Spotify forecasts fourth-quarter profit above estimates on AI bets

Synopsis

Spotify is predicting a stellar fourth-quarter profit that could outshine Wall Street's forecasts, largely driven by its innovative AI features. The company anticipates an operating income of €820 million, well above analysts' expectations. In the previous quarter, Spotify's operating income hit €672 million, aligning with forecasts. Co-CEO Alex Norstrom highlighted the platform's robust foundation and growth potential as they continue to invest in cutting-edge technology and enhance user engagement.

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Spotify forecast fourth-quarter profit above Wall Street estimates on Thursday, as the Swedish music streaming company bets on its AI-powered features to drive user growth in the crucial holiday season.

The company expects operating income of €820 million ($920.53 million), compared with analysts' average estimate of €813.4 million, according to data compiled by LSEG.

Investors closely monitor the company's profitability as it invests in AI for improving discovery and engagement on the platform to attract more users and fend off emerging music-generation rivals such as Suno and Udio.

In the third quarter, the company reported operating income of €672 million, in line with Visible Alpha-compiled analysts' average estimate of €671.8 million.

Spotify reported revenue of €4.97 billion in the quarter, compared with estimates of €4.98 billion, according to LSEG data.

"This was a quarter where we did what we said. We've built a strong business that keeps compounding, we invest when we see a path for growth, our costs are moderating, and there is more runway ahead," co-CEO Alex Norstrom said in a statement.

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