Spotify $SPOT ( ▲ 15.14% ) turned up the volume on its growth story, reporting fourth quarter results that sent shares sharply higher in premarket trading. The music streaming giant posted record user gains and its highest ever gross margin, giving investors fresh confidence in its long term model.
The headline numbers showed a platform that is still expanding at scale, even as it pushes into new areas like audiobooks and physical book sales.
Users Keep Flooding In
Spotify $SPOT added more than 38 million monthly active users in the quarter, a company record that brought its total to 751 million. That easily topped Wall Street expectations of 744.7 million. Premium subscribers, the paying tier that drives most revenue, rose 10% to 290 million, slightly ahead of forecasts.
Revenue climbed 7% to €4.53 billion, or about $5.4 billion, roughly in line with estimates. But the standout figure was gross margin, which hit a record 33.1%, showing improved efficiency and pricing power.
Guidance Hits a Slightly Softer Note
Looking to the current quarter, Spotify $SPOT forecast a net addition of 8 million monthly active users, bringing the total to 759 million. That is still strong growth, though a touch below what analysts had been modeling. The company expects 293 million premium subscribers in Q1, just shy of consensus.
On the revenue side, Spotify guided for €4.5 billion, or about $5.36 billion, which also came in a bit under Wall Street expectations. The company recently raised subscription prices in the US, a move investors will watch closely to see how it affects churn and margins.
A Massive Global Footprint
With the world population just over 8 billion, Spotify’s latest figures suggest roughly one in eleven people uses the platform each month. That kind of reach helps explain why investors are rewarding the stock after this report.
Between record user growth, improving margins, and steady subscriber gains, Spotify $SPOT is showing it still has room to grow in a market many once thought was nearing saturation.