Spotify forecasts fourth-quarter profit above estimates on AI bets
A screen displays the logo of Spotify on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., December 4, 2023. REUTERS/Brendan McDermid
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Oct 22 : Spotify forecast fourth-quarter profit above Wall Street estimates on Thursday, as the Swedish music streaming company bets on its AI-powered features to drive user growth in the crucial holiday season.
The company expects operating income of €820 million ($920.53 million), compared with analysts’ average estimate of €813.4 million, according to data compiled by LSEG.
Shares of the company were last up more than 3 per cent in volatile premarket trading.
Spotify offers AI-powered features such as its AI DJ, which curates personalized music mixes with spoken commentary, and prompt-based playlists that let users describe a mood or listening preference to generate tailored selections.
Guess Word
Crack the word, one row at a time
Buzzword
Create words using the given letters
Mini Sudoku
Tiny puzzle, mighty brain teaser
Mini Crossword
Small grid, big challenge
Word Search
Spot as many words as you can
Investors closely monitor the company’s profitability as it invests in AI to improve discovery and engagement on the platform to attract more users and fend off emerging music-generation rivals such as Suno and Udio.
In the third quarter, the company reported operating income of €672 million, in line with Visible Alpha-compiled analysts’ average estimate of €671.8 million.
Spotify reported revenue of €4.97 billion in the quarter, compared with estimates of €4.98 billion, according to LSEG data.
“This was a quarter where we did what we said. We’ve built a strong business that keeps compounding, we invest when we see a path for growth, our costs are moderating, and there is more runway ahead,” co-CEO Alex Norstrom said in a statement.
Spotify’s monthly active users forecast of 818 million for the fourth quarter was marginally below Visible Alpha estimates of 819 million, while its outlook for a 10 million increase in premium subscribers to 316 million was above estimates of 314.7 million.
($1 = 0.8908 euros)
Source: Reuters
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