Spotify’s stock surged in early-morning trading on Monday, after the music streaming giant reported an unexpected Q3 profit and strong user growth — a combination that typically makes analysts and investors rather happy.
Spotify posted 36 cents earnings per share on about $267 million in net income, easily running past 29 cents analysts expected it to lose per share. This marked the second time since Spotify went public in April 2018 that the company posted a profit.
Revenue of 1.73 euros, or about $1.92 billion, marked an increase of 28% year-over-year and narrowly surpassed Wall Street’s projections.
Just as importantly for shareholders, Spotify continued pulling in more customers. The company closed Q3 with 248 million monthly active users, or about 7% more than the 232 million MAUs it started the quarter with. Most of its gains came internationally in Southeast Asia and South America. Spotify’s paying customer base added 5 million people during the quarter, wrapping up Q3 with 113 million users paying for Spotify’s ad-free service.
Shares jumped 13.2% in early trading on Monday, with Spotify’s stock hitting $136.86 per share. The company opened the year below $115 per share.
The company, in its letter to shareholders, pointed to more than just its music library as a driving force behind its healthy growth.
“We continue to see exponential growth in podcast hours streamed (up approximately 39% quarter-over-quarter) and early indications that podcast engagement is driving a virtuous cycle of increased overall engagement and significantly increased conversion of free to paid users,” Spotify said.
Spotify’s 113 million paying customers puts the company within striking distance of doubling the most recent update from Apple Music, its chief competitor. Apple revealed in June its music service has 60 million customers.
Spotify added it continues to “feel very good about our competitive position in the market. Relative to Apple, the publicly available data shows that we are adding roughly twice as many subscribers per month as they are.”
In company news, CFO Barry McCarthy is expected to retire in January, the company shared.