 20.00 euros per share. Spotify’s stock rose 11 percent with the earnings. The stock is the highest since January 31.
Spotify’s loss in the previous year was 166 million euros.
On Tuesday, the Spotify CFO Paul Vogel said on the company’s third-quarter financial report that, we now expect that, after the black chapter, we’ll continue moving forward.
“Obviously, you never know what can happen in any one quarter, but we feel good that we are on a different trajectory and we have reached an inflection point in terms of profitability of the business,” he added.
“Looking ahead to 2024, we expect to see a continued improvement in our gross margin trends and our operating income trends,” Vogel said.
Spotify managed to deliver a 26.4 percent gross margin for the current quarter, helped by recent price increases and a lower-than-expected 26 percent expense related to personal and marketing expenses.
Late last quarter, Spotify raised the price of its ad-free premium subscription plan from $1 to $10.99 a month. Duo plan increased from $2 to $14.99. Family plan increased from $1 to $16.99. The student plan was also raised from $1 to $5.99 a month.
In addition to price hikes, Spotify has taken several cost-cutting initiatives over the past year. This led to layoffs and restructuring of its podcast division. But recently audiobooks offer subscribers 15 hours of free listening per month
Some analysts, however, are concerned that audiobooks could drag down Spotify’s push margin growth.
