Spotify Technology SA, the music-streaming giant, reported third-quarter sales that exceeded analysts’ projections and a surprise operating profit due to the early impact of a price increase and a jump in subscribers.

• Premium subscribers rose 16% to 226 million, the company said Tuesday in a statement. That was more than the 224.3 million average of analysts’ estimates compiled by Bloomberg. Total revenue, up 11% to €3.36 billion, was above expectations of €3.33 billion.
• Total active users rose 26% to 574 million. The company’s adjusted operating profit was €32 million, beating analysts’ estimates for a loss of €44.6 million.
• Spotify forecasts 601 million active users for the fourth quarter, with 235 million premium subscribers, both exceeding analysts’ consensus. It sees sales of €3.7 billion for the period, in line with estimates.

Key Insights

• After price increases earlier this year on its standard subscription offering, Stockholm-based Spotify is also expected in introduce another premium subscription plan that includes high-fidelity audio.
• The company cited lower personnel costs and marketing spend for its improved profit.
• Spotify cut back on its podcast investments over the past year by approving fewer shows and laying off staff. The company has still sought to sign exclusive ad sales partnerships like that with Alex Cooper’s Unwell Network.
• Earlier this month, Spotify began offering 15 hours of audiobook listening to premium subscribers in the UK and Australia. Major book publishing companies, like Penguin Random House, are participating in the offering, which is expected to roll out in the US later this year.

Get More

• See Spotify estimates.
• See the Spotify statement here.