Spotify Achieves Its First Profitable Year, Possibly Boosted by Apple

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Spotify Achieves Its First Profitable Year, Possibly Boosted by Apple

Spotify has achieved its first year of profitability since its inception in 2008. Although the company had some profitable quarters before, it consistently faced annual losses.

Apple may have contributed to this turnaround with a change implemented last year …

Spotify had long informed investors about its focus on growth rather than profit, but shifted its strategy in 2023 to pursue profitability. The latest earnings report indicates the company has successfully made this transition.

Today, we shared our fourth quarter 2024 earnings, concluding Q4 on a high note by exceeding key metrics and celebrating our first complete year of profitability.

The company witnessed significant growth in both user engagement and premium subscriptions.

Monthly active users surged 12% year-on-year, reaching 675 million, with net additions of 35 million marking the largest Q4 performance in our history. Premium subscribers rose by 11% to 263 million.

One potential factor in achieving profitability may be Apple’s recent allowance for Spotify to show pricing within its iOS app in Europe, enabling users to register on the Spotify website and bypass Apple’s 30% commission.

In a significant reversal, Apple is now permitting Spotify to display pricing in the app – including promotional deals – and to redirect users to its website for sign-ups.

This decision came just three months after the iPhone manufacturer denied a Spotify app update that proposed this feature, and four months following the EU’s imposition of a $2B fine on Apple for anti-competitive behavior against its music streaming rival.

It was never clear why Apple obstructed this, especially since it seemed to align with the company’s music permissions.

Photo by omid armin on Unsplash

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