**Spotify Projects Higher Q4 Profit Due to Cost-Cutting and Subscriber Growth**

Spotify has announced that it expects to see an increase in fourth-quarter profit, surpassing Wall Street predictions, driven by strategic cost reductions and robust user growth anticipated during the holiday season. Following this announcement, Spotify’s shares rose by 7% in extended trading, continuing a year where their value has more than doubled.

Over the past year, the Swedish audio-streaming giant has implemented several measures to enhance profitability. These measures include employee layoffs, scaling back on podcast investments, and reducing marketing expenses. Additionally, Spotify has increased the prices of its subscription plans in the U.S., aiming to leverage the strong demand for its premium services.

Spotify has projected an operating income of 481 million euros ($509.76 million) for the fourth quarter, which exceeds the average analyst estimate of 445.7 million euros compiled by LSEG. It also anticipates monthly active users (MAUs) to reach 665 million, above the estimated 661 million, according to Visible Alpha. The company expects to gain approximately 8 million premium subscribers in the quarter, potentially bringing the total number of premium subscribers to 260 million.

CEO Daniel Ek highlighted that achieving full-year profitability is a crucial milestone for the company, noting that investors have long awaited this progress.

Spotify operates a dual service model: a free ad-supported tier with limited features and a subscription-based tier that offers complete access to its premium functionalities. The company has been continuously adding premium features to attract more users. In September, for example, it expanded an AI-driven playlist creation tool to four new markets, including the U.S.

The introduction of such features contributed to a 12% increase in premium subscribers, reaching 252 million, slightly above the Visible Alpha estimate of 251 million. MAUs also saw an 11% rise to 640 million, marginally surpassing expectations.

However, despite a 19% increase in overall revenue to 3.99 billion euros for the third quarter, this figure fell short of the expected 4.02 billion euros. The shortfall was attributed to a weak digital advertising market and a strong dollar, which are also likely to impact fourth-quarter revenue, projected at 4.1 billion euros versus the anticipated 4.26 billion euros.

Acknowledging the current pressures in the advertising industry, Ek noted the shift from brand spending to automated and direct spending. He emphasized that Spotify is investing heavily in this area to navigate the market challenges.

In the third quarter, Spotify's gross profit surged by 40% to 1.24 billion euros, exceeding the estimate of 1.22 billion euros. The gross profit margin also saw an increase, climbing to 31.1% from 29.2% in the previous quarter.