Spotify Stock Gains on Subscriber Growth and Narrower-Than-Expected Loss

Spotify Technology’s (SPOT) operating loss narrowed for the fourth quarter after the company moved beyond music to audiobook content and paid for staff cuts in a bid to reduce costs. Its shares advanced 3.9% on Tuesday following the earnings news.

Monthly Active Users (MAUs) for Spotify grew by 23% year-on-year to 602 million, which was 1 million ahead of management’s guidance. Subscribers grew 15% in the same period to 236 million.

Total revenue was 16% higher at 3.7 euros billion ($3.97 billion), in line with company guidance, helped by a price increase in the second half of 2023 and expanding ad business. Spotify‘s loss narrowed to 70 million euros, equivalent to about $75 million, in the period, down from a 270 million-euro loss a year earlier.

Costs related to a layoff program added to the company’s loss. Ahead of the holiday season, Spotify announced a 17% cut to its global workforce, equivalent to about 1,500 jobs. It cut 600 staff in June and 200 in January in 2023.

The Swedish company has been trying to diversify beyond music and has spent on acquiring the rights to 200,000 audiobooks for premium subscribers. Popular titles included Prince Harry’s autobiography and a release from comedian David Mitchell. Spotify has been offering 15 hours of free audiobook listening per month to premium subscribers in the U.K., U.S., and Australia since October.

“With revenue and profitability trends both inflecting favorably heading into 2024, we view the business as well-positioned to deliver improving growth and profitability,” Spotify management said.

Shares of Spotify gained 3.9% to finish Tuesday at $231.92. The stock has risen about 85% over the past year.