Spotify shares pop 10% on strong user growth

Spotify shares popped as much as 10% Tuesday after the company reported fourth-quarter earnings that beat analysts’ expectations for revenue and showed strong user growth.

Here’s how the company did:

• Loss per share: Loss of 1.40 euros ($1.52) vs. an estimated loss of 1.27 euros as expected by analysts, according to Refinitiv
• Revenue: 3.17 billion euros vs. 3.16 billion euros expected by analysts, according to Refinitiv

Spotify reported 489 million monthly active users for the quarter, up 20% year over year. There were 33 million net additions to monthly active users during the quarter, marking a record high for the company. Spotify also reported 205 million paid subscribers, up 14% from a year ago.

In its third-quarter report, the company said it expected to add approximately 23 million new monthly active users in Q4, bringing its total to 479 million. It had also expected its revenue to increase to 3.2 billion euros and to post 202 million paid subscribers in the quarter.

Spotify is continuing to invest in advertising, and its ad-supported revenue grew 14% year over year and accounted for 14% of total revenue. The company said growth was driven by podcasting.

Earlier this month, Spotify announced plans to cut 6% of its global workforce as it contends with a gloomy economic environment that has caused consumers and advertisers to limit their spending. The cuts impacted about 600 employees.

CEO Daniel Ek wrote a note to employees, which was posted publicly on the company’s website, and said he takes “full accountability for the moves that got us here today.”

“In hindsight, I was too ambitious in investing ahead of our revenue growth,” he said.