Spotify Technology SA (NYSE:SPOT) shares rallied around 3.5% to €213 after its operating loss for the fourth quarter was narrower than the company’s guidance had initially forecast.
Operating losses reached €75 million for the last three months of 2023, building on 2022’s €231 million loss.
A one-off €143 million hit during the quarter was due to “real estate optimisation” and severance pay for some of the 2,300 jobs it axed during the year.
Spotify said without this charge adjusted operating income would have reached €68 million, reflecting more than a doubling of earnings from the third quarter’s €32 million.
A key driver of this was the streaming services’ decision to limit its marketing by cutting jobs and lowering spending, offsetting higher “social charges”.
Social charges are “payroll taxes associated with employee salaries and benefits” and because the group provides share-based rewards to workers, a shift in share price risks fluctuations in the tax it is required to pay.
Revenues continued to grow for the third consecutive quarter, reaching €3.67 billion, representing a 16% jump year-on-year.
Ad-supported revenues reached all-time highs, highlighting the changes in consumer trends during a period of reduced spending.
Spotify now boasts around 602 million users, representing a 23% jump from 2022 and coming in 1 million ahead of guidance.
Looking forward to the first quarter of the new financial year, the Swedish music group hopes to grow its user base to 618 million, while achieving an operating income of €180 million.