Spotify (NYSE:SPOT) shares surged by nearly 8% in the early trading session today after the audio streaming platform’s first-quarter revenue jumped by 20% year-over-year to €3.6 billion. Additionally, the company surpassed €1 billion in gross profits for the first time in its history.
SPOT’s Impressive Q1 Growth
The quarter was marked by robust subscriber gains, better monetization, and improving profitability trends. Its total monthly active users (MAUs) increased by 19% to 615 million, and the number of premium subscribers improved by 14% to 239 million. Impressively, ad-supported MAUs jumped by 22% to 388 million.
Spotify’s Q1 gross margin expanded by 243 basis points year-over-year to 27.6%. Moreover, a focus on profitability helped the company deliver an operating income of €168 million, compared to an operating loss of €156 million in the year-ago period.
New Feature Introductions
Additionally, a slew of new feature introductions promises to keep the growth engine humming for Spotify. The company introduced music videos in 11 markets and made Song Psychic, a music engagement feature, available in 64 markets. It has also launched the Audiobook access tier in the U.S. and announced an in-house music advisory agency for brands.
Spotify’s Future Expectations
For the upcoming quarter, Spotify expects the addition of 16 million net new MAUs and six million net new premium subscribers. The audio streaming giant foresees an operating income of €250 million on €3.8 billion in revenue for the quarter.
Is SPOT a Good Stock to Buy?
Today’s price gains in Spotify stock come on top of a nearly 107% rally in the company’s share price over the past year. Overall, the Street has a Strong Buy consensus rating on Spotify, alongside an average SPOT price target of $271.76. However, analysts’ views on Spotify could see a revision following today’s earnings report.
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