Streaming giant posts record profits, paying $10b in royalties, as user growth shatters expectations.

Spotify has finally cracked the code to profitability. The world’s leading music streaming platform stunned investors on Tuesday, reporting its first-ever profitable year. Shares jumped 13% following the announcement, marking a dramatic turnaround for the company that once bled cash in its quest for dominance.

For 2024, Spotify recorded a staggering €1.14 billion net income, a milestone that sent shockwaves through the tech and music industries. The Luxembourg-based company also revealed fourth-quarter revenue of €4.24 billion, comfortably beating analyst projections of €4.19 billion. Despite slightly missing earnings per share estimates (€1.76 vs. €1.99), the overall financials painted a picture of robust growth.

Spotify’s expansion isn’t just about revenue—user engagement is at an all-time high. The platform now boasts 675 million monthly active users (MAUs), smashing forecasts of 664.3 million. This represents a record 35 million net user increase in the fourth quarter alone, with a 5% quarter-over-quarter and 12% annual rise. A major driving force? Spotify Wrapped. The popular end-of-year music analysis continues to be a viral sensation, pulling users back and boosting subscriptions.

One of the most striking figures from the report was Spotify’s $10 billion payout in royalties to the music industry in 2024, an unprecedented sum that underscores its growing influence. The platform’s newly inked multi-year agreement with Universal Music Group (UMG), announced in January, is expected to further reshape the industry. The deal includes new paid tiers, content bundles, and a direct licensing agreement, strengthening Spotify’s foothold in both the U.S. and international markets.

Spotify’s operating income hit €477 million for the fourth quarter, reflecting a 40% year-over-year gross profit increase. Though slightly below expectations, this still signals a significant shift for a company that long prioritised growth over profitability.

Looking ahead, Spotify’s first-quarter guidance anticipates 678 million MAUs, with two-thirds being premium subscribers. Revenue is forecasted at €4.2 billion, again outpacing analysts’ expectations of €4.17 billion. If the company maintains this momentum, its stock—already up 39% year to date—could continue its meteoric rise.

Spotify’s journey from financial uncertainty to profitability is nothing short of remarkable. By refining its revenue model, expanding partnerships, and leveraging viral engagement tactics, it has secured a powerful position in the streaming industry. The question now is: Can it sustain this growth, or is turbulence on the horizon?