Spotify is cashed up thanks to job cuts and subscriber growth

Spotify’s (NYSE:SPOT) New York listed shares jumped around 12% after the music and podcast streamer reported record quarterly profits.

Its second-quarter results highlighted a material turnaround, driven by a substantial improvement in margin, thanks to cost-cutting measures and fresh growth in its premium subscription business.

Revenue was up 20% for the quarter, at €3.81 billion, to drive a profit of €274 million, or €1.33 per share, compared to a loss of €302 million in the same period last year.

Wall Street analysts had expected €1.23 per share, on €4.17 billion of revenue.

Operating costs were reduced by some 16% following cuts to marketing spend and the axing of around 1,500 jobs (around 17% of Spotify’s workforce were let go).

Premium, i.e. paid-for, accounts were up by 12% at 246 million users, whilst the platform’s total active users, including those on the ad-supported ‘free’ accounts, totalled 626 million worldwide.

Spotify generated a total of €3.4 billion from subscriptions, up 21%, whilst ad revenue increased 13% to €456 million.

Looking ahead, Spotify said it expects to add 13 million new users in the third quarter, including 5 million premium subscribers.

This growth is expected to be supported by an expanded video catalog, plus the introduction of new subscription plans in Australia and Britain.

Third-quarter revenue was forecast by Spotify to reach €4 billion, to result in income of €405 million.

“It’s an exciting time at Spotify,” said chief executive Daniel Ek.

“We keep on innovating and showing that we aren’t just a great product, but increasingly also a great business.”

“We are doing so on a timeline that has exceeded even our own expectations.

“This all bodes very well for the future.”

In New York, Spotify shares were was up $34.95 or 11.84% changing hands at $330.23 each.