Spotify Technology SA (NYSE:SPOT) shares built momentum to trade more than 10% higher Tuesday afternoon (despite a muted premarket) after the company reported strong third-quarter financials.
Rising $15.65 or 10.1% the stock was changing hands at $170.29.
The Swedish music and podcast streamer reported operating income of €32 million (US$33.9 million), beating forecasts of a €45 million loss, from €3.4 billion (US$3.6 billion) of revenue for the three-month period versus expectations pitched at €3.3 billion. Spotify had €216 million of free cash flow over the three months.
It represented a step up from last year’s third quarter operating loss of €228 million.
Spotify told investors it increased its monthly active users (MAU) count by 26% to 574 million, which it highlighted was 2 million users ahead of its own guidance.
Paying subscriber user numbers meanwhile improved 16% to 226 million, versus the same quarter a year ago.
Revenue from ‘premium’ subscribers was up 10%, with Spotify explaining that average revenue per user (ARPU) performance was impacted by ‘product and market mix’ and partially offset by the price increases that began late in the quarter.
Meanwhile, ad-supported revenue was up 16% with ad spend in the music segment “re-accelerating”, up 20%, whilst podcast advertising was described as “in the healthy double-digit range”.
Giving its outlook, Spotify told investors it expects to see the MAU count at 601 million by the end of its fourth quarter with total premium subscribers counting up to 235 million.
It expects €3.7 billion (US$3.9 billion) in fourth-quarter revenue, 26.6% margin, and €37 million of operating income for its final quarter of 2023.
“Overall, we are pleased with our performance in Q3, and view the business as well positioned to drive continued progress towards delivering against our Investor Day goals,” Spotify said in its quarterly shareholder ‘dec’.