Spotify just made Wall Street very happy indeed.
The music streaming giant posted a surprise rise in third-quarter operating profit and saw its base of “paid” subscribers jump to 113 million at the end of September.
That’s against 108 million premium users reported at the end of June, meaning the company added almost 2 million new, paying subscribers each month during the three-month period, roughly in line with what has been reported in recent years. Year-on-year premium subs are up 31 percent.
At the end of September, the total sum of active monthly users grew to 248 million, against 232 million three months earlier.
Podcasts are kicking goals for Spotify. The company reports “exponential growth” in podcast hours streamed, up some 39% for the quarter, and early indications are that podcasts have “significantly increased” conversion of free to paid users. “Podcast engagement is clearly a growing global phenomenon,” a shareholder statement reads.
Monday’s financial update exceeded Wall Street expectations and internal forecasts, and was led by “strong performance in both Family Plan and Student Plan,” a statement reads.
Spotify is now optimistic on its forecasts for the months ahead. Expect to see 120 million to 125 million premium subscribers by year’s end, the company said, with roughly 255 million to 270 million monthly active users.
The company has a strategy to help get it there. In recent days, Spotify announced it would gift premium subscribers a free Google Home Mini until Nov. 15, or until supplies are exhausted.
Also on Monday, the global streaming leader announced a lift in third-quarter operating profit of €54 million vs an operating loss of €6 million in the same period last year.
At the same time, revenue grew by 28 percent to €1.73 billion and operating expenses were up by 11 percent to €387 million.
Spotify points to the “developing regions” where it operates as a “significant driver of this outperformance.”
Some of those businesses include Israel, Romania, South Africa and Vietnam, where the streamer opened for business in 2018 ahead of its debut on the New York stock exchange.
Growth in Latin America “accelerated sequentially” for the second-straight quarter as “retention among newer users continues to improve,” the shareholder letter continues.
Southeast Asia, excluding India, remains its fastest growing region. India, which came on earlier this year, outperformed Spotify’s forecast by 30% during the period.
Swedish company now operates in 79 markets.
In other news, CFO Barry McCarthy will retire from the company on Jan. 15, 2020. McCarthy, a former Netflix exec who played a “pivotal role in Spotify’s listing and helping to establish Spotify as a public company,” Ek said in an earning calls, will be succeeded by Paul Vogel, Spotify’s VP financial planning and analysis, treasury and investor relations.
Read Spotify’s shareholder letter here.