(Reuters) -Spotify forecast fourth-quarter profit above Wall Street expectations on Tuesday, betting on robust user growth and a boost from price hikes in the crucial holiday season.
Shares of the company, which competes with Apple and Amazon’s music streaming offerings, rose 5.3% in premarket trading.
The Swedish streaming giant has raised prices of its premium individual subscription and cut down on marketing and personnel-related costs to boost profitability.
This is the first batch of results since it announced in September founder-CEO Daniel Ek will become executive chairman in January, as it adopts a new co-CEO structure.
The company has also rolled out new features including a long-awaited high-quality streaming option called lossless audio, aiming to boost engagement.
Spotify’s audiobook listeners climbed 36% and consumption hours grew 37% over the past year, led by younger audiences, it said last month, around two years after adding the product to paid subscriptions.
Last month, the company teamed up with ChatGPT-owner OpenAI to let users link their Spotify account within the chatbot and ask for music or podcast recommendations through conversational prompts in a bid to boost user growth and engagement.
Spotify expects operating income of 620 million euros ($723.04 million) in the fourth quarter, above analysts’ average estimate of 618.6 million euros, according LSEG-compiled data.
The company forecast fourth-quarter revenue of 4.5 billion euros, compared with the 4.57 billion estimates.
Its quarterly monthly active users forecast of 745 million was above an estimate of 737.3 million, while its forecast for an 8 million increase in premium subscribers to 289 million was marginally below the estimate of 290.9 million.
Premium subscribers rose 12% to 281 million in the third quarter, in line with estimates. Its MAU net additions of 17 million took the total to 713 million, exceeding expectations.
Revenue rose 7% to 4.27 billion euros, beating estimates of 4.23 billion euros.
($1 = 0.8575 euros)
(Reporting by Jaspreet Singh in Bengaluru; Editing by Arun Koyyur)
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