Spotify Technology S.A. (NYSE: SPOT) guided for fourth-quarter operating income well above analyst estimates, citing healthy user activity and strength in its premium tier heading into year-end. Investors have focused on profitability since Spotify achieved its first full-year income in 2024 through price increases and cost controls, a shift that helped drive a share price gain of over 40% year to date but also lifted payroll tax-related expenses.
In the third quarter, the payroll tax charge was €16 million, which was €41 million lower than the company had forecast and down from €53 million a year earlier. Operating expenses fell 2% on the reduced tax charge and favorable currency effects; excluding those items, operating expenses increased 11% due to higher marketing and personnel costs. Premium revenue rose 9% to €3.83 billion on double-digit subscriber growth.
For the fourth quarter, the company projected continued growth and improving margins through 2025 as it reinvested for long-term potential. Monthly active users were guided to 745 million, ahead of expectations, with particularly strong premium subscriber gains in Latin America and North America. Operating income was expected at €620 million versus a €605.3 million consensus, with recent high-profile releases also contributing to engagement trends.
